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SIGNATURE JAMES REA, JR
TITLE PRESIDENT
R&W LLP DRAFT 8/17/99
As filed with the Securities and Exchange
Commission on August 18, 1999
Registration No. 33-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
[ ] Pre-Effective Amendment No. [X] Post-Effective Amendment No. 1
ORBITEX GROUP OF FUNDS
(Exact Name of Registrant as specified in Charter)
410 Park Avenue
New York, New York 10022
(Address of Principal Executive Offices)
(888) - ORBITEX
(Area Code and Telephone Number)
Mr. James L. Nelson
Orbitex Group of Funds
410 Park Avenue
New York, New York 10022
(Name and Address of Agent for Service)
copies to:
Leonard B. Mackey, Jr., Esq. M. Fyzul Khan, Esq
Rogers & Wells LLP Orbitex Management, Inc.
200 Park Avenue 410 Park Avenue
New York, New York 10166 New York, New York 10022 .
Thomas R. Westle, Esq
Spitzer & Feldman P.C
405 Park Avenue
New York, New York 10022
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered: Orbitex Growth Fund Class A Shares of
beneficial interest, no par value.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith.
FORM N-14 CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
Part A Item No. and Caption Prospectus/Proxy Statement Caption
Item 1. Beginning of Registration Cover Page; Cross Reference Sheet
Statement and Outside Front
Cover Page of Prospectus
Item 2. Beginning and Outside Table of Contents
Back Cover Page of Prospectus
Item 3. Synopsis Information and Synopsis; Risk Factors; Introduction;
Risk Factors Comparative Investment Policies
and Styles
Item 4. Information About the Synopsis; Reasons for the
Transaction Reorganization; Procedures for the
Reorganization; Certain Comparative
Information About Maryland funds and
Delaware funds; Required Vote; Annex-A
(Reorganization Agreement
Item 5. Information About the Cover Page; Synopsis; Reasons for
Registrant the Reorganization; Comparative
Investment Policies and Styles;
The Orbitex Group of Funds;
Description of the Orbitex
Growth Fund Agreement
Item 6. Information About the Cover Page; Synopsis; Reasons for the
Company Being Acquired Reorganization; Comparative Investment
Policies and Styles; Certain
Comparative Information About Maryland
funds and Delaware funds;
Recommendation of the ADGVF Board
of Directors
Item 7. Voting Information Synopsis; Reasons for the
Reorganization; Required Vote;
Recommendation of the ADGVF Board
of Directors
Item 8. Interest of Certain Security Ownership of Certain
Persons and Experts Beneficial Owners
Item 9. Additional Information Not Applicable
Required for Re-offering By
Persons Deemed to be
Underwriters
Statement of Additional
Part B Item No. and Caption Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Financial Statements
of the Registrant and
the Company being
acquired, including
the Statements of
Additional Information
contained therein, are
incorporated herein by
reference.
Item 12. Additional Information Financial Statements of the
Registrant and About the Registrant
the Company being acquired,
including the Statements of
Additional Information
contained therein, are
incorporated herein by
reference.
Item 13. Additional Information Financial Statements of the Registrant
About the Company Being and the Company being acquired,
Acquired including the Statements of
Additional Information contained
therein, are incorporated herein by
reference.
Item 14. Financial Statements Financial Statements of the
Registrant and the Company being
acquired, including the Statements
of Additional Information contained
therein, are incorporated herein by
reference.
Part C Item No. and Caption Other Information Caption
Item 15. Indemnification Indemnification: Incorporated by
reference to part A caption
"Certain Comparative Information About
Maryland funds and Delaware
funds - Liability of Directors
in Maryland and
Trustees in Delaware"
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
AMERICAN DIVERSIFIED FUNDS, INC.
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
August-18, 1999
Dear Stockholder:
A special meeting of stockholders of American
Diversified Global Value Fund ("ADGVF") will be held
at the principal executive offices of Orbitex
Management, Inc. ("Orbitex Management") on
September 10, 1999, at 12:00 p.m. local time (including
any adjustment or postponement thereof, the "Special
Meeting"). ADGVF is the only active series of
American Diversified Funds, Inc. ("ADFI"), a Maryland
corporation. Formal notice of the Special Meeting
appears on the next page and is followed by the
Prospectus/Proxy Statement.
In the attached Prospectus/Proxy Statement,
stockholders of ADGVF are being requested to consider
and approve the proposed business combination (the
"Reorganization") of ADGVF with the Orbitex Growth
Fund, a separate series of Orbitex Group of Funds, a
business trust organized under the laws of the State
of Delaware, pursuant to an Agreement and Plan of
Reorganization, dated as of July-8, 1999, by and
between ADFI and the Orbitex Group of Funds, whereby
ADGVF would, in exchange for shares of the Orbitex
Growth Fund, sell, transfer and assign to the Orbitex
Growth Fund, and the Orbitex Growth Fund would
purchase from ADGVF, certain of the assets and certain
of the liabilities of ADGVF. The investment
objectives and policies of ADGVF and the Orbitex
Growth Fund are similar but not identical. ADGVF
employs a value-oriented strategy for selecting
investments with a secondary focus on growth stocks;
and the Orbitex Growth Fund employs a growth-oriented
strategy for selecting investments with a secondary
focus on value stocks. In other words, the Orbitex
Management employs measures of intrinsic value, such
as the company's price-to-earnings ratio, historical
trends and cash flows to select investments for
Orbitex Growth Fund. Unlike ADGVF, however, in
addition to limiting its investment to securities that
meet traditional value investing criteria, Orbitex
Growth Fund places a greater emphasis on seeking
companies that the Orbitex Management believes will
experience earnings and cash flow growth. Also, even
though the Orbitex Growth Fund is permitted to invest
in the securities of foreign issuers, it typically
does not do so to the same extent that the ADGVF Fund
has historically been permitted to do. In addition,
Orbitex Growth Fund does not seek current income, and
consequently does not invest any significant portion
of its assets in debt securities. The dollar value of
each ADGVF stockholder's account with the Orbitex
Growth Fund immediately after the Reorganization will
be the same as the dollar value of such stockholder's
account with ADGVF immediately before the
Reorganization. The Reorganization is intended to
qualify as a tax-free reorganization.
Orbitex Management, a New York corporation, has served
as the investment adviser to ADGVF since May 7, 1999,
pursuant to an investment advisory agreement (the
"Orbitex Agreement"), dated May-5, 1999, between
Orbitex Management and ADGVF and approved by the
Board of Directors of ADFI (the "Board"). The Board
made this appointment after it terminated the
engagement of American Diversified Asset Management,
Inc. ("ADAM") and Ladas & Hulings, Inc. as ADGVF's
investment adviser and sub-adviser, respectively,
following notice from ADAM of its insolvency and the
insolvency of its parent company. The Reorganization
is designed to permit the stockholders of ADGVF to
merge into the Orbitex Growth Fund and become part of
the Orbitex Group of Funds, for which Orbitex
Management also serves as investment adviser. As part
of the Orbitex Group of Funds, ADGVF through its
merger into the Orbitex Growth Fund would have the
benefits of certain economies with respect to
administrative expenses and of being marketed together
with the other funds in the Orbitex Group of Funds.
Orbitex Management has agreed that if ADGVF's
stockholders fail to approve the Reorganization by the
requisite vote, it will continue to serve as
investment adviser to ADGVF for a reasonable period of
time without fees until a replacement adviser is
selected or until ADGVF is liquidated. The Board
believes that in such a case the prospects of finding
a replacement adviser would be minimal.
After careful consideration, the Board has unanimously
approved the Reorganization and recommends that you
read the enclosed materials carefully and then vote
"FOR" the Reorganization. It is important that you
sign and return your proxy card because approval of
the Reorganization requires a minimum number of
affirmative votes.
While the Board recommends that you vote "FOR" the
Reorganization and become a shareholder of the Orbitex
Growth Fund, you also have the option of redeeming
your shares in AGDVF at any time before the
Reorganization becomes effective.
You are cordially invited to attend the Special
Meeting. If you do not expect to attend the Special
Meeting, the Board requests that you vote by taking a
moment to sign and return your proxy cards in the
enclosed postage paid return envelope. You may also
vote by telephone at 1-800-690-6903 or through the
internet at www.proxyvote.com by following the simple
instructions on the Proxy card provided. If we do not
hear from you after a reasonable amount of time, you
may receive a telephone call from our proxy solicitor,
Shareholder Communications Corporation, reminding you
to vote your shares.
Sincerely,
James B. Rea, Jr.,
President
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
c/o ORBITEX Management, Inc.
410 Park Avenue
New York, New York 10022
(888) ORBITEX
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on September 10, 1999
___________________________________________________________
To the stockholders of American Diversified
Global Value Fund:
NOTICE IS HEREBY GIVEN that a special meeting of
stockholders (including any adjournment or
postponement thereof, the "Special Meeting") of
American Diversified Global Value Fund ("ADGVF"), a
series of American Diversified Funds, Inc. ("ADFI"), a
Maryland corporation, will be held at the principal
executive offices of Orbitex Management at 410 Park
Avenue, New York, New York 10022 on September 10,
1999, at 12:00 p.m., local time, for the following
purposes:
I. To consider and approve the proposed business
combination (the "Reorganization") of ADGVF with
the Orbitex Growth Fund ("OGF"), a separate
series of the Orbitex Group of Funds, a business
trust organized under the laws of the State of
Delaware, pursuant to an Agreement and Plan of
Reorganization, dated as of July 8, 1999, by and
between ADFI and the Orbitex Group of Funds,
whereby ADGVF would sell, transfer and assign to
the Orbitex Group of Funds certain of the assets
ADGVF, in exchange for which the Orbitex Group
of Funds would assume certain of the liabilities
of ADGVF and deliver to ADGVF no par, Class A
Shares of OGF having an aggregate value equal to
the aggregate value of the shares of common
stock, par value $1.00 per share, of ADGVF
outstanding (the "ADGVF Common Stock") as of the
Closing Date.
II. To transact any other business, not currently
contemplated, that may properly come before the
Special Meeting, in the discretion of the
proxies or their substitutes.
ADGVF's stockholders of record as of the close
of business on July 8, 1999, (the "Record Date") are
entitled to notice of, and to vote at, the Special
Meeting or any adjournment thereof. On the Record
Date, 476,162.328 shares of ADGVF Common Stock were
issued and outstanding and entitled to vote.
A copy of the Reorganization Agreement is
attached as Appendix A to the attached
Prospectus/Proxy Statement and forms a part of such
Prospectus/Proxy Statement.
The board has unanimously approved the
reorganization as being in the best interest of
ADGVF's stockholders and unanimously recommends a vote
"FOR" the reorganization.
Stockholders are encouraged to vote promptly by
executing and returning in the enclosed envelope the
accompanying proxy. Stockholders may also vote by
telephone or through the internet by following the
simple instructions on the proxy card provided. Your
vote is important for the purpose of ensuring a quorum
at the Special Meeting. Any proxy may be revoked at
any time before they are exercised by the subsequent
execution and submission of a revised proxy, by giving
written notice of revocation to ADGVF at any time
before the proxy is exercised or by voting in person
at the Special Meeting.
BY THE ORDER OF THE BOARD OF DIRECTORS
Secretary
M. Fyzul Khan
August 18, 1999
_____________________
PROSPECTUS/PROXY STATEMENT
_____________________
ORBITEX GROUP OF FUNDS
410 Park Avenue
New York, New York 10022
(888)-ORBITEX
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
(800)-348-5032
_____________________
This Prospectus/Proxy Statement, dated August 9,
1999, is being furnished in connection with the
solicitation of proxies by the Board of Directors (the
"Board") of American Diversified Funds, Inc. ("ADFI")
for use at a special meeting of the stockholders of
American Diversified Global Value Fund ("ADGVF") to be
held in connection with the proposed business
combination (the "Reorganization") of ADGVF with the
Orbitex Growth Fund ("OGF" or Orbitex Growth Fund"), a
separate series of the Orbitex Group of Funds, a
business trust organized under the laws of the State
of Delaware (the "Orbitex Group of Funds"), at the
principal executive offices of Orbitex Management,
Inc. ("Orbitex Management") on September 10, 1999, at
12:00 p.m., local time (including any adjournment or
postponement thereof, the "Special Meeting"). It is
expected that the Notice of Special Meeting of
Stockholders, this Prospectus/Proxy Statement and the
accompanying materials will first be mailed to
stockholders on or about August 19, 1999.
In connection with the Reorganization, you
should note that:
The holders of outstanding shares of ADGVF's
common stock, including fractional shares
("ADGVF Common Stock"), will receive a
proportionate number of Class A Shares (or
fractions thereof) of OGF, based on the
relative net asset values per share of each
of ADGVF and OGF as of the Closing Date;
ADGVF employs a value-oriented strategy for
selecting investments with a secondary focus
on growth stocks; and Orbitex Growth Fund
employs a growth-oriented strategy for
selecting investments with a secondary focus
on value stocks. In other words, Orbitex
Management employs measures of intrinsic
value, such as the company's
price-to-earnings ratio, historical trends
and cash flows to select investments for
OGF. Unlike ADGVF, however, in addition to
limiting its investment to securities that
meet traditional value investing criteria,
OGF places a greater emphasis on seeking
companies that Orbitex Management believes
will experience earnings and cash flow
growth. Also, even though Orbitex Growth
Fund is permitted to invest in the securities
of foreign issuers, it typically does not do
so to the same extent that ADGVF Fund has
historically done. In addition, OGF does not
seek current income, and consequently does
not invest any significant portion of its
assets in debt securities; and
Orbitex Management is the investment adviser
to OGF.
A representative of Tait, Weller & Baker,
independent accountants to ADGVF, will be available
for the Special Meeting.
The Board of Directors of American Diversified
Funds, Inc. unanimously recommends that you vote "FOR"
the reorganization described in the Notice of Special
Meeting of Stockholders.
This Prospectus/Proxy Statement provides you
with detailed information about the proposed
Reorganization that a prospective investor ought to
know before voting. We encourage you to read this
entire document carefully and retain it for future
reference.
The following documents are incorporated herein
in their entirety by reference.
1. The Current Prospectus of ADGVF, dated
July 31, 1998, as supplemented May 7, 1999, which may
be obtained without charge by writing to ADGVF, c/o
PFPC, Inc. ("PFPC"), 400 Bellevue Parkway, Suite 108,
Wilmington, DE 19809, or by calling 1-800-348-5032.
2. The Annual Report of ADGVF for the fiscal
year ended March 31, 1999, which may be obtained
without charge by writing or calling PFPC at the
address or telephone number listed above.
3. The Current Prospectus of the Orbitex
Group of Funds, filed with the SEC on July 12, 1999
(File No. 333-20635), which accompanies this
Prospectus/Proxy Statement.
4. The Statement of Additional Information
relating to this Prospectus/Proxy Statement, which may
be obtained without charge by writing to the Orbitex
Group of Funds, 410 Park Avenue, New York, New York
10022 or by calling (888) ORBITEX.
Information about the Orbitex Group of Funds
(including the Statement of Additional Information
described above) can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Call
1-800-SEC-0330 for information on the operation of the
public reference room. This information is also
available on the SEC's Internet site at
http://www.sec.gov and copies may be obtained upon
payment of a duplicating fee by writing the Public
Reference Section of the SEC, Washington, D.C.
20549-6009.
The Securities and Exchange Commission has not
approved or disapproved these securities or passed
upon the adequacy of this Prospectus/Proxy Statement.
Any representation to the contrary is a criminal
offense.
i
TABLE OF CONTENTS
Page
I. SYNOPSIS 1
A. Questions and Answers About the
Reorganization....................1
B. ADFI and ADGVF..........................2
C. The Orbitex Growth Fund.................2
D. The Orbitex Group of Funds..............3
E. Orbitex Management......................3
F. The Reorganization......................4
G. The Special Meeting of Stockholders.....4
II. RISK FACTORS..................................5
III. THE PROPOSAL: TO CONSIDER AND APPROVE THE
PROPOSED REORGANIZATION..............5
A. Introduction............................5
B. Reasons For The Reorganization..........5
C. Procedures for the Reorganization.......6
D. Orbitex Management......................7
E. Description of the Orbitex Growth Fund
Agreement.........................8
F. Pro Forma Capitalization...............10
G. Comparative Investment Policies
and Styles..........................10
H. The Orbitex Group of Funds.............11
I. Certain Comparative Information about
Maryland funds and Delaware Funds......11
J. Federal Income Tax Consequences........14
K. Accounting Consequences................14
L. Expenses...............................14
M. Required Vote..........................14
N. Recommendation of the ADGVF Board of
Directors........................14
IV. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS............................15
V. OTHER MATTERS................................15
VI. ADDITIONAL INFORMATION.......................15
21
SYNOPSIS
The following summary is qualified in its
entirety by the more detailed information contained in
other parts of this Prospectus/Proxy Statement. We
urge you to review this entire Prospectus/Proxy
Statement.
Questions and Answers About the Reorganization
Q: What is the purpose of the Reorganization?
A: The purpose of the Reorganization is to transfer
certain of the assets and certain of the
liabilities of ADGVF to OGF, which has as its
investment adviser, Orbitex Management. Orbitex
Management was selected by the Board of
Directors of ADFI and is now serving as
investment adviser to ADGVF pending completion
of the Reorganization.
Q: What are the benefits of the proposed
Reorganization?
A: We believe the Reorganization should offer the
following benefits:
After the Reorganization, ADGVF stockholders
will hold Class A Shares of beneficial
interest in OGF. As holders of these Class A
Shares, they will have the benefit of
exchange privileges with Class A Shares of
beneficial interest in the Orbitex Group of
Funds.
OGF, as part of the Orbitex Group of Funds,
will have the benefit of marketing and
administrative resources significantly
greater than those available to ADGVF in the
past.
While the expense ratio of managing OGF in
respect of the Class A Shares is likely to be
higher than ADGVF's expense cap (ADGVF
imposed an expense cap on August 1, 1988 of
1.88%), the overall expenses of managing OGF
will be spread over the two existing classes
of shares of OGF.
Q: What will happen if the Reorganization is not
completed?
A: If the Reorganization is not approved by the
requisite vote of ADGVF's stockholders, Orbitex
Management is not expected to continue to
provide investment advisory services to ADGVF
beyond a reasonable transitional period required
for ADGVF to retain another investment adviser
or liquidate. The Board believes that, in that
situation, the prospects of finding another
investment adviser would be minimal.
Q: What are the detriments of the proposed
Reorganization?
A: We expect the Reorganization to have the
following detriments:
Since August 1, 1998, the expense ratio of
OGF in respect of the Class A shares has been
voluntarily capped by Orbitex Management at
2.00% of average net assets. The prior
adviser of ADGVF had voluntarily imposed a
lower annual expense cap of 1.88% of ADGVF's
average net assets on ADGVF's total
expenses. In addition, the expense ratio of
OGF in respect of the Class A shares before
giving effect to the voluntary expense cap,
was 18.03% for the year ended April 30,
1999. Orbitex Management has contractually
agreed to maintain this expense cap through
April 30, 2000; however, it may discontinue
the cap at any time thereafter.
Since OGF places a greater emphasis on
growth stocks then does ADGVF, OGF may be
regarded as having greater risk.
Q: What will happen to the ADGVF shares in my
account?
A: For the ADGVF shares in your account (including
fractional shares), you will receive a
proportionate number of Class A Shares (or
fractions thereof) of OGF, based on the relative
net asset values per share of each of ADGVF and
OGF as of the Closing Date. The value of your
account will be the same immediately after the
Reorganization as it was immediately before the
Reorganization.
Q: What do I need to do now?
A: Just vote your shares as soon as possible by
mail by signing and returning the Proxy Card in
the enclosed envelope, or by telephone at
1-800-690-6903 or through the internet at
www.proxyvote.com by following the simple
instructions on the Proxy Card, so that your
shares can be voted at the Special Meeting.
Q: When do we expect the Reorganization to be
completed?
A: We hope to complete the Reorganization as
quickly as possible after the stockholder vote.
Q: Who can help answer my questions?
A: If you have more questions about the
Reorganization, you should contact:
M. Fyzul Khan
410 Park Avenue
New York, New York 10022
Telephone No.: (212) 891-7900
Fax No.: (212) 616-7954
Q: Can I change my vote after I have mailed my
signed proxy card?
A: Yes. You can change your vote at any time
before your proxy is voted at the Special
Meeting. You can do this in one of three ways.
First, you can send a written notice stating
that you revoke your proxy. Second, you can
complete and submit a new Proxy Card, dated a
later date than the first Proxy Card. Third,
you can attend the Special Meeting and vote in
person. Your attendance at the meeting without
voting will not, however, revoke your proxy. If
you have instructed a broker to vote your
shares, you must follow directions received from
your broker to change those instructions.
Q: What are the tax consequences of the
Reorganization?
A: We have structured the Reorganization so that
neither ADGVF nor its stockholders will
recognize any gain or loss for federal income
tax purposes in the Reorganization. The closing
of the Reorganization is conditioned, among
other things, on the delivery of the legal
opinion of counsel to the Orbitex Group of Funds
as to the tax consequences as to ADGVF and
ADGVF's stockholders.
ADFI and ADGVF
ADFI is registered as an open-end management
investment company under the Investment Company Act of
1940, as amended. ADGVF is a separate series, and the
only active series, of ADFI. ADGVF's investment
objective is to achieve medium-term capital growth,
income and safety through investments in common stock,
preferred stocks (or common stock equivalents, such as
convertible securities), money market instruments and
corporate, U.S. Government and agency debt
securities. Under normal market conditions, ADGVF
invests 75% of its assets in equity securities. At
July 1, 1999, ADGVF's net asset value was $7.3 million.
The Orbitex Growth Fund
OGF is a separate series of the Orbitex Group of
Funds. The number of Class A Shares of beneficial
interest of OGF issued in the Reorganization will
correspond to a proportionate number of shares of
ADGVF Common Stock issued and outstanding under
Maryland law immediately prior to the Reorganization,
based on the relative net asset values per share of
each of ADGVF and OGF as of the Closing Date.
Although Class A Shares of OGF are normally subject to
a front-end sales load, the shares issued in the
Reorganization will not be subject to any sales load.
Class A Shares are also subject to an annual sales or
distribution ("Rule 12b-1") charge equal to 0.40% of
the Orbitex Growth Fund's average daily net assets,
whereas the ADGVF shares are subject to an annual
distribution fee under Rule 12b-1 equal to 0.35% of
ADGVF's average daily net assets. OGF also offers
Class B Shares that are subject to a deferred sales
charges and higher Rule 12b-1 fees than Class A Shares.
The investment objective of OGF is long-term
growth of capital through selective investment in
securities of companies of all sizes that offer
potential for growth. The Fund's investment adviser
applies a "bottom-up" blending of value and growth
criteria to select the Fund's investments, seeking to
identify companies that are undervalued by the stock
market and less expensive than comparable companies.
To do so, Orbitex Management employs measures of
intrinsic value, such as the company's
price-to-earnings ratio, historical stock prices and
cash flows. Orbitex Management also employs criteria
to identify companies it believes will experience
earnings growth. Finally, Orbitex Management attempts
to identify investment and economic themes that can
drive profits.
Like ADGVF, OGF invests primarily in common
stocks. Although OGF is permitted to invest in the
securities of foreign issuers, unlike ADGVF, it
invests primarily in the securities of domestic
issuers. OGF invests in companies regardless of their
stock market value (or "market capitalization").
The Orbitex Group of Funds
The Orbitex Group of Funds, like ADFI, is an
open-end management investment company. The Orbitex
Group of Funds was established pursuant to an
Agreement and Declaration of Trust, as amended, dated
December 31, 1996 (the "Trust Agreement"). Currently,
the Orbitex Group of Funds consists of five funds that
invest primarily in equity securities ("Equity
Funds"): Orbitex Growth Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Strategic Natural
Resources Fund, Orbitex Focus 30 Fund and the Orbitex
Health & Biotechnology Fund. The Orbitex Group of
Funds also includes a money market fund, the Orbitex
Cash Reserves Fund. Each Equity Fund is a separate
investment portfolio and has its own investment
objectives, programs, policies and restrictions.
Each Equity Fund offers two classes of shares:
Class A Shares, which have an initial sales charge,
and Class B Shares, which have a deferred sales
charge. Class A Shares have a front end load, and
purchasers thereof pay a charge of up to 5.75% of the
purchase price. Purchases of Class A Shares of $1
million or more are not subject to any front load
sales charge, but may be subject to a 1.0% contingent
sales charge if redeemed within one year. Class A
Shares of an Equity Fund are subject to a service and
distribution fee pursuant to Rule 12b-1 at the rate of
0.40% of the average daily net assets of the Fund.
Although there is no front end load sales charge for
purchasers of Class B Shares, there is a contingent
deferred sales charge on shares redeemed within six
years of purchase ranging from 5% in the first year to
1% in the sixth year. After the sixth year, Class B
Shares convert to Class A Shares. Class B Shares of
an Equity Fund are subject to service and distribution
fees pursuant to Rule 12b-1 at the rate of 1.0% of the
average daily net assets of the Fund. The Orbitex
Focus 30 Fund also has Class D Shares outstanding that
were issued in connection with the acquisition of the
assets and liabilities of the ASM Index 30 Fund. The
Orbitex Cash Reserves Fund is also a separate
investment portfolio of the Orbitex Group of Funds.
Its investment objective is to provide current income
while maintaining liquidity and a stable share price
of $1.00. The Orbitex Cash Reserves Fund offers two
classes of shares: Institutional Service Shares which
provide shareholder services at an additional 0.25%
fee and Institutional Shares which offer no
shareholder services.
Each Equity Fund is managed by Orbitex
Management, which directs the day-to-day operations of
each Equity Fund. The Orbitex Group of Funds
principal executive offices are at 410 Park Avenue,
New York, New York 10022 and its telephone number is
1-888-ORBITEX.
Orbitex Management
Orbitex Management is a registered investment
adviser under the Investment Advisers Act of 1940, as
amended. Orbitex Management is currently organized as
a New York corporation. Orbitex Management is a
majority owned subsidiary of Capital Management Ltd.,
a Bahamian corporation and an investment management
firm. Mr. Thomas Bachmann is the controlling person
of Capital Management Ltd. Orbitex Management is the
parent corporation of ORBITEX Strategies, Inc., a
Delaware corporation whose primary business is
commodities, futures, foreign exchange and separate
account management. Orbitex Management's principal
executive offices are at 410 Park Avenue, New York,
New York 10022. Orbitex Management is affiliated with
Orbitex Management Ltd., a Bahamian corporation and
investment adviser that provides investment services
to individuals and institutions including Canadian
unit trusts.
The Reorganization
In the Reorganization:
Each outstanding share of ADGVF's common
stock (including fractional shares) will
be converted into a proportionate number
of Class A Shares (or fractions thereof)
of OGF, based on the relative net asset
values per share of each of ADGVF and OGF
as of the Closing Date.
OGF generally has similar but not
identical investment objectives and
policies as ADGVF. ADGVF employs a
value-oriented strategy for selecting
investments with a secondary focus on
growth stocks; and Orbitex Growth Fund
employs a growth-oriented strategy for
selecting investments with a secondary
focus on value stocks. In other words,
Orbitex Management employs measures of
intrinsic value, such as the company's
price-to-earnings ratio, historical trends
and cash flows to select investments for
OGF. Unlike ADGVF, however, in addition
to limiting its investment to securities
that meet traditional value investing
criteria, OGF places greater emphasis on
seeking companies that Orbitex Management
believes will experience earnings and cash
flow growth. Also, even though the OGF is
permitted to invest in the securities of
foreign issuers, it typically does not do
so to the same extent that ADGVF has
historically been permitted to do. In
addition, OGF does not seek current
income, and consequently does not invest
any significant portion of its assets in
debt securities. Since OGF places a
greater emphasis on growth stocks, it may
be regarded as involving a higher level of
risk than ADGVF.
Orbitex Management, the current
investment adviser to ADGVF, is also the
investment adviser to OGF. Orbitex
Management is entitled to an investment
management fee at an annual rate equal to
0.75% of the net asset value of OGF
whereas it is entitled to receive an
advisory fee equal to 1% of the net asset
value of ADGVF.
OGF will acquire all of ADGVF's assets
and certain of its liabilities.
Following the Reorganization, ADGVF may
be continued under Maryland law. None of
the members of the Board is a member of
the Board of Trustees of the Orbitex Group
of Funds.
The Special Meeting of Stockholders
Time, Place:, The Special Meeting is scheduled to be
held at 12:00 p.m., on September 10,
1999 at the principal executive offices
of Orbitex Management, 410 Park Avenue,
New York, New York 10022.
Record Date:, The Board has fixed the close of
business on July 8, 1999 as the record
date (the "Record Date") for the
determination of ADGVF's stockholders
entitled to notice of and to vote at
the Special Meeting. On the Record
Date, 476,162.328 shares of ADGVF's
common stock were issued and
outstanding and entitled to vote. Each
share is entitled to one vote and each
fractional share is entitled to a
fractional vote. All voting rights are
non-cumulative.
Required Vote:, The affirmative vote of the holders
of a majority of ADGVF's outstanding
shares of common stock is required to
approve the Reorganization. Broker
non-votes and abstentions will have the
same effect as votes against the
Reorganization.
Quorum:, The presence, in person or by proxy, at
the Special Meeting of a majority of
ADGVF's shares of common stock
outstanding on the record date is
required for a quorum. Shares
represented by abstentions or broker
non-votes are counted for quorum
purposes.
Voting of Proxies:, If the Proxy Card furnished
with this Prospectus/Proxy Statement is
properly signed and returned, or if you
vote your proxy by telephone at
1-800-690-6903 or through the internet
at www.proxyvote.com by following the
simple instructions on the Proxy Card,
it will be voted in accordance with the
instructions on that Proxy Card. If no
instructions are specified on a Proxy
Card that is properly signed and
returned, the shares represented by the
Proxy Card will be voted "FOR" the
Reorganization.
Recommendation of
the Board:, The Board unanimously recommends a vote
"FOR" the Reorganization.
RISK FACTORS
An investment in OGF involves a number of risks,
including stock market volatility, risks associated
with the companies in which OGF invests, risks of
foreign investment and inflation risk. These risks
are discussed in the accompanying Prospectus of the
Orbitex Group of Funds.
Because OGF invests primarily in the securities
of domestic companies, its returns are more affected
by developments in the economy of the United States
than ADGVF, which historically spread its investments
throughout the global economy. On the other hand,
because OGF does not invest significantly in foreign
companies, it is less subject than ADGVF to risks of
foreign investments such as the impact on its
investments from unstable international political and
economic conditions, currency fluctuation, foreign
controls on investment and currency exchange,
withholding taxes, a lack of adequate information
regarding the companies in which it invests, less
liquid and more volatile markets, and the lack of
government regulation in certain foreign markets.
There is also possible that, after April 30,
2000, Orbitex Management will no longer cap the
expenses of OGF, with the result that the expense
ratio of OGF will increase significantly.
THE PROPOSAL: TO CONSIDER AND APPROVE THE PROPOSED
REORGANIZATION
Introduction
On May 4, 1999, the Board unanimously approved,
and recommended that the ADGVF stockholders approve,
an Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and between ADFI and
the Orbitex Group of Funds substantially in the form
attached hereto as Appendix A. The Reorganization
Agreement provides, among other things, for the sale,
transfer and assignment to OGF, a separate series of
the Orbitex Group of Funds, and the purchase from ADFI
of certain of the assets and certain of the
liabilities of ADFI. Each ADGVF stockholder will
receive for his or her shares of ADGVF common stock a
proportionate number of no par value, Class A Shares
of beneficial interest of OGF (each an "OGF Share" and
together the "OGF Shares"), based on the relative net
asset values per share of each of ADGVF and OGF as of
the Closing Date. (See "Federal Income Tax
Consequences" below). The mailing address and
principal executive offices of the Orbitex Group of
Funds are located at 410 Park Avenue, New York, New
York 10022.
Reasons For The Reorganization
Orbitex Management serves as the investment
adviser to ADGVF. The principal business address of
Orbitex Management is 410 Park Avenue, New York,
New York 10022. Orbitex Management is also adviser to
the Orbitex Group of Funds. The purpose of the
Reorganization is to merge ADGVF into OGF. As of
May 5, 1999, Orbitex Management replaced ADGVF's
previous investment adviser. On May 4, 1999,
following the notice of American Diversified Asset
Management, Inc., ADGVF's former investment adviser
("ADAM"), to the Board that ADAM and its parent
company were insolvent, the Board, including all of
the independent directors, unanimously voted to
terminate the investment advisory agreement, by and
between ADFI, on behalf of ADGVF, and ADAM (the "ADAM
Agreement"), effective immediately. The Board also
terminated the sub-advisory agreement with Ladas &
Hulings, Inc. ("Ladas") at that meeting. In seeking a
replacement for ADAM and Ladas, the Board interviewed
several potential replacement advisers, including
Orbitex Management. Orbitex Management agreed to serve
as investment adviser to ADGVF and to assume ADAM's
obligation to ADGVF under the voluntary expense
reimbursement limitation if, among other things, the
Board would agree to recommend the Reorganization to
the ADGVF stockholders for consideration and
approval. In evaluating Orbitex Management and the
Reorganization, the Board reviewed materials
furnished, and considered representations made, by
Orbitex Management regarding its philosophy of
management, performance expectations and methods of
operation insofar as they related to ADGVF, and its
prior performance as investment adviser to the Orbitex
Group of Funds. In selecting Orbitex Management and
recommending the Reorganization for approval by the
ADGVF stockholders, the Board, considering the best
interests of the ADGVF stockholders, took into account
all such factors as they deemed relevant, but gave
equal consideration to each of the following factors.
Among such factors were the following: nature, quality
and extent of the services furnished by Orbitex
Management; the advantages and possible disadvantages
to ADGVF of merging into OGF; the investment record of
OGF and Orbitex Management; possible economies of
scale resulting from an enhanced distribution network
and the elimination of duplicative fixed overhead
expenses; comparative data as to advisory fees; the
voluntary expense limitation assumed by Orbitex
Management; the financial resources of Orbitex
Management; and the importance of obtaining high
quality professional services for the stockholders of
ADGVF.
Orbitex Management currently serves as the
adviser pursuant to an investment advisory agreement,
dated May 5, 1999, by and between ADGVF and Orbitex
Management (the "Orbitex Agreement"). The Board
approved the Orbitex Agreement on May 4, 1999. The
Orbitex Agreement is permitted pursuant to Rule 15a-4
under the Investment Company Act of 1940, as amended
(the "1940 Act"). Rule 15a-4 allows an investment
adviser to be retained by a fund in the event that the
agreement between the fund's former investment adviser
and the fund has been terminated. Under this rule,
the newly-retained investment adviser to a fund is
permitted to serve the fund under an investment
advisory agreement that has not yet been approved by
shareholders if (i) the agreement has been approved by
the fund's governing board as specified in the
1940 Act, (ii) the compensation to be received by the
investment adviser does not exceed the compensation
paid to the former investment adviser and (iii) the
agreement is approved by shareholders within the one
hundred twenty (120) day period following the
termination of the prior agreement. The terms and
conditions of the Orbitex Agreement are substantially
the same as those of the ADAM Agreement including,
that Orbitex has continued ADAM's voluntary agreement
to limit ADGVF's annual expenses to 1.88% of the
average daily net assets of ADGVF. Under the Orbitex
Agreement, Orbitex Management maintains a continuous
investment program for ADGVF by making decisions and
placing orders to buy, sell or hold particular
securities. Orbitex Management also supervises most,
if not all, matters relating to the operation of ADGVF
and supplies, or arranges for others to supply, most
of ADGVF's corporate officers, clerical staff, office
space, equipment and services. Under the Management
Agreement, Orbitex Management is entitled to receive a
monthly fee at an annual rate of 1% of ADGVF's average
daily net assets for services provided to ADGVF. In
addition to the fee payable to Orbitex Management,
ADGVF is responsible for its operating expenses,
including: (i) interest and taxes; (ii) brokerage and
futures commissions; (iii) insurance premiums;
(iv) compensation and expenses of directors other than
those affiliated with Orbitex Management; (v) legal
and audit expenses; (vi) fees and expenses of the
custodian, shareholder servicing agent and transfer
agent; (vii) fees and expenses for registration or
qualification of ADGVF and its shares under federal or
state securities laws; (viii) expenses of preparing,
printing and mailing reports and notices and proxy
material to shareholders; (ix) other expenses
incidental to holding any shareholders' meetings;
(x) dues or assessments of or contributions to the
Investment Company Institute or any successor; and
(xi) such non-recurring expenses as may arise,
including litigation affecting ADGVF and the legal
obligations with respect to which ADGVF may have to
indemnify its officers and directors.
The Orbitex Agreement terminates pursuant to the
provisions of Rule 15a-4 upon the expiration of
120 days of the date of the investment advisory
agreement, unless earlier terminated by either ADGVF
or Orbitex Management upon sixty (60) days' notice to
the other party. Orbitex Management has advised the
Board that it currently does not intend to continue as
adviser to ADGVF if the ADGVF stockholders fail to
approve the Reorganization. Orbitex Management has,
however, agreed that if the ADGVF stockholders fail to
approve the Reorganization by the requisite vote, it
will continue to serve as interim investment adviser
to ADGVF for a reasonable period of time until a
replacement adviser is selected or until ADGVF is
liquidated. The Board believes that in such a case
the prospects of finding a replacement adviser would
be minimal.
Procedures for the Reorganization
In order to accomplish the Reorganization, OGF
will transfer to each stockholder a proportionate
number of OGF Shares that correspond to the dollar
value of shares of ADGVF common stock issued and
outstanding on the Closing Date under Maryland law,
based on the relative net asset values per share of
each of ADGVF and OGF as of the Closing Date. The
obligations of each of ADGVF and the Orbitex Group of
Funds to consummate the Reorganization are conditioned
upon several customary conditions having been
satisfied including, the approval of the
Reorganization by the holders of the requisite number
of ADGVF shareholders. On the Closing Date, as
defined in the Reorganization Agreement (the "Closing
Date"), ADGVF will sell, transfer and assign to OGF,
and OGF will purchase from ADGVF, certain of the
assets and certain of the liabilities of ADGVF in
exchange for shares of OGF. Holders of the shares of
ADGVF Common Stock outstanding (including fractional
shares) prior to the Reorganization will receive a
proportionate number of OGF shares (or fraction
thereof) after the Reorganization based on the
relative net asset values per share of each of ADGVF
and OGF as of the Closing Date. The dollar value of
each ADGVF stockholder's account with OGF immediately
after the Reorganization will be the same as the
dollar value of such ADGVF stockholder's account with
ADGVF immediately prior to the Reorganization.
It will not be necessary for holders of
certificates representing shares of ADGVF Common Stock
to exchange their certificates for new certificates
representing the OGF Shares following consummation of
the Reorganization. New certificates will not be
issued by OGF after the Reorganization to the ADGVF
stockholders unless specifically requested in
writing. ADGVF stockholders who have not been issued
certificates and whose shares are held in an open
account will automatically have the OGF shares issued
to them in the Reorganization held in an open account
of OGF.
Orbitex Management
Orbitex Management is a registered investment
adviser under the Investment Advisers Act of 1940, as
amended. Orbitex Management is currently organized as
a New York corporation. Orbitex Management is a
majority owned subsidiary of Capital Management Ltd.,
a Bahamian corporation and an investment management
firm. Mr. Thomas Bachmann is the controlling person
of Capital Management Ltd. Orbitex Management is the
parent corporation of Orbitex Strategies, Inc., a
Delaware corporation whose primary business is
commodities, futures, foreign exchange and separate
account management. Orbitex Management's principal
executive offices are at 410 Park Avenue, New York,
New York 10022. Orbitex Management is affiliated
with Orbitex Management Ltd., a Bahamian corporation
and an investment adviser that provides investment
services to individuals and institutions including
Canadian unit trusts.
Set forth below is a list of the directors and
principal executive officers of Orbitex Management,
which indicates each business, profession, vocation or
employment of a substantial nature in which each
director or principal executive officer has been
engaged for the past five (5) years for his or her own
account or in the capacity of director, officer,
partner or trustee. All directors and officers have
as their business address 410 Park Avenue, New York,
New York 10022. Each director or principal executive
of Orbitex Management that is an officer or trustee of
the Orbitex Group of Funds is indicated by an asterisk
next to his or her name.
Position with
Orbitex
Management and
Principal Occupation within
the
Name Age Past Five (5)Years
THOMAS T. BACHMANN, 52, Co-Chairman of the
Board of Directors;
Chairman of the Board
of Directors of Orbitex
Management, Ltd.
(1986-present).
OTTO J. FEBER 66 Director; President
and Vice Chairman,
Altamira Management
Ltd. (Investment
Management Company)
(1987-1997); President
of Felcom Capital
Corp. (1985-present).
*M. FYZUL KHAN 28 Legal Counsel and
Secretary; Corporate
Secretary of Orbitex
Group of Funds;
Attorney at CIBC
Oppenheimer (investment
banking and management)
(August 1997-March
1998); law student at
Widener University
School of Law
(September 1994-June
1997).
*JAMES L. NELSON 49 Co-Chairman of the
Board of Directors;
President, AVIC Group
International
(Telecommunication)
(1993-1995); President,
Eaglescliff Corporation
(Consulting)
(1987-present).
*KIMBERLY S. RATZ 38 Treasurer; Chief
Financial Officer,
America's Mortgage
Source (Mortgage
banking) (1996-1997);
Vice President and
Retail Finance Manager,
Chase Manhattan
Mortgage (Mortgage
banking) (1984-96).
*RICHARD E. STIERWALT 44 Chief Executive
Officer, President and
Director; Consultant,
Bisys Management Inc.
(Mutual Fund
Distributor)
(1996-1998); President,
Bisys Management Inc.
(Mutual Fund
Distributor)
(1995-1996); Chairman
and Chief Executive
Officer, Concord
Financial Group (Mutual
Fund Distributor)
(1987-1995).
JOHN W. DAVIDSON 53 Chief Investment
Officer; President and
Chief Executive
Officer, Mutual of
America Capital
Management (1996-1998);
President and Chief
Executive Officer,
Munich Re Capital
Management (1994-1996);
Vice President,
Investment Strategist
and Portfolio Manager,
Bankers Trust Company
(1987-1994).
Description of the Orbitex Growth Fund Agreement
The Investment Advisory Agreement between the
Orbitex Group of Funds and Orbitex Management in
respect of OGF (the "OGF Agreement") provides that
Orbitex Management will render investment supervisory
and corporate administrative services to OGF, subject
to the general supervision of the trustees of the
Orbitex Group of Funds (the "Trustees") and the stated
policies of OGF. It will be the responsibility of
Orbitex Management to perform, or supervise the
performance of, services in connection with OGF,
including (i) the development of a continuing program
for the management of OGF's assets; (ii) the placement
of buy, sell or exchange orders, or other trades in
portfolio securities and other assets; (iii) the
placement of orders and the negotiation of commissions
for the execution of transactions in securities with
or through broker-dealers, underwriters or issuers;
(iv) the preparation and supervision of the
preparation of shareholder reports and other
shareholder communications; and (v) the assimilation
and evaluation of business and financial information
in connection with the exercise of its duties.
As compensation for all services rendered,
facilities provided and expenses paid or assumed by
Orbitex Management under the OGF Agreement, Orbitex
Management is entitled to receive a management fee at
an annual rate of 0.75% of the net asset value of
OGF. In addition, Orbitex Management has voluntarily
agreed to waive its management fee and to reimburse
expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio with respect to
Class A Shares of OGF does not exceed 2.00%. Orbitex
Management may discontinue this waiver and
reimbursement at any time without notice.
The information set forth below shows what
ADGVF's management and administrative fee, other
expense and total operating expense ratios would have
been for its most recent fiscal year if the proposed
management fee payable to Orbitex Management had been
in effect, based on ADGVF's assets as of March 31,
1999 of approximately $8.0 million.
12 MONTHS ENDED March 31, 1999
- --------------------------------------------------------
% of Average
DailyNet
Assets Amount of Fee % Change
- --------------------------------------------------------
MANAGEMENT FEE
Present Fee 1.00% $ 88,174
Proposed Fee 0.75% $ 66,130
Difference (0.25)% $(22,044) (0.25)%
ADMINISTRATIVE FEE
Present Fee N/A $ 31,679
Proposed Fee 0.10% $40,000
Difference N/A $ 8,321 0.26%
The following table describes the fees and
expenses that an ADGVF stockholder may pay in
connection with an investment in ADGVF today and in
OGF on a pro forma basis.
Shareholder Fees
(Fees paid directly
Fund Orbitex Growth
from your investment) ADGVF Class A
Maximum Sales Charge 4.75% 5.75%
(load) on Purchases
(as a percentage of
offering price)
Sales charge on None None
Reinvested Dividends
Redemption Fees None None
Exchange Fees None None
Annual Operating Expenses
(Expenses that are deducted
Growth Fund Orbitex
from fund assets) ADGVF Class A
Advisory Fee 1.00% 0.75%
Distribution and/or
Service Fee (12b-1) 0.35% 0.40%
Other Annual Expenses 1.78% 16.88%
Total Fund Operating Expenses 3.13% 18.03%
The following example4 indicates both for the current expenses of ADGVF and
the expenses of OGF, the direct and indirect expenses an investor could expect
to incur in a one-year, three-year, five-year and ten-year period, respectively:
One Year Three Years Five years Ten Years
Current ADGVF $ 766 $1,397 $2,037 $3,750
Current of OGF: $2,164 $4,747 $6,701 $9,749
The OGF Agreement may be terminated at any time
by either party thereto, without the payment of any
penalty, upon sixty (60) days' prior written notice to
the other party; provided, that in the case of
termination by the Orbitex Group of Funds, such action
has been authorized (i) by resolution of the Orbitex
Group of Funds' Board of Trustees, including the vote
or written consent of Trustees of the Orbitex Group of
Funds who are not parties to OGF Agreement or
interested persons of either party thereto, or (ii) by
vote of a majority of the outstanding voting
securities of the Orbitex Group of Funds.
Securities held by OGF may also be held by other
funds or clients for which Orbitex Management acts as
a manager or adviser. Securities may be held by, or
be appropriate investments for, OGF as well as such
other clients of Orbitex Management. Because of
different objectives or other factors, a particular
security may be bought for one or more clients when
one or more clients are selling the same security. If
purchases or sales of securities for OGF, or other
funds or clients for which Orbitex Management acts as
manager or adviser arise for consideration at or about
the same time, transactions in such securities will be
made, insofar as feasible, for the respective funds
and clients in a manner deemed equitable to all. To
the extent that transactions on behalf of more than
one client of Orbitex Management during the same
period may increase the demand for securities being
purchased or the supply of securities being sold,
there may be an adverse effect on price.
The advisory services of Orbitex Management to
OGF are not exclusive under the terms of the Orbitex
Growth Fund Agreement, and Orbitex Management is also
free to, and does, render such services to others.
Pro Forma Capitalization
The capitalization of ADGVF and OGF as of April
30, 1999, and their pro forma combined capitalization
as of that date after giving effect to the
Reorganization are as follows:
(Unaudited) (Unaudited) Pro Forma
OGF Class A ADGVF Combined
Aggregate Net Assets $1,421,648 $7,904,113 $9,352,761
Shares Outstanding 76,173 495,664 499,759
Net Asset Value Per Share $ 18.66 $ 15.95 $ 18.66
Comparative Investment Policies and Styles
ADGVF's investment objective is medium-term
capital growth, income and safety through investments
in common stocks, preferred stocks (or common stock
equivalents, such as convertible securities), money
market instruments and corporate, government and
agency debt securities. Up to 75% of the Fund's
assets normally are invested in selected equity
securities. Normally, 25% of the Fund's assets are
invested in government, agency or corporate notes
(usually two to ten year maturities at the time of
purchase) or in short-term money market instruments,
or cash or cash equivalents (including repurchase
agreements with respect to obligations of the U.S.
Government, its agencies or instrumentalities,
maturing in seven days or less).
The adviser to ADGVF generally seeks to purchase
equity securities it believes are priced at a discount
to or below their long-term fundamental value. This
strategy includes a dividend-yield test that seeks to
determine the historical trading ranges of companies'
securities and to identify companies whose dividend
yields are near their highs for the preceding five to
seven years. In addition, the adviser to ADGVF
normally reviews historic, absolute and relative
ranges of the traditional value analysis factors
seeking one or more of the following characteristics:
above-average dividend yield, low stock price in
relation to book value, low price-to-earnings ratio,
low price-to-cash flow ratio, low price-to-sales
ratio, low corporate leverage or high
normalized-earnings power. The adviser to ADGVF also
endeavors to determine which of these relationships is
relevant to a portfolio company or its industry in
determining over-valuation and under-valuation. Prior
to buying a company's securities, the adviser
generally looks for a "value catalyst" - some
fundamental change occurring that might cause the
securities markets to recognize the long-term
fundamental value. The adviser to ADGVF also seeks to
sell a Fund investment as its market price approaches
the adviser's estimated fundamental value and reinvest
the proceeds in other securities offering a greater
discount to fundamental value.
ADGVF employs a value-oriented strategy for
selecting investments with a secondary focus on growth
stocks; and Orbitex Growth Fund employs a
growth-oriented strategy for selecting investments
with a secondary focus on value stocks. In other
words, the adviser to OGF employs measures of
intrinsic value, such as the company's
price-to-earnings ratio, historical trends and cash
flows to select investments for OGF. Unlike ADGVF,
however, in addition to limiting its investment to
securities that meet traditional value investing
criteria, OGF also seeks companies that the adviser to
OGF believes will experience earnings and cash flow
growth. Also, even though the Orbitex Growth Fund is
permitted to invest in the securities of foreign
issuers, it typically does not do so to the same
extent that ADGVF has historically been permitted to
do. In addition, OGF does not seek current income,
and consequently does not invest any significant
portion of its assets in debt securities.
ADGVF's fundamental investment restrictions are
virtually identical to those of the Orbitex Growth
Fund. The text of ADGVF's investment restrictions and
OGF's investment restrictions are attached hereto as
Appendix B.
The Orbitex Group of Funds
General. The Orbitex Group of Funds, like
ADGVF, is an open-end management investment company.
Its principal executive offices are at 410 Park
Avenue, New York, New York 10022 and its telephone
number is 1-888-ORBITEX. The Prospectus of the
Orbitex Group of Funds, as filed with the SEC on July
12, 1999 (File No. 333-20635), which accompanies the
Prospectus/Proxy, is incorporated herein by reference
and forms part of this Prospectus/Proxy Statement in
its entirety. The financial statements of the Orbitex
Group of Funds for the period ended April 30, 1999 are
attached hereto as Appendix C.
The Orbitex Group of Funds was established
pursuant to the Trust Instrument. Currently, the
Orbitex Group of Funds consists of six funds, the
Orbitex Strategic Natural Resources Fund, the Orbitex
Info-Tech & Communications Fund, the Orbitex Focus 30
Funds, the Orbitex Health and Biotechnology Fund, the
Orbitex Cash Reserves Fund and OGF. Each fund is a
separate investment portfolio and has its own
investment objectives, programs, policies and
restrictions.
Each fund is managed by Orbitex Management,
which directs the day-to-day operations of each fund.
American Data Services, an affiliate of Orbitex
Management, serves as administrator, custodian,
accounting services agent, transfer agent and dividend
dispensing agent for: Orbitex Focus 30 Fund, Orbitex
Cash Reserves Fund and Orbitex Health & Bio-Technology
Fund. State Street Bank and Trust Company serves as
sub-administrator, custodian, accounting services
agent, transfer agent and dividend dispensing agent
for: Orbitex Strategic Natural Resource Fund, Orbitex
Info Tech & Communications Fund and Orbitex Growth
Fund.
Certain Comparative Information about Maryland funds
and Delaware Funds
Summary of the Trust Instrument and By-Laws.
OGF has been formed as one of several series
established by the Orbitex Group of Funds pursuant to
the Trust Instrument and under Delaware law. As such,
the operations of OGF will be governed by the Trust
Instrument, the Orbitex Group of Funds' By-Laws (the
"By-Laws") and applicable Delaware law, rather than by
ADFI's Articles of Incorporation, ADFI's By-Laws and
Maryland Law. The operations of OGF will be subject
to the provisions of the 1940 Act, the rules and
regulations of the SEC thereunder and applicable state
securities law. The Trust Instrument and By-Laws will
govern OGF. In addition, the Orbitex Group of Funds'
By-Laws require the affirmative vote of at least a
majority of the Trustees to amend the provisions of
the By-Laws.
Trustees of the Orbitex Group of Funds. Subject
to the provisions of the Trust Instrument, the
operations of OGF are supervised by the Trustees. The
responsibilities, powers and fiduciary duties of the
Trustees will be substantially the same as those of
the directors of ADFI. Under Maryland Law, a director
of ADFI may be removed with or without cause only by
the affirmative vote of a majority of shares entitled
to vote for the election of directors. The provisions
of the Trust Instrument would permit the Board of
Trustees to remove a Trustee with or without cause by
action of two-thirds of the Trustees or by the vote of
holders of shares of beneficial interest ("Beneficial
Owners") of two-thirds of the shares of the Orbitex
Group of Funds present, in person or represented by
proxy, at a special meeting of stockholders called for
such purpose. The Trust Instrument also requires a
vote of a majority of the Trustees or the vote of
Beneficial Owners of a majority of the outstanding
shares of the Orbitex Group of Funds to amend such
removal provision. The incumbent Trustees of the
Orbitex Group of Funds will remain as the Trustees of
the Orbitex Group of Funds upon consummation of the
Reorganization.
Series of Delaware Trusts and Maryland
Corporations. The Trust Instrument permits the Board
of Trustees to create one or more series of the
Orbitex Group of Funds and, with respect to each
series, to issue an unlimited number of full or
fractional shares of that series or of one or more
classes of shares of that series. Each share of a
series of a Delaware Trust, like each share of a
series of a Maryland corporation, represents an equal
proportionate interest with each other share in that
series, none having priority or preference over
another. The directors of ADFI have substantially
similar rights under ADFI's Articles of Incorporation
and Maryland law, except that they are required to
specify a fixed number of shares authorized for
issuance. Delaware law also provides that liabilities
arising under a series shall only be enforceable
against that series and not the entire business trust
or any other series thereunder if (i) the trustees
maintain separate and distinct records for each
series, (ii) the trustees hold and account for the
assets of each series separately from the other assets
of the business trust or any series thereof, (iii) if
the trust instrument so provides and (iv) if the
business trust's certificate of trust sets forth
notice of such limited liability. As the Trust
Instrument provides for such limited liability, the
Orbitex Group of Funds' Certificates of Trust gives
notice of such limited liability and the Trustees
maintain separate records and assets for each series,
any liability arising under one series would not
affect the other series. Maryland law has no such
provision.
Delaware Trust Beneficial Owner Liability and
Maryland Corporation Stockholder Liability. One area
of difference between the two forms of organizations
is the potential liability of Beneficial Owners and
ADGVF stockholders. Under Delaware law, Beneficial
Owners generally are not personally liable for the
obligations of a Delaware business trust, such as the
Orbitex Group of Funds. A Beneficial Owner is
entitled to the same limitation of liability extended
to stockholders of private, for-profit corporations.
Similar statutes or other authority limiting
Beneficial Owner liability, however, do not exist in
most other states. As a result, to the extent that
the Orbitex Group of Funds or a Beneficial Owner
thereof is subject to the jurisdiction of courts in
those states, the courts may not apply Delaware law,
thereby subjecting the Beneficial Owner to liability.
To guard against this risk, the Trust Instrument (i)
contains an express disclaimer of Beneficial Owner
liability for acts or obligations of the Orbitex Group
of Funds and requires that notice of such disclaimer
be given in each agreement, obligation and instrument
entered into by the Orbitex Group of Funds or its
Trustees and (ii) provides for indemnification out of
the Orbitex Group of Funds' property for any
Beneficial Owner held personally liable for the
obligations of the Orbitex Group of Funds. Thus, the
risk of a Beneficial Owner incurring financial loss
beyond his or her investment because of Beneficial
Owner liability is limited to circumstances in which
(i) a court refuses to apply Delaware law, (ii) no
contractual limitation of liability is in effect or
(iii) the Orbitex Group of Funds is unable to meet its
obligations to indemnify a Beneficial Owner. In light
of Delaware law, the nature of OGF's business and the
nature of its assets, the Board believes that the risk
of personal liability to a Beneficial Owner is
extremely remote.
Stockholders of a Maryland corporation currently
have no personal liability for the corporation's acts
or obligations, except that a stockholder may be
liable to the extent that: (i) the dividends he or she
receives exceed the amount which properly could have
been paid under Maryland law, (ii) the consideration
paid to him by the Maryland corporation for his or her
stock was paid in violation of Maryland law or (iii)
he or she otherwise receives any distribution, payment
or release which exceeds the amount which he or she
could properly receive under Maryland law.
Liability of Directors in Maryland and Trustees
in Delaware. Maryland law provides that in addition
to any other liability imposed by law, the directors
of a Maryland corporation may be liable to a Maryland
corporation: (i) for voting or assenting to the
declaration of any dividend or other distribution of
assets to stockholders which is contrary to Maryland
law, (ii) for voting or assenting to certain
distributions of assets to stockholders during
liquidation of the corporation, and (iii) for voting
or assenting to a repurchase of the shares of a
Maryland corporation in violation of Maryland law. In
the event of any litigation against the directors or
officers of ADFI, Maryland law permits ADFI to
indemnify a director or officer for certain expenses
and to advance money for such expenses only if he or
she demonstrates that he or she acted in good faith
and reasonably believed that his or her conduct was in
the best interest of ADFI. In addition, ADFI's
Articles of Incorporation limit the personal liability
of directors and officers to the corporation and its
stockholders for monetary damages, except to the
extent that a judgment or other final adjudication
adverse to the director or officer is entered in a
proceeding based on a finding in the proceeding that
the director's or officer's action, or failure to act,
was the result of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
Under Delaware law, a trustee of a business
trust, while acting in such capacity, is not
personally liable to any person other than the
business trust and beneficial owners for any act,
omission or obligation of the business trust or any
trustee thereof. In addition, to protect the Trustees
against such liability, the Trust Instrument provides
that the Trustees will not be liable to any person in
connection with the assets or affairs of the Orbitex
Group of Funds and that a Trustee will not be liable
for any errors of judgment or mistakes of fact or law;
but nothing in the Trust Instrument protects a trustee
against any liability to the Orbitex Group of Funds or
its Beneficial Owners to which he or she would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his or her
office.
Voting Rights of Maryland Corporation
Stockholders and Delaware Beneficial Owners. Neither
Maryland corporations nor Delaware business trusts are
required to hold annual meetings. ADFI's By-laws,
however, require ADFI to hold an annual meeting of
stockholders in every year in which the 1940 Act
requires stockholders to elect directors, approve an
investment advisory agreement, ratify the selection of
an independent public accountant or approve a
distribution agreement. Maryland law and the Articles
of Incorporation and By-laws of ADFI provide that a
special meeting of stockholders may be called by
(i) the Chairman of the Board, (ii) the President of
ADFI, (iii) a majority of the Board of Directors,
(iv) for matters not substantially the same as a matter
voted on at any special meeting of the shareholders
held during the preceding twelve (12) months, the
holders of shares representing at least 25% of the
shares entitled to vote at such meeting and (v) for
matters substantially the same as a matter voted on at
any special meeting of the shareholders held during
the preceding twelve (12) months, the holders of
shares representing at least 50% of the shares
entitled to vote at such meeting. The Trust
Instrument provides that Trustees may call special
meetings of Beneficial Owners from time to time for
any purpose as may be prescribed by Delaware law, the
Trust Instrument or the Orbitex Group of Funds'
By-laws. The Trust Instrument, however, does not
grant Beneficial Owners the right to call such special
meetings.
The Trust Instrument provides that the
Beneficial Owners have the power to vote only with
respect to (i)the election or removal of Trustees as
provided therein, (ii) the approval or termination of
investment advisory agreements or distribution
contracts, (iii) the termination or reorganization of
the Orbitex Group of Funds or any series of the
Orbitex Group of Funds, (iv) with respect to
amendments of the Trust Instrument, to the extent the
amendment adversely affect the rights of the
Beneficial Owners, and (v) with respect to such
additional matters as may be required by law, the
Trust Instrument, By-Laws or as the Trustees may
consider necessary or desirable. ADFI's Articles of
Incorporation and Maryland law generally give
stockholders substantially similar voting rights. The
Trust Instrument requires 30% of the Beneficial Owners
of shares entitled to vote to establish a quorum for
the transaction of business at a meeting of Beneficial
Owners. ADFI's Articles of Incorporation require a
majority of the holders of shares present, in person
or by proxy, at the meeting to constitute a quorum.
The Trust Instrument provides that Beneficial
Owners of each series also have the power to vote on
any matter required to be submitted to the Beneficial
Owners by the 1940 Act, Delaware law or otherwise.
Under the Trust Instrument, any matter affecting a
particular series will not be considered approved
unless approved by the required vote of the Beneficial
Owners of that series, and, to the extent permitted by
the 1940 Act, only Beneficial Owners of the affected
series are entitled to vote on matters concerning that
series. Subject to the foregoing, Beneficial Owners
are not required to vote separately on the selection
of independent accountants, the election of trustees
or any submission with respect to a contract with a
principal underwriter or distributor.
Right of Inspection. Maryland law provides that
persons who have been stockholders of record for six
(6) months or more and who own at least five percent
of the shares of ADGVF may inspect the books of
account and stock ledger of ADGVF. OGF's Beneficial
Owners have the same rights to inspect the records,
accounts and books of OGF as are permitted
stockholders of a Delaware business corporation.
Currently, each stockholder of a Delaware business
corporation is permitted to inspect the records,
accounts and books of a business corporation for any
legitimate business purposes.
The foregoing is only a summary of certain of
the differences between ADFI, its Articles of
Incorporation and By-laws and Maryland law and the
Orbitex Group of Funds, the Trust Instrument, the
By-Laws and Delaware Law. It is not a complete list of
differences. ADGVF Stockholders should refer to the
provisions of such Articles of Incorporation, By-laws
and Maryland law and the Trust Instrument, By-laws and
Delaware Law directly for a more thorough comparison.
ADGVF Stockholders on the Record Date may obtain
copies of the organizational documents of ADGVF by
calling the telephone number set forth on the first
page of this Proxy Statement.
Federal Income Tax Consequences
It is anticipated that the transactions
contemplated by the Reorganization Agreement will be
tax-free. Consummation of the Reorganization is
subject to receipt of an opinion of Rogers & Wells
LLP, counsel to the Orbitex Group of Funds, that, under
Section 368(a) of the Internal Revenue Code of 1986,
as amended, the merger of ADGVF into OGF pursuant to
the Reorganization Agreement will not give rise to the
recognition of income, gain or loss for federal income
tax purposes to ADGVF or the ADGVF Stockholders. An
ADGVF Stockholder's adjusted basis for tax purposes in
shares of OGF after the Reorganization will be the
same as his or her adjusted basis for tax purposes in
the shares of ADGVF Common Stock immediately before
the Reorganization. Each ADGVF Stockholder should
consult his or her own tax adviser with respect to the
state and local tax consequences of the proposed
transaction.
Accounting Consequences
The Reorganization will be accounted for as a
business combination under generally accepted
accounting principles for investment companies.
Expenses
The expenses related to the Reorganization will
be borne by Orbitex Management.
Required Vote
The affirmative vote of a majority of the shares
of ADGVF Common Stock entitled to vote on the
Reorganization is required to approve the
Reorganization. For purposes of the vote for the
Reorganization, abstentions and broker non-votes will
have the same effect as votes cast against the
Reorganization.
Recommendation of the ADGVF Board of Directors
The Board has unanimously approved the
Reorganization and has determined that the
Reorganization is in the best interests of ADGVF and
that the interests of existing stockholders of ADGVF
will not be diluted as a result of the
Reorganization. THE ADGVF BOARD RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE REORGANIZATION.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Board, the following
persons owned of record 5% or more of ADGVF Common
Stock outstanding shares at June 24, 1999 and have as
their business address American Diversified Funds,
Inc., 410 Park Avenue, New York, New York 10022:
Name and Address of Amount and Nature of Ownership
Beneficial Owner Beneficial Ownership of Class
- ------------------------------------------------------------------------------
James B. Rea, Jr. and immediate family 8.75
Gerald H. Borden 5.53
R. Paul Toeppen 15.18
As of June 24, 1999 there were 479,525 shares
outstanding, of which 162,856.401 shares (or 33.95% of
the total outstanding shares) were owned beneficially,
directly or indirectly, controlled or held with power
to vote, by the directors and officers of the Fund.
OTHER MATTERS
The Board does not intend to bring any matters
before the Special Meeting other than the
Reorganization described above, and the Board is not
aware of any other matters to be brought before the
Special Meeting thereof by others. If any other
matters legally come before the Special Meeting, it is
intended that the accompanying proxy will be voted on
such matters in accordance with the best judgment of
the persons named in said proxy.
In the event that sufficient votes in favor of
the proposals set forth in the Notice of Special
Meeting of Stockholders are not received by the date
of the Meeting, the proxyholders may propose one or
more adjournments of the Special Meeting for a period
or periods of not more than sixty (60) days in the
aggregate to permit further solicitation of proxies,
even though a quorum is present. Any such adjournment
will require the affirmative vote of a majority of the
votes cast on the question, in person or by proxy, at
the session of the Special Meeting to be adjourned.
Proxies which are instructed to be voted against the
matters to be considered at the Special Meeting when
it convenes will be voted against a proposal to
adjourn.
ADDITIONAL INFORMATION
Persons Making the Solicitation. The
solicitation of proxies may be made by, among others,
directors of ADFI and officers and employees of
Orbitex Management.
Shareholders Communication Corporation ("SCC")
has been retained to assist in the solicitation of
proxies. SCC shall be paid approximately $3,000 by
Orbitex Management. In addition, Automatic Data
Processing ("ADP") has been retained to assist in the
voting of proxies by telephone or the internet. ADP
will be paid approximately $3,500 by Orbitex
Management. Orbitex Management will reimburse ADP and
SCC for their related out-of-pocket expenses. The
solicitation of proxies will be largely by mail, but
may include, without additional cost to ADGVF,
telephone, telegraphic or oral communications by
directors, officers or employees of Orbitex Management.
The expense of preparation, printing and mailing
this Prospectus/Proxy Statement and the other proxy
materials that accompany the Prospectus/Proxy
Statement will be borne by Orbitex Management.
Orbitex Management will reimburse banks, brokers and
others for their reasonable expenses in forwarding
proxy solicitation materials to the beneficial owners
of the ADGVF Common Stock.
RESPECTFULLY SUBMITTED,
M. Fyzul Khan
Secretary
Dated: August 18, 1999
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT
THE SPECIAL MEETING AND WHO WISH TO HAVE THEIR SHARES
VOTED ARE URGED TO VOTE THEIR SHARES BY MAIL BY
SIGNING AND RETURNING THE PROXY CARD IN THE ENCLOSED
ENVELOPE (NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES), OR BY TELEPHONE OR THROUGH THE
INTERNET BY FOLLOWING THE SIMPLE INSTRUCTIONS ON THE
PROXY CARD.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR
FULL TITLE AS SUCH, WHERE STOCK IS HELD JOINTLY, BOTH
SIGNATURES ARE REQUIRED.
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
ORBITEX GROUP OF FUNDS
AND
AMERICAN DIVERSIFIED FUNDS, INC.
Dated as of July 8, 1999
TABLE OF CONTENTS
(continued)
A-ii
TABLE OF CONTENTS
A-i
ARTICLE I CERTAIN DEFINITIONS................A-1
ARTICLE II THE REORGANIZATION.................A-3
Section 2.1 The Reorganization.............A-3
Section 2.2 Closing........................A-3
Section 2.3 Trustees and Officers
of the Surviving Entity......A-4
ARTICLE III VALUATION AND CONVERSION OF SHARES.A-4
Section 3.1 Exchange of Shares.............A-4
Section 3.2 Exchange of Certificates.......A-4
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF THE COMPANY..........A-5
Section 4.1 Organization and Qualification.A-5
Section 4.2. Authority, Authorization and
Enforceability.............. A-5
Section 4.3 Capitalization.................A-5
Section 4.4 Subsidiaries...................A-5
Section 4.5 No Conflicts...................A-5
Section 4.6 Financial Statements;
No Undisclosed Liabilities...A-6
Section 4.7 Books and Records..............A-6
Section 4.8 Legal Proceedings..............A-6
Section 4.9 No Brokers or Finders..........A-6
Section 4.10 Investment Company
Registration.................A-6
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF THE TRUST............A-7
Section 5.1 Organization and Qualification.A-7
Section 5.2 Authority, Authorization and
Enforceability...............A-7
Section 5.3 Capitalization.................A-7
Section 5.4 No Conflicts...................A-7
Section 5.5 Legal Proceedings..............A-7
Section 5.6 No Brokers or Finders..........A-7
ARTICLE VI PRE-CLOSING COVENANTS..............A-8
Section 6.1 Investigations
and Examinations.............A-8
Section 6.2 Conduct of Business............A-8
Section 6.3 Covenant to Proceed............A-8
Section 6.4 Notice of Material Changes.....A-8
Section 6.5 Regulatory Approvals...........A-8
Section 6.6 No Default.....................A-8
Section 6.7 Preparation of Proxy Materials.A-8
Section 6.8 Investment Company
Registration.................A-9
ARTICLE VII CONDITIONS TO THE CLOSING..........A-9
Section 7.1 Conditions Precedent to the
Obligations of the Company
on behalf of the Fund to
Complete the Closing........ A-9
Section 7.2 Representations, Warranties
and Covenants................A-9
Section 7.3 No Injunctions.................A-9
Section 7.4 SEC Related Matters............A-9
Section 7.5 Closing Certificates...........A-9
Section 7.6 Opinion of Counsel.............A-9
Section 7.7 Tax Opinion of Counsel.........A-9
Section 7.8 Closing Documents..............A-9
Section 7.9 Fund Stockholders' Meeting.....A-10
Section 7.10.Conditions Precedent to the
Obligations of the Trust on
behalf of OGF to Complete
the Closing..................A-10
Section 7.11 Representations, Warranties
and Covenants...............A-10
Section 7.12 No Injunctions................A-10
Section 7.13 Closing Certificates..........A-10
Section 7.14 Opinion of Counsel............A-10
Section 7.15 Tax Opinion of Counsel........A-10
Section 7.16 Closing Documents.............A-10
Section 7.17 Governmental and Regulatory
Consents and Approvals......A-10
Section 7.18 Good Standing Certificates....A-10
Section 7.19 Due Diligence.................A-11
Section 7.20 Fund's Stockholders' Meeting..A-11
ARTICLE VIII SURVIVAL OF REPRESENTATIONS
AND WARRANTIES.....................A-11
ARTICLE IX TERMINATION........................A-11
ARTICLE X MISCELLANEOUS......................A-12
Section 10.1 Publicity; Confidentiality....A-12
Section 10.2 Waivers and Amendments........A-12
Section 10.3 Governing Law.................A-12
Section 10.4 Notices.......................A-12
Section 10.5 Binding Effect; Assignment....A-13
Section 10.6 Variations in Pronouns........A-13
Section 10.7 Counterparts..................A-13
Section 10.8 Complete Agreement............A-13
Section 10.9 Headings......................A-13
Section 10.10 Severability of Provisions....A-13
A-iii
EXHIBITS
EXHIBIT A - Officer's Certificate of the Trust
EXHIBIT B - Assistant Secretary's Certificate of the Trust
EXHIBIT C - Opinion of Counsel to the Trust
EXHIBIT D - Officer's Certificate of the Fund
EXHIBIT E - Secretary's Certificate of the Fund
EXHIBIT F - Opinion of Counsel to the Fund
APPENDICES
APPENDIX 2.1 - Excluded Assets and Liabilities
A-17
A-1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") dated as of July 8, 1999, by and between
ORBITEX GROUP OF FUNDS, a Delaware business trust (the
"Trust"), on behalf of its series, ORBITEX GROWTH FUND
("OGF"), and AMERICAN DIVERSIFIED FUNDS, INC., a
Maryland corporation (the "Company"), on behalf of its
series, AMERICAN DIVERSIFIED GLOBAL VALUE FUND (the
"Fund").
WHEREAS, the Board of Trustees of the Trust and
the Board of Directors of the Company have each
determined that it is advisable and in the best
interests of their respective shareholders to
consummate, and have approved, the business
combination transaction provided for herein pursuant
to which the Fund would sell, transfer and assign to
the Trust, and the Trust would purchase from the Fund,
certain of the assets and certain of the liabilities
of the Fund (the "Reorganization"); and
WHEREAS, ORBITEX MANAGEMENT, INC., a New York
corporation ("Orbitex"), has been engaged pursuant to
Investment Advisory Agreement, dated May 5, 1999, by
and between Orbitex and the Company on behalf of the
Fund to serve as interim investment adviser to the
Fund in accordance with Rule 15a-4 under the 1940 Act;
and
WHEREAS, it is the intention of the parties that
the Reorganization shall qualify as a tax-free
reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Trust, on behalf of OGF, and the
Company, on behalf of the Fund, desire to make certain
representations, warranties and agreements in
connection with the Reorganization and also to
prescribe various conditions to the Reorganization.
NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants,
representations and warranties herein contained and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is
agreed:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms
have the following meanings:
"Action or Proceeding" means any action, suit,
proceeding or arbitration by any Person, or any
investigation or audit by any Governmental or
Regulatory Body.
"ADS" has the meaning specified in
Section 3.1(c).
"Affiliate" means, with respect to any Person,
any other Person controlling, controlled by or under
common control with such first Person.
"Assumed Assets" has the meaning specified in
Section 2.1.
"Assumed Liabilities" has the meaning specified
in Section 2.1.
"Authorities" has the meaning specified in
Section 2.2.
"Books and Records" means the Fund's or OGF's,
as the case may be, minute books, stock transfer
ledgers, financial statements, tax returns and related
work papers and letters from accountants, and other
similar records.
"Business Combination" means, with respect to
any Person, any reorganization, consolidation,
conversion, or combination to which such Person is a
party, any sale, dividend, split or other disposition
of capital stock or other equity interests of such
Person, any sale, dividend or other disposition of all
or substantially all of the assets and properties of
such Person or any sale, dividend or disposition of a
portion of the assets or properties of such Person
(other than in the ordinary course of business).
"Business Day" means a day other than Saturday,
Sunday or a day on which banks located in New York
City are authorized or obligated to close.
"Closing" has the meaning specified in Section
2.3.
"Closing Date" has the meaning specified in
Section 2.3.
"Contract" means any agreement, lease, evidence
of indebtedness, mortgage, indenture, security
agreement or other contract.
"Delaware Law" has the meaning specified in
Section 2.1 hereof.
"Declaration of Trust" has the meaning specified
in Section 5.1.
"Fund" has the meaning specified in the preamble
hereof.
"Fund Share" has the meaning specified in
Section 4.3.
"GCLM" has the meaning specified in Section 2.1.
"Governmental or Regulatory Body" means any
court, tribunal, arbitrator or any government or
political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority,
official or instrumentality of any such government or
political subdivision.
"Law" means any law, statute, rule, regulation,
ordinance and other pronouncement having the effect of
law of any Governmental or Regulatory Body.
"Liabilities" means all indebtedness,
obligations and other liabilities of the Fund or OGF,
as the case may be, whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to
become due.
"Material Adverse Effect" as to any Person means
a material adverse effect on the business, prospects,
results of operations or financial condition of such
Person.
"1940 Act" means the Investment Company Act of
1940, as amended.
"1933 Act" means the Securities Act of 1933, as
amended.
"OGF" has the meaning specified in the preamble
hereof.
"OGF Share" has the meaning specified in Section
3.1(b).
"Orbitex" has the meaning specified in the
preamble hereof.
"Order" means any writ, judgment, decree,
injunction or similar order of any Government or
Regulatory Body, in each case whether preliminary or
final.
"Person" means any individual, corporation,
partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated
organization, Governmental or Regulatory Body or other
entity.
"Proxy Materials" has the meaning specified in
Section 6.8 hereof.
"Regulatory Reports" has the meaning specified
in Section 4.10.
"Reorganization" has the meaning specified in
the recitals.
"SEC" means the United States Securities and
Exchange Commission.
"Surviving Entity" has the meaning specified in
Section 2.1 hereof.
"Trust" has the meaning specified in the
preamble hereof.
ARTICLE II
THE REORGANIZATION
SectioThe Reorganization.
(a) Subject to the requisite approval of the
stockholders of the Company and to the other terms and
conditions contained herein, the Company agrees to
assign, sell, convey, transfer, and deliver to the
Trust as of the Closing Date certain of the assets of
the Fund of every kind and nature existing on the
Closing Date, other than those assets set forth on
Appendix 2.1 (the "Assumed Assets"). The Trust agrees
in exchange therefor: (i) to assume all of the Fund's
liabilities existing on or after the Closing Date,
whether or not determinable on the Closing Date, other
than those liabilities set forth on Appendix 2.1
hereto (the "Assumed Liabilities") and (ii) to issue
and deliver to the Fund a number of full and
fractional OGF Shares having an aggregate net asset
value equal to the value of the Assumed Assets of the
Fund less the Assumed Liabilities of the Fund,
determined as provided for under Article III.
(b) The Assumed Assets of the Fund to be acquired by
the Trust shall include (except for the excluded
assets set forth on appendix 2.1 hereto), without
limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends
receivables), claims, chooses in action, and other
property owned by the Fund, and any deferred or
prepaid expenses shown as an asset on the books of the
Fund on the Closing Date. The Fund will pay or cause
to be paid to the Trust any dividend or interest
payments received by it on or after the Closing Date
with respect to the Assumed Assets transferred to the
Trust hereunder, and the Trust will retain any
dividend or interest payments received by it after the
Valuation Time with respect to the Assumed Assets
transferred hereunder without regard to the payment
date thereof.
(c) The Assumed Liabilities shall include (except
for the excluded liabilities set forth on Appendix 2.1
hereto) all of the Fund's liabilities, debts,
obligations, and duties, of whatever kind or nature,
whether absolute, accrued, contingent, or otherwise,
whether or not arising in the ordinary course of
business, whether or not determinable on the Closing
Date, and whether or not specifically referred to in
this Agreement. Notwithstanding the foregoing, the
Company agrees to use its best efforts to discharge
all of the Fund's known liabilities prior to the
Closing Date, other than liabilities incurred in the
ordinary course of business.
(d) Any reporting responsibility of the Company with
respect to the Fund is and shall remain the Company's
responsibility.
(e) Any transfer taxes payable upon issuance of the
OGF Shares in a name other than that of the registered
holder on the Fund's books of the Fund shares
constructively exchanged for the OGF Shares shall be
paid by the person to whom such OGF Shares are to be
issued, as a condition of such transfer.
SectioClosing. The closing of the Reorganization (the
"Closing") will take place at the offices of Rogers &
Wells LLP, 200 Park Avenue, New York, New York 10166,
or at such other place as the parties hereto mutually
agree, on a date and at a time to be specified by the
parties, which shall in no event be later than 10:00
a.m., local time, on the fifth Business Day following
satisfaction of the conditions set forth in
ARTICLE VII or, if permissible, waived in accordance
with this Agreement, or on such other date as the
parties hereto mutually agree (the "Closing Date").
Following the closing on the Closing Date, the parties
shall file the Certificates with the Authorities.
SectioTrustees and Officers of the Surviving Entity.
From and after the Closing Date, the trustees and
officers of the Surviving Entity shall be the same
persons who were the trustees and officers of the
Trust immediately prior to the Closing Date, and each
of them shall continue in office until their
successors shall have been duly elected or appointed
and qualified or until their earlier death,
resignation or removal in accordance with the
Surviving Entity's Declaration of Trust and applicable
law.
ARTICLE III
VALUATION AND CONVERSION OF SHARES
SectioExchange of Shares.
(a) The Valuation Time shall be as of the close of
business of the New York Stock Exchange on the Closing
Date, or such other date as may be mutually agreed
upon in writing by the parties hereto (the "Valuation
Time").
(b) The net asset value per share of the shares of
OGF to be delivered to the Fund (the "OGF Shares"),
the value of the Assumed Assets of the Fund
transferred hereunder, and the value of the Assumed
Liabilities of the Fund to be assumed hereunder shall
in each case be determined as of the Valuation Time.
(c) All computations pursuant to this Section shall
be made by or under the direction of PFPC, Inc., as
the Fund's administrator, and American Data Services,
Inc. ("ADS"), as the Trust's administrator, in
accordance with their regular practices.
SectioExchange of Certificates. On the Closing Date,
the Trust shall establish an open account in the share
records of OGF in the name of each stockholder of the
Fund and representing the number of OGF Shares having
an aggregate net asset value equal to the value of the
Assumed Assets of the Fund transferred hereunder less
the Assumed Liabilities, determined as provided in
Section 3.1. The accounts of stockholders of the Fund
who have not been issued certificates representing
Fund shares and whose shares are held in open account
with PFPC, Inc., as the Fund's transfer agent, shall
become open accounts with ADS in its capacity as the
transfer agent for OGF.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Trust
as follows:
SectioOrganization and Qualification. The Company is
a corporation duly incorporated, validly existing and
in good standing under the laws of the State of
Maryland and is duly qualified, licensed or admitted
to do business and is in good standing as a foreign
corporation under the laws of the State of California
and each other jurisdiction in which the nature of the
business to be conducted by it makes such
qualification, licensing or admission necessary,
except in such other jurisdictions where the failure
to be so qualified, licensed or admitted and in good
standing would not, individually or in the aggregate,
have a Material Adverse Effect on the Fund or its
properties and assets.
SectioAuthority, Authorization and Enforceability.
The execution, delivery and performance by the Company
of this Agreement and the consummation of the
transactions contemplated herein have been duly and
validly authorized by the Board of Directors of the
Company (the "Board") and the Board has resolved to
recommend the Reorganization to the Fund's
stockholders and to call a special meeting of the
stockholders for the purpose of approving the
Reorganization and this Agreement, to be held as soon
as is practicable after the execution of this
Agreement, but in no event later than sixty (60) days
after OGF has furnished the Proxy Materials to the
Fund's stockholders. Other than the affirmative vote
of the holders of a majority of the Fund Shares at the
Fund's stockholders meeting or any adjournment
thereof, no other corporate action on the part of the
Company or its stockholders is necessary to authorize
the execution, delivery and performance of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby. This
Agreement has been duly and validly executed and
delivered by the Company on behalf of the Fund and is
a legal, valid and binding obligation of the Company
and the Fund enforceable in accordance with its terms.
SectioCapitalization. The authorized capital of the
Fund consists of 20,000,000 shares of common stock,
$1.00 par value per share, of which as of July 6,
1999, 476,311.328 shares have been issued and are
outstanding (each, a "Fund Share" and collectively,
the "Fund Shares"). The Fund Shares are duly
authorized, validly issued, outstanding, fully paid
and nonassessable. The Fund has no shares of its
capital stock reflected on the Books and Records of
the Fund as treasury shares. There are no outstanding
options, warrants or other rights of any kind to
acquire from the Fund any shares of capital stock or
equity interests of the Fund or securities convertible
into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire, any such
additional shares, nor is the Fund committed to issue
any stock appreciation or similar rights or option,
warrant, right or security.
SectioSubsidiaries. The Company has no subsidiaries.
SectioNo Conflicts. Except for consents, approvals,
or waivers to be received prior to Closing, the
execution, delivery and performance by the Company on
behalf of the Fund of this Agreement does not, and the
consummation of the transactions contemplated herein
will not, (i) violate or conflict with the terms,
conditions or provisions of its Articles of
Incorporation, By-Laws or any Contract to which the
Fund is a party or by which it or its assets are
bound, (ii) result in a breach or violation by the
Company or the Fund of any of the terms, conditions or
provisions of any Law or Order, or (iii) require any
consent or approval of, filing with or notice to, any
Governmental or Regulatory Body.
SectioFinancial Statements; No Undisclosed Liabilities.
(a) Prior to the execution of this Agreement, the
Company on behalf of the Fund has delivered to the
Trust on behalf of OGF true and complete copies of the
audited balance sheet of the Fund as of March 31,
1999, and the related audited statements of income and
retained earnings and cash flows for the period then
ended, together with a true and correct copy of the
report on such audited information by Tait, Weller &
Baker, certified public accountants, and all letters
from such accountants with respect to the results of
such audits; and
(b) Except as set forth in the notes thereto, all
such financial statements were prepared in accordance
with generally accepted accounting principles,
consistently applied throughout the periods then
ended, and fairly present the financial condition and
results of operations of the Fund as of the respective
dates thereof and for the respective periods covered
thereby subject, in the case of the unaudited
financial statements, to normal year-end audit
adjustments and the absence of footnotes.
(c) Except as reflected or reserved against in the
audited March 31, 1999 balance sheet or in the notes
thereto, there are no Liabilities against, relating to
or affecting the Company or the Fund or any of their
respective properties and assets, other than those
incurred in the ordinary course of business consistent
with past practice, which, individually or in the
aggregate, would have a Material Adverse Effect on the
Fund or its properties or assets.
SectioBooks and Records. The minute books and other
similar records of the Company as made available to
OGF prior to the execution of this Agreement contain a
true and complete record of all action taken at all
meetings and by all written consents in lieu of
meetings of the stockholders, the Board and committees
of the Board of the Company. The stock transfer
ledgers and other similar records of the Company as
made available to OGF prior to the execution of this
Agreement accurately reflect all record transfers
prior to the execution of this Agreement in the
capital stock of the Fund. The Company does not have
any Books and Records which have not been made
available to OGF.
SectioLegal Proceedings. There is no Action or
Proceeding pending or, to the best of the Company's
knowledge, threatened against, relating to or
affecting the Fund.
SectioNo Brokers or Finders. No agent, broker, finder
or investment or commercial banker, or other Person or
firm engaged by or acting on behalf of the Company in
connection with the negotiation, execution or
performance of this Agreement or any other agreement
contemplated hereby, or the consummation of the
transactions contemplated hereby, is or will be
entitled to any broker's or finder's or similar fees
or other commissions as a result of the consummation
of such transactions.
SectioInvestment Company Registration. The Company is
duly registered as a diversified, open-end management
investment company under the 1940 Act, and under all
applicable state statutes or related laws. The
Company has delivered to OGF a true and complete copy
of the Company's currently effective registration
statement on Form N-1A relating to the Fund, as filed
with the SEC, and has made available to OGF all state
and federal registration forms, all prior Form N-1A
filings relating to the Fund and all reports filed by
the Company with the SEC under the 1940 Act and the
rules promulgated thereunder or otherwise and under
similar state statutes (together, the "Regulatory
Reports") within the last five (5) years. The
information contained in the Regulatory Reports was
true and complete in all material respects as of the
time of filing and, except as indicated on a
subsequent form or report filed before the Closing
Date, continues to be true and complete in all
material respects. Each such registration is in full
force and effect. The Company has timely computed and
publicized the Fund's net asset value in accordance
with the provisions of the 1940 Act.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Company
as follows:
SectioOrganization and Qualification. The Trust was
organized pursuant to an Agreement and Declaration of
Trust, dated December 31, 1996 (the "Declaration of
Trust"), under the laws of the State of Delaware and
is duly qualified, licensed or admitted to do business
and in good standing as a foreign trust under the laws
of each jurisdiction in which the nature of the
business to be conducted by it makes such
qualification, licensing or admission necessary,
except in such jurisdictions where the failure to be
so qualified, licensed or admitted or in good standing
would not, individually or in the aggregate, have a
Material Adverse Effect on the Trust or its properties
and assets.
SectioAuthority, Authorization and Enforceability.
The execution, delivery and performance of this
Agreement by the Trust and the consummation of the
transactions contemplated herein have been duly and
validly authorized by all necessary corporate action
on the part of the Trust. This Agreement has been
duly and validly executed and delivered by the Trust
and is a legal, valid and binding obligation of the
Trust enforceable against it in accordance with its
terms.
SectioCapitalization. The OGF Shares, when issued,
will be duly authorized, validly issued, fully paid
and non-assessable. The Trust is authorized to issue
an unlimited number of no par shares of beneficial
interest with respect to its series including OGF.
SectioNo Conflicts. Except for consents, approvals,
or waivers to be received prior to Closing, the
execution, delivery and performance of this Agreement
by the Trust on behalf of OGF does not, and the
consummation of the transactions contemplated herein
will not, (i) violate or conflict with the terms,
conditions or provisions of the Declaration of Trust,
By-Laws or any Contract to which OGF is a party or by
which it or its assets are bound, (ii) result in a
breach or violation by the Trust or OGF of any of the
terms, conditions or provisions of any Law or Order,
or (iii) require any consent or approval of, filing
with or notice to, any Governmental or Regulatory Body.
SectioLegal Proceedings. There is no Action or
Proceeding pending or, to the best of the Trust's
knowledge, threatened against, relating to or
affecting the Trust or OGF which (i) could reasonably
be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the
transactions contemplated herein or (ii) could
reasonably be expected, individually or in the
aggregate with any other such Action or Proceeding, to
have a Material Adverse Effect on the Trust, OGF or
its properties and assets.
SectioNo Brokers or Finders. No agent, broker, finder
or investment or commercial banker, or other Person or
firm engaged by or acting on behalf of the Trust in
connection with the negotiation, execution or
performance of this Agreement or the consummation of
the transactions contemplated herein, is or will be
entitled to any broker's or finder's or similar fees
or other commissions as a result of the consummation
of such transactions.
ARTICLE VI
PRE-CLOSING COVENANTS
From the date of the execution of this Agreement
through the Closing Date:
SectioInvestigations and Examinations. Each party
will cooperate and will cause its representatives and
agents to cooperate, in all reasonable respects in
connection with the performance by the other party of
its inspection and examination of such party.
SectioConduct of Business. Each party will (i)
conduct its business in the ordinary and normal course
of business consistent with past practice in all
material respects and (ii) comply with any Law and
Order applicable to such business.
SectioCovenant to Proceed. Each party hereto
covenants to use all reasonable efforts within its
control (i) to prevent the breach of any
representation or warranty of such party hereunder,
(ii) to satisfy all covenants of such party and
closing conditions hereunder, (iii) to cooperate with
the other party hereto and to take or cause to be
taken all other actions and do, or cause to be done,
all other things necessary, proper or appropriate to
consummate and make effective the transactions
contemplated by this Agreement and (iv) to promptly
cure any breach of a representation, warranty or
covenant of such party hereunder upon its learning of
same.
SectioNotice of Material Changes. Each party will
notify the other party hereto of any material adverse
change in such party's business, prospects, results of
operations or financial condition as soon as
practicable following such change.
SectioRegulatory Approvals. Each party will (i) use
best efforts and proceed diligently and in good faith
as promptly as practicable to obtain all consents,
approvals or actions of, to make all filings with and
to give all notices to Governmental or Regulatory
Bodies required of the respective party or its
respective Affiliates to consummate the transactions
contemplated hereby and (ii) provide such other
information and communications to such Governmental or
Regulatory Bodies as each such Governmental or
Regulatory Body may reasonably request in connection
therewith. Each party will provide prompt
notification to the other party when any such consent,
approval, action, filing or notice referred to in
clause (i) above is obtained, taken, made or given, as
applicable, and, prior to the Closing, will advise the
other party of any communications (and, unless
precluded by Law, provide copies to the other party of
any such communications that are in writing) with any
Governmental or Regulatory Body regarding any of the
transactions contemplated herein.
SectioNo Default. No party hereto shall do any act or
intentionally omit to do any act which would cause a
breach of any representation, warranty, covenant or
agreement by it under this Agreement.
SectioPreparation of Proxy Materials. The Fund and
OGF shall cooperate with each other in the preparation
of the Registration Statement on Form N-14 including
the prospectus/proxy statement contained therein and
other materials (collectively, the "Proxy Materials")
required to be delivered to the Fund's stockholders
pursuant to the 1933 Act and 1940 Act and any other
applicable federal or state securities laws in
connection with the Reorganization and this Agreement
and to cause such Proxy Materials to be filed with the
SEC as promptly as practicable after the execution of
this Agreement.
SectioInvestment Company Registration. The Company
will provide the Trust and OGF with true and complete
copies of all the Regulatory Reports filed from and
after the date hereof and prior to the Closing Date.
ARTICLE VII
CONDITIONS TO THE CLOSING
SectioConditions Precedent to the Obligations of the
Company on behalf of the Fund to Complete the
Closing. The obligations of the Company on behalf of
the Fund herein are subject to the fulfillment on or
prior to the Closing Date of the conditions set forth
in this Section 7.1 below, any one or more of which
may be waived by the Company.
SectioRepresentations, Warranties and Covenants. The
representations and warranties of the Trust contained
in this Agreement shall be true, correct and complete
in all material respects on and as of the Closing Date
with the same force and effect as though made on and
as of the Closing Date except those representations
and warranties expressly stated herein to be made as
of a specified date shall be true in all material
respects only as of such date. The Trust shall have
performed and complied in all material respects with
its covenants and agreements required by this
Agreement to be performed or complied with by it on or
prior to the Closing Date.
SectioNo Injunctions. No temporary restraining order,
preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the
consummation of this Agreement or the related
transactions shall be in effect.
SectioSEC Related Matters. The Trust on behalf of OFG
shall have filed with the SEC a Registration Statement
on Form N-14 under the 1933 Act and the 1940 Act
relating to the OGF Shares and that such registration
statement, including the Proxy Materials, shall have
become effective and no order shall have issued
withdrawing, suspending or terminating such
effectiveness, no stop order shall have been issued
with respect to the OGF Shares and no proceeding for
any such purpose shall have been initiated or
threatened by the SEC.
SectioClosing Certificates. The Trust shall have
delivered to the Fund a certificate, dated the Closing
Date and executed by the Chairman of the Board, the
President or any Executive or Senior Vice President of
the Trust, substantially in the form and to the effect
of Exhibit A hereto, and a certificate, dated the
Closing Date and executed by the Secretary or
Assistant Secretary of the Trust, substantially in the
form and to the effect of Exhibit B hereto.
SectioOpinion of Counsel. The Fund shall have
received an opinion of Rogers & Wells LLP, counsel to
the Trust, dated the Closing Date, substantially in
the form and to the effect of Exhibit C hereto.
SectioTax Opinion of Counsel. The Fund shall have
received an opinion from Rogers & Wells LLP, counsel
to the Trust, to the effect that the Reorganization
will constitute a tax free reorganization as defined
in Section 368(a) of the Code.
SectioClosing Documents. The Trust will execute and
deliver, or cause to be executed and delivered, to the
Company all documents reasonably requested by the
Company or reasonably necessary to effectuate the
transactions contemplated hereby, including without
limitation, state and local transfer tax and gains tax
returns and any other filings in any applicable
governmental jurisdiction.
SectioFund Stockholders' Meeting. The Reorganization
shall have been approved by the holders of two-thirds
of the Fund Shares, in accordance with the
requirements of the GCLM.
SectioConditions Precedent to the Obligations of the
Trust on behalf of OGF to Complete the Closing. The
obligations of the Trust on behalf of OGF herein are
subject to the fulfillment on or prior to the Closing
Date of the conditions specified in this Section 7.2,
any one or more of which may be waived by the Trust.
SectioRepresentations, Warranties and Covenants. The
representations and warranties of the Company
contained in this Agreement shall be true, correct and
complete in all material respects on and as of the
Closing Date with the same force and effect as though
made on and as of the Closing Date except those
representations and warranties expressly stated herein
to be made as of a specified date shall be true in all
material respects only as of such date. The Company
shall have performed and complied in all material
respects with all covenants and agreements required by
this Agreement to be performed or complied with by it
on or prior to such Closing Date.
SectioNo Injunctions. No temporary restraining order,
preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the
consummation of this Agreement or the related
transactions shall be in effect.
SectioClosing Certificates. The Company shall have
delivered to the Trust a certificate, dated the
Closing Date and executed by the Chairman of the
Board, the President or any Executive Vice President
of the Company, substantially in the form and to the
effect of Exhibit D hereto and a certificate, dated
the Closing Date And executed by the Secretary or any
Assistant Secretary of the Company, substantially in
the form and to the effect of Exhibit E hereto.
SectioOpinion of Counsel. The Trust shall have
received an opinion of Spitzer & Feldman P.C., counsel
to the Fund, dated the Closing Date, substantially in
the form and to the effect of Exhibit F hereto.
SectioTax Opinion of Counsel. The Trust shall have
received an opinion from Rogers & Wells LLP, counsel
to the Trust, to the effect that the Reorganization
will constitute a tax free reorganization as defined
in Section 368(a) of the Code.
SectioClosing Documents. The Company will execute and
deliver, or cause to be executed and delivered, to the
Trust all documents reasonably requested by the Trust
or reasonably necessary to effectuate the transactions
contemplated hereby, including without limitation,
state and local transfer tax and gains tax returns and
any other filings in any applicable governmental
jurisdiction.
SectioGovernmental and Regulatory Consents and
Approvals. Other than the filing provided for by
Section 2.3, all consents, approvals and actions of,
filings with and notices to any Governmental or
Regulatory Body, required under applicable securities
"blue sky" laws, or the failure of which to be
obtained or taken could be reasonably expected to have
a Material Adverse Effect on OGF, or on the ability of
the Trust to consummate the transactions contemplated
hereby, shall have been obtained, all in form and
substance reasonably satisfactory to the Trust and no
such consent, approval or action shall contain any
term or condition which could be reasonably expected
to result in a material diminution of the benefits of
the Reorganization to the Trust or OGF.
SectioGood Standing Certificates. The Company shall
have delivered to the Trust (a) copies of the articles
of incorporation (or other comparable corporate
charter documents), including all amendments thereto,
of the Company certified by the Secretary of State of
the State of Maryland or other appropriate official of
the jurisdiction of incorporation, (b) certificates
from the Secretary of State of the State of Maryland
or other appropriate official of the respective
jurisdictions of incorporation to the effect that the
Company is in good standing or subsisting in such
jurisdiction, listing all charter documents of the
Company on file and attesting to its payment of all
franchise or similar taxes, and (c) a certificate from
the Secretary of State of the State of California or
other appropriate official in each jurisdiction in
which the Fund is qualified or admitted to do business
to the effect that the Fund is duly qualified or
admitted and in good standing in such jurisdiction.
SectioDue Diligence. The Trust shall have completed,
to its satisfaction, its due diligence investigation
of the Fund.
SectioFund's Stockholders' Meeting. The
Reorganization shall have been approved by the holders
of two-thirds of the Fund's Shares in accordance with
the GCLM.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party
contained in this Agreement or any certificate
delivered at the Closing shall survive to, and shall
expire upon, the Closing. No claim may be made
against any party hereto, and no party hereto shall
have any liability to the other party hereto, with
respect to any inaccuracy in or any breach of any
representation or warranty after the Closing.
ARTICLE IX
TERMINATION
Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be
terminated at any time prior to the Closing Date:
(a) by the mutual consent of the parties hereto;
(b) by the Trust upon any material breach by the
Company of any of its representations, warranties or
covenants contained in this Agreement; provided, that
the Company shall have been given written notice of
such breach and a reasonable opportunity to cure such
breach;
(c) by the Company upon any material breach by the
Trust of any of its representations, warranties or
covenants contained in this Agreement; provided, that
the Trust shall have been given written notice of such
breach and a reasonable opportunity to cure such
breach; and
(d) by either party if the Closing hereunder does
not occur by August 31, 1999, unless such date is
extended by mutual consent of the parties hereto.
In the event that this Agreement shall be
terminated pursuant to this ARTICLE IX, all further
obligations of the parties under this Agreement shall
terminate without further liability of either party to
the other party, except for any liability of either
party for any of its representations, warranties or
covenants, the breach of which was the cause of a
termination pursuant to (b) or (c) above.
ARTICLE X
MISCELLANEOUS
SectioPublicity; Confidentiality. No publicity
release or public announcement concerning this
Agreement or the transactions contemplated herein
shall be made by either party hereto without advance
approval thereof by the other party hereto; provided,
however, that (i) approval by such other party of any
proposed press release or other public disclosure
shall not be unreasonably withheld or delayed and (ii)
if any such party is advised by legal counsel that
such public disclosure by such party is required by
Law or by any listing agreement with any national
securities exchange or automated quotation system to
which such party is subject, such party may make such
disclosure without the prior approval of the other
party hereto, provided that the disclosing party, to
the extent practicable, first provides the other party
with a copy or draft of such proposed disclosure and
provides such other party an opportunity to review and
comment thereon.
SectioWaivers and Amendments. This Agreement may be
amended, superseded, cancelled, renewed or extended,
and the terms hereof may be waived, only by a written
instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on
the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver
thereof.
SectioGoverning Law. This Agreement shall be governed
by and construed in accordance with the laws of the
State of New York. Any judicial proceeding brought
against any of the parties to this Agreement on any
dispute arising out of this Agreement or any matter
related hereto may be brought in the courts of the
State of New York and, by execution and delivery of
this Agreement, each of the parties hereto accepts and
consents to the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound
by any judgment rendered thereby in connection with
this Agreement.
SectioNotices. All notices and other communications
required or permitted to be given hereunder shall be
in writing and shall be given by (i) personal
delivery, (ii) United States registered or certified
mail (postage prepaid, return receipt requested)
addressed as hereinafter provided, (iii) a nationally
recognized overnight courier or (iv) telephonic
facsimile transmission. Notice shall be sent and
deemed given when (i) if personally delivered or via
overnight courier, then upon receipt (or the date
delivery is refused) by the receiving party, or
(ii) if mailed, then three business days after being
postmarked, or (iii) if sent via telephonic facsimile
transmission, then upon receipt by a designated
facsimile receiving device in the office of the
receiving party.
Until further notice, notices and other
communications hereunder shall be addressed to the
parties as follows:
If to the Trust:
ORBITEX GROUP OF FUNDS
c/o Orbitex Management, Inc.
410 Park Avenue, 18th Floor
New York, NY 10022
Attention: M. Fyzul Khan
Telephone: (212) 891-7914
Facsimile: (212) 616-7954
With a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166-0153
Attention: John A. Healy, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
If to the Fund:
American Diversified Funds, Inc.
c/o James B. Rea, Jr.
2305 Donella Circle
Los Angeles, CA 90077
Telephone: (310) 472-2495
Facsimile: (310) 209-2610
With a copy to:
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022-4405
Attention: Thomas R. Westle, Esq.
Telephone: (212) 888-6680
Facsimile: (212) 838-7472
SectioBinding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of the
parties and their respective successors and legal
representatives. Except as otherwise provided herein,
this Agreement is not assignable by any party hereto
without the prior written consent of the other parties
hereto and any other purported assignment shall be
null and void.
SectioVariations in Pronouns. All pronouns and any
variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
SectioCounterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by
all of the parties hereto.
SectioComplete Agreement. This Agreement constitutes
the complete agreement of the parties with respect to
the subject matter thereof, and supersedes all prior
agreements or understandings among the parties hereto.
SectioHeadings. The headings in this Agreement are
for reference only, and shall not affect the
interpretation of this Agreement.
SectioSeverability of Provisions. If any provision or
any portion of any provision of this Agreement or the
application of such provision or any portion thereof
to any Person or circumstance, shall be held invalid
or unenforceable, the remaining portion of such
provision and the remaining provisions of this
Agreement, or the application of such provision or
portion of such provision as is held invalid or
unenforceable to persons or circumstances other than
those as to which it is held invalid or unenforceable,
shall not be affected thereby.
A-27
IN WITNESS WHEREOF, the parties hereto,
intending to be legally bound hereby, have duly
executed this Agreement on the date first above
written.
ORBITEX GROUP OF FUNDS
By:
Name: James L. Nelson
Title: President and Chief
Executive Officer
AMERICAN DIVERSIFIED FUNDS, INC.
By:
Name: James B. Rea, Jr.
Title:President
APPENDIX 2.1
Excluded Assets and Liabilities
Excluded Assets
The following corporate names:
1. American Diversified Funds, Inc.;
2. American Diversified Global Value Fund; and
3. Rea Graham Value Fund.
Excluded Liabilities
All liabilities not directly related to, arising out
of, or resulting from the operation of the Fund.
EXHIBIT A TO REORGANIZATION AGREEMENT
Officer's Certificate
I, JAMES L. NELSON, President and Chief
Executive Officer of Orbitex Group of Funds, a
Delaware business trust (the "Trust"), pursuant to
Section 7.1(d) of the Agreement and Plan of
Reorganization, dated as of July 8, 1999 (the
"Reorganization Agreement"; capitalized terms not
defined herein shall have the meanings ascribed to
them in the Reorganization Agreement), by and between
the Trust and American Diversified Funds, Inc., a
Maryland corporation, DO HEREBY CERTIFY on behalf of
the Trust that:
(1) Each of the representations and
warranties made by the Trust in the Reorganization
Agreement is true, correct and complete in all
material respects on and as of the date hereof with
the same force and effect as though made on and as of
the date hereof except that those representations and
warranties expressly stated herein to be made as of a
specified date are true in all material respects only
as of such date.
(2) Each of the covenants and agreements
required by the Reorganization Agreement to be
performed or complied with by the Trust on or prior to
the Closing has been performed or complied with in all
material respects.
IN WITNESS WHEREOF, the Trust has caused this
Certificate to be executed on its behalf by the
undersigned on and as of the ____ day of ______, 1999.
ORBITEX GROUP OF FUNDS
By:________________________________
Name: James L. Nelson
Title: President and Chief
Executive Officer
EXHIBIT B TO REORGANIZATION AGREEMENT
Assistant Secretary's Certificate
I, KEVIN P. MEEHAN, Assistant Secretary of
Orbitex Group of Funds, a Delaware business trust (the
"Trust"), pursuant to Section 7.1(d) of the Agreement
and Plan or Reorganization, dated as of July 8, 1999
(the "Reorganization Agreement"), by and between the
Trust and American Diversified Funds, Inc., a Maryland
corporation, DO HEREBY CERTIFY on behalf of the Trust
as follows:
(1) Attached hereto as Exhibit A is a true,
complete and correct copy of the Agreement and
Declaration of Trust of the Trust and all amendments
thereto (as so amended, the "Declaration of Trust"),
and no amendment to the Declaration of Trust has been
authorized or become effective since the date of the
last of such amendments, no amendment or other
document relating to or affecting the Declaration of
Trust has been filed in the office of the Secretary of
State of the State of Delaware since such date and no
action has been taken by the Trust, its stockholders,
directors or officers in contemplation of the filing
of any such amendment or other document or in
contemplation of the liquidation or dissolution of the
Trust.
(2) Attached hereto as Exhibit B is a true,
complete and correct copy of the By-Laws of the Trust
as in full force and effect on the date hereof and at
all times since [date of last amendment].
(3) Attached hereto as Exhibit C is a true,
complete and correct copy of resolutions adopted by
the Board of Trustees of the Trust with respect to the
Reorganization Agreement and the transactions
contemplated thereby, which resolutions were duly and
validly adopted at a meeting of the Board of Trustees
of the Trust on ___________, 1999, at which a quorum
was present and acting throughout. All such
resolutions are in full force and effect on the date
hereof in the form in which adopted and no other
resolutions have been adopted by the Board of Trustees
of the Trust or any committee thereof relating to the
Reorganization Agreement and the transactions
contemplated thereby.
Each of the following named individuals is a
duly elected or appointed, qualified and acting
officer of the Trust who holds the office set opposite
such individual's name, and the signature written
opposite the name and title of such officer is such
officer's genuine signature:
James L. Nelson President and
Chief Executive Officer
Kimberly S. Ratz Treasurer
Kevin P. Meehan Assistant Secretary
IN WITNESS WHEREOF, the Trust has caused this
Certificate to be executed on its behalf by the
undersigned on and as of the _____ day of __________,
1999.
ORBITEX GROUP OF FUNDS
By:
Name: Kevin P. Meehan
Title: Assistant Secretary
I, JAMES L. NELSON, President and Chief
Executive Officer of the Trust, DO HEREBY CERTIFY, on
behalf of the Trust that KEVIN P. MEEHAN is the duly
elected or appointed, qualified and acting Assistant
Secretary of the Trust, and the signature set forth
above is the genuine signature of such officer.
Name: James L. Nelson
Title: President and
Chief Executive Officer
EXHIBIT C TO REORGANIZATION AGREEMENT
[R&W LETTERHEAD]
___________, ____
American Diversified Funds, Inc.
c/o Mr. James B. Rea, President
2305 Donella Circle
Los Angeles, CA 90077
Dear Sirs:
We have acted as special counsel to Orbitex
Group of Funds, a Delaware business trust (the
"Trust"), in connection with the Agreement and Plan of
Reorganization, dated as of July 8, 1999 (the
"Reorganization Agreement"), by and between the Trust
and American Diversified Funds, Inc., a Maryland
corporation, and the transactions contemplated
thereby. Capitalized terms not defined herein shall
have the meanings ascribed to them in the
Reorganization Agreement. We are rendering this
opinion to you pursuant to Section 7.1(e) of the
Reorganization Agreement.
In rendering the opinions expressed below, we
have examined such documents and such corporate
records of the Trust as we have deemed necessary as a
basis for the opinions hereinafter expressed. In such
examination, we have assumed the genuineness of all
signatures, the authenticity of documents submitted to
us as originals, the conformity with the original
documents of all documents submitted to us as copies
and the authenticity of the originals of such latter
documents. When facts relevant to such opinions were
not independently established, we have relied upon the
representations and warranties as to factual matters
made in or pursuant to the Reorganization Agreement
and upon certificates of government officials and of
the Trust and its officers.
Based upon the foregoing and having regard to
legal considerations we deem relevant, we are of the
opinion that:
The Trust was organized under the laws of the
State of Delaware and is duly qualified, licensed or
admitted to do business and in good standing as a
foreign trust under the laws of each jurisdiction in
which the nature of the business to be conducted by it
makes such qualification, licensing or admission
necessary, except in such jurisdictions where the
failure to be so qualified, licensed or admitted or in
good standing would not, individually or in the
aggregate, have a Material Adverse Effect on the Trust
or its properties and assets.
The execution, delivery and performance of the
Reorganization Agreement by the Trust and the
consummation of the transactions contemplated therein
have been duly and validly authorized by all necessary
corporate action on the part of the Trust. The
Reorganization Agreement has been duly and validly
executed and delivered by the Trust and is a legal,
valid and binding obligation of the Trust enforceable
against it in accordance with its terms.
The OGF Shares, when issued, will be duly
authorized, validly issued, fully paid and
non-assessable. The Trust is authorized to issue an
unlimited number of no par shares of beneficial
interest with respect to OGF.
The execution, delivery and performance by the
Trust of the Reorganization Agreement did not, and the
consummation of the transactions contemplated thereby
will not, (a) violate or conflict with the terms,
conditions or provisions of the Declaration of Trust,
By-Laws or any Contract to which the Trust is a party
or by which it or its assets are bound, (b) result in
a breach or violation by the Trust of any terms,
conditions or provisions of any Law or Order, or (c)
require any consent or approval of, filing with or
notice to, any Governmental or Regulatory Body.
We express no opinion herein as to (i) the "blue
sky" laws of any State, (ii) the laws of any
jurisdiction other than the laws of the State of New
York and Title 12 of the Delaware Code ("Delaware
Law") and (iii) the bulk sales or transfer laws of any
jurisdiction. With respect to matters concerning the
Delaware Law involved in the opinions set forth above,
we draw your attention to the fact that we are not
admitted to the Bar in the State of Delaware and we
are not experts in the laws of the State of Delaware
and that any such opinions concerning Delaware Law are
based on our reasonable familiarity with Delaware Law
as a result of our prior involvement in transactions
involving such laws.
These opinions may not be relied on by any
person or entity other than you without our prior
written consent.
Very truly yours,
EXHIBIT D TO REORGANIZATION AGREEMENT
Officer's Certificate
I, JAMES B. REA, JR., President of American
Diversified Funds, Inc., a Maryland corporation (the
"Company"), pursuant to Section 7.2(d) of the
Agreement and Plan of Reorganization, dated as of July
8, 1999 (the "Reorganization Agreement"; capitalized
terms not defined herein shall have the meanings
ascribed to them in the Reorganization Agreement), by
and between Orbitex Group of Funds, a Delaware
business trust, and the Company, DO HEREBY CERTIFY on
behalf of the Company that:
(1) Each of the representations and
warranties made by the Company in the Reorganization
Agreement is true, correct and complete in all
material respects on and as of the date hereof with
the same force and effect as though made on and as of
the date hereof except that those representations and
warranties expressly states herein to be made as of a
specified date are true in all material respects only
as of such date.
(2) Each of the covenants and agreements
required by the Reorganization Agreement to be
performed or complied with by the Company on or prior
to the Closing has been performed or complied with in
all material respects.
(3) Attached hereto as Exhibit A is a true,
complete and correct copy of the Articles of
Incorporation of the Company and all amendments
thereto (as so amended, the "Articles of
Incorporation"), and no amendment to the Articles of
Incorporation has been authorized or become effective
since [date of the last of such amendments], no
amendment or other document relating to or affecting
the Articles of Incorporation has been filed in the
office of the Secretary of State of the State of
Maryland since such date and no action has been taken
by the Company, its stockholders, directors or
officers in contemplation of the filing of any such
amendment or other document or in contemplation of the
liquidation or dissolution of the Company.
(4) Attached hereto as Exhibit B is a true,
complete and correct copy of the By-Laws of the
Company as in full force and effect on the date hereof
and at all times since [date of last amendment].
(5) Attached hereto as Exhibit C is a true,
complete and correct copy of resolutions adopted by
the Board of Directors of the Company with respect to
the Reorganization Agreement and the transactions
contemplated thereby, which resolutions were duly and
validly adopted at a meeting of the Board of Directors
of the Company on May __, 1999, at which a quorum was
present and acting throughout. All such resolutions
are in full force and effect on the date hereof in the
form in which adopted and no other resolutions have
been adopted by the Board of Directors of the Company
or any committee thereof relating to the
Reorganization Agreement and the transactions
contemplated thereby.
(6) Attached hereto as Exhibit D is a true,
complete and correct copy of the minutes from the
Special Meeting of Stockholders of the American
Diversified Global Value Fund (the "Fund"), held on
______, 1999, with respect to the Reorganization
Agreement and the transactions contemplated thereby,
which contain resolutions which were duly adopted by a
two-thirds vote of the stockholders at a meeting of
the stockholders of the Fund on ______, 1999, at which
a quorum was present and acting throughout. All such
resolutions are in full force and effect on the date
hereof in the form in which adopted and no other
resolutions have been adopted by the stockholders of
the Fund relating to the Reorganization Agreement and
the transactions contemplated thereby.
IN WITNESS WHEREOF, the Trust has caused this
Certificate to be executed on its behalf by the
undersigned on and as of the _____day of __________,
1999.
AMERICAN DIVERSIFIED FUNDS, INC.
By:
Name: James B. Rea, Jr.
Title: President
EXHIBIT E TO REORGANIZATION AGREEMENT
Secretary's Certificate
The following named individual is a duly elected
or appointed, qualified and acting officer of the
Company who holds the office set opposite such
individual's name, and the signature written opposite
the name and title of such officer is such officer's
genuine signature:
James B. Rea, Jr., President
M. Fyzul Khan, Secretary
IN WITNESS WHEREOF, the Company has caused this
Certificate to be executed on its behalf by the
undersigned on and as of the ____ day of ________,
1999.
AMERICAN DIVERSIFIED FUNDS, INC.
By:_______________________________________
Name: M. Fyzul Khan
Title: Secretary
I, JAMES B. REA, JR., President of the Fund, DO
HEREBY CERTIFY, on behalf of the Fund that M. FYZUL
KHAN is the duly elected or appointed, qualified and
acting Secretary of the Fund, and the signature set
forth above is the genuine signature of such officer.
Name: James B. Rea, Jr.
Title: President
EXHIBIT F TO REORGANIZATION AGREEMENT
[SPITZER & FELDMAN P.C. LETTERHEAD]
_______________, _
Orbitex Group of Funds
410 Park Avenue
18th Floor
New York, NY 10022
Dear Sirs:
We have acted as special counsel to American
Diversified Funds, Inc., a Maryland corporation (the
"Company"), in connection with the Agreement and Plan
of Reorganization, dated as of July 8, 1999 (the
"Reorganization Agreement"), by and between Orbitex
Group of Funds, a Delaware business trust, and the
Company and the transactions contemplated thereby.
Capitalized terms not defined herein shall have the
meanings ascribed to them in the Reorganization
Agreement. We are rendering this opinion to you
pursuant to Section 7.2(e) of the Reorganization
Agreement.
In rendering the opinions expressed below, we
have examined such documents and such corporate
records of the Company and the Fund as we have deemed
necessary as a basis for the opinions hereinafter
expressed. In such examination, we have assumed the
genuineness of all signatures, the authenticity of
documents submitted to us as originals, the conformity
with the original documents of all documents submitted
to us as copies and the authenticity of the originals
of such latter documents. When facts relevant to such
opinions were not independently established, we have
relied upon the representations and warranties as to
factual matters made in or pursuant to the
Reorganization Agreement and upon certificates of
government officials and of the Company and its
respective officers.
Based upon the foregoing and having regard to
legal considerations we deem relevant, we are of the
opinion that:
1. The Company is a corporation duly
incorporated, validly existing and in good standing
under the laws of the State of Maryland and is duly
qualified, licensed or admitted to do business and is
in good standing as a foreign corporation under the
laws of each jurisdiction in which the nature of the
business to be conducted by it makes such
qualification, licensing or admission necessary,
except in such jurisdictions where the failure to be
so qualified, licensed or admitted and in good
standing would not, individually or in the aggregate,
have a Material Adverse Effect on its series, American
Diversified Global Value Fund (the "Fund") or its
properties and assets.
2. The execution, delivery and performance by
the Company of the Reorganization Agreement and the
consummation of the transactions contemplated therein
have been duly and validly authorized by the Board of
Directors of the Company and by the stockholders of
the Fund and no other corporate action on the part of
the Company or the Fund's stockholders is necessary to
authorize the execution, delivery and performance of
the Reorganization Agreement by the Company or the
consummation by the Company of the transactions
contemplated thereby. The Reorganization Agreement
has been duly and validly executed and delivered by
the Company and is a legal, valid and binding
obligation of Company enforceable against the Company
in accordance with its terms.
3. The authorized capital stock of the Fund
consists solely of 20,000,000 shares of Common Stock,
$1.00 par value per share, of which only the Fund
Shares have been issued and are outstanding. The Fund
Shares are duly authorized, validly issued,
outstanding, fully paid and nonassessable. The Fund
has no shares of its capital stock reflected on the
Books and Records of the Fund as treasury shares.
There are no outstanding options, warrants or other
rights of any kind to acquire from the Fund any shares
of capital stock or equity interests of the Fund or
securities convertible into or exchangeable for, or
which otherwise confer on the holder thereof any right
to acquire, any such additional shares, nor is the
Fund committed to issue any stock appreciation or
similar rights or option, warrant, right or security.
4. The Company has no subsidiaries.
5. The execution, delivery and performance by
the Company of the Reorganization Agreement did not,
and the consummation of the transactions contemplated
thereby will not, (a)violate or conflict with the
terms, conditions or provisions of the Articles of
Incorporation or By-Laws or any Contract to which the
Fund is a party or by which it or its assets are
bound, (b)result in a breach or violation by the Fund
of any of the terms, conditions or provisions of any
Law or Order or (c) require any consent or approval
of, filing with or notice to, any Governmental or
Regulatory Body.
6. The Company is duly registered as a
diversified, open-end management investment company
under the 1940 Act, and under all applicable state and
foreign investment company or related laws. Each such
registration is in full force and effect. The Company
has timely computed and publicized the Fund's net
asset value in accordance with the provisions of the
1940 Act.
We express no opinion herein as to (i) the "blue
sky" laws of any State, or (ii) laws of any
jurisdiction other than the laws of the State of New
York and the General Corporation Law of the State of
Maryland. With respect to matters concerning the
Maryland Law involved in the opinions set forth above,
we draw your attention to the fact that we are not
admitted to the Bar in the State of Maryland and we
are not experts in the laws of the State of Maryland
and that any such opinions concerning Maryland Law are
based on our reasonable familiarity with Maryland Law
as a result of our prior involvement in transactions
involving such laws.
These opinions may not be relied on by any
person or entity other than you without our prior
written consent.
Very truly yours
B-5
APPENDIX B
ADGVF's INVESTMENT RESTRICTIONS STATE:
The Fund has adopted the following restrictions
(in addition to those indicated in its prospectus) as
fundamental policies, which may not be changed without
the favorable vote of the holders of a "majority", as
defined in the 1940 Act, of the Fund's outstanding
voting securities. Under the 1940 Act, the vote of
the holders of a majority of a Fund's outstanding
voting securities means the vote of the holders of the
lesser of (i) 67% of the shares of the Fund
represented at a meeting at which the holders of more
than 50% of its outstanding shares are represented or
(ii) more than 50% of the outstanding shares.
The Fund may not:
1. Purchase or sell real estate or interests
therein, although the Fund may purchase
securities of issuers, which engage in real
estate operations, and securities which are
secured by real estate or interests therein.
2. Purchase or sell commodities or commodity
futures contracts, except that the Fund may
enter into foreign currency forward contracts
for the purpose of hedging against foreign
currency risk in connection with the purchase or
sale of foreign securities.
3. Purchase oil, gas or other mineral leases,
rights or royalty contracts or exploration or
development programs, except that the Fund may
invest in the securities of companies which
operate, invest in or sponsor such programs.
4. Write, purchase or sell puts, calls, or
combinations thereof.
5. Make short sales of securities.
6. Purchase securities on margin, except for such
short-term loans as are necessary for the
clearance of purchases of portfolio securities.
7. Engage in the underwriting of securities.
8. Make loans of money or securities, except (a)
by the purchase of a portion of an issue of
publicly distributed debt obligations in which
the Fund may invest consistent with its
investment objectives and policies, or (b) by in
repurchase agreements with respect to
obligations of the U.S. Government, its agencies
or instrumentality's, maturing in seven (7) days
or less.
9. Borrow money, except that the Fund may borrow
from a bank for temporary or emergency purposes
in amounts not exceeding 5% (taken at the lower
of cost or current value) of its total assets
(not including the amount borrowed).
10. Pledge its assets or assign or otherwise
encumber them, except to secure borrowings
effected within the limitations set forth in
Restriction 9. To meet the requirements of
regulations in certain states, the Fund, as a
matter of operating policy, but not as a
fundamental policy, will limit any pledge of its
assets such that at the time of sale of Fund
shares the market value of unpledged net assets
(per share) is at least 90% of the Offering
Price.
11. Issue senior securities, as defined in the
Investment Company Act of 1940 ("1940 Act"),
except insofar as the Fund may be deemed to have
issued a senior security by reason of (a)
entering into any repurchase agreement, or
(b)borrowing money in accordance with
Restriction 9.
12. Invest more than 5% of the Fund's total assets
in securities of issuers which have been in
continuous operation less than three (3) years.
13. Purchase more than 10% of any class of
securities of any one issuer, including its
outstanding voting securities, or invest in any
issuer for the purpose of exercising control or
management.
14. Invest more than 15% of the Fund's total assets
in securities of foreign issuers that are not
listed on a recognized U.S. or foreign
securities exchange, including no more than 10 %
of its total assets which may be invested in
securities with a limited trading market.
15. Invest more than 25% of its total net assets in
any one industry(determined by reference to the
Standard Industrial Classification code).
16. Purchase or retain securities of any company in
which Directors or Officers of the Company or of
the Fund's Investment Adviser, individually
owning more than 1/2 of 1% of the securities of
such company, in the aggregate own more than 5%
of the securities of such company.
17. Purchase securities of other investment
companies, except (a) in connection with a
merger, consolidation, reorganization or
acquisition of assets, or (b) in the open market
where no commission or profit to a sponsor or
dealer other than the customary broker's
commission results from such purchase ,in an
amount not in excess of 10% of the value of the
Fund's total assets.
18. Invest in "letter stocks" or securities on
which there are any sales restrictions under a
purchase agreement or in securities which do not
have readily available market quotations.
19. Participate on a joint or a joint and several
basis in any trading account in securities.
Whenever any investment policy or investment
restriction states a maximum percentage of the Fund's
assets which may be invested in any security or other
property, it is intended that such maximum percentage
limitation be determined immediately after and as a
result of the Fund's acquisition of such security or
property. Accordingly, the Fund is not required to
dispose of common stocks due to an increase in
percentage resulting from a change in market values.
THE ORBITEX GROWTH FUND'S INVESTMENT RESTRICTIONS
STATE:
The Fund has adopted the following restrictions
(in addition to those indicated in its prospectus) as
fundamental policies, which may not be changed without
the favorable vote of the holders of a "majority", as
defined in the 1940 Act, of the Fund's outstanding
voting securities. Under the 1940 Act, the vote of
the holders of a majority of a Fund's outstanding
voting securities means the vote of the holders of the
lesser of (i) 67% of the shares of the Fund
represented at a meeting at which the holders of more
than 50% of its outstanding shares are represented or
(ii) more than 50% of the outstanding shares.
The Fund may not:
1. Purchase securities on margin, except a 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, the 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 the 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 and
contracts thereon, except that the Fund may
enter into financial futures contracts and
options thereon.
6. Underwrite securities issued by other persons,
except to the extent that the 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 the Fund's investment
objective, policies and restrictions.
7. Make loans, except that the Fund in accordance
with the Fund's investment objective, policies
and restrictions may: (i) invest in all or a
portion of an issue of publicly issued or
privately placed bonds, debentures, notes, other
debt securities and loan participation interests
for investment purposes; (ii) purchase money
market securities and enter into repurchase
agreements; and (iii) lend its portfolio
securities in an amount not exceeding one-third
of the value of the Fund's total assets.
8. Make an investment unless 75% of the value of
the 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, the
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. This limitation (9)
does not apply to securities issued or
guaranteed by the U.S. Government, its agencies
or instrumentalities or repurchase agreements
secured by U.S. Government securities.
The following restrictions are designated as
non-fundamental and may be changed by the Board of
Trustees of the Orbitex Group of Funds without the
approval of shareholders. The Fund may not:
1. Invest in portfolio companies for the purpose
of acquiring or exercising control of such
companies.
2. Invest in the securities of other investment
companies except in compliance with the 1940 Act.
3. Invest in puts, calls, straddles, spreads or
any combination thereof, except to the extent
permitted by the Prospectus and Statement of
Additional Information.
4. Purchase or otherwise acquire any security or
invest in a repurchase agreement if, as a
result, more than 15% of the net assets of the
Fund would be invested in securities that are
illiquid or not readily marketable, including
repurchase agreements maturing in more than
seven days and non-negotiable fixed time
deposits with maturates over seven days. The
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,
the 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 the 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.
APPENDIX C
[INSERT THE ORBITEX GROUP'S SEMI-ANNUAL AND ANNUAL
REPORT
PROXY
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby constitutes and appoints Keith
Kemp and M. Fyzul Khan, and each of them, as proxies
for the undersigned, with full power of substitution
and resubstitution, and hereby authorizes said
proxies, and each of them, to represent and vote, as
designated on the card below, all stock of the above
Company held of record by the undersigned on July 8,
1999 at the Special Meeting of Stockholders to be held
on September 10, 1999 and at any adjournment thereof.
The undersigned hereby revokes any and all proxies
with respect to such stock heretofore given by the
undersigned. The undersigned acknowledges receipt of
the Prospectus/Proxy Statement dated August 18, 1999.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER
AND, IN THE DISCRETION OF SUCH PROXIES, UPON ANY AND
ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
SPECIAL MEETING OR ANY ADJOURNMENT THEREOF. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR
OF THE REORGANIZATION.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES
ARE HELD BY JOINT TENANTS, EACH JOINT TENANT SHOULD
SIGN.
When signing as attorney, executor, administrator,
trustee, guardian or custodian, please sign full title
as such. If a corporation, please sign full corporate
name by an authorized officer and indicate the
signer's office. If a partnership, please sign in
partnership name. PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
To vote by Telephone
1) Read the Prospectus/Proxy Statement and have the
Proxy Card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on
the Proxy Card and follow the simple instructions.
To vote by Internet
1) Read the Prospectus/Proxy Statement and have the
Proxy Card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on
the Proxy Card and follow the simple instructions.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
For address changes and/or comments, please check
this box and write them on the back of the proxy card. _____
To approve the Reorganization. For Against Abstain
____ ____ ____
Signature Date
_____________________________________________________
Signature (Joint Owners) Date
(PLEASE SIGN WITHIN BOX)
________________________
PART B
________________________
STATEMENT OF ADDITIONAL INFORMATION
Dated August 6, 1999
ORBITEX GROUP OF FUNDS
410 Park Avenue
New York, New York 10022
(888) ORBITEX
________________________
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
(800) 348-5032
________________________
This Statement of Additional Information
relating specifically to the Reorganization consists
of this cover page, the pro forma financial statements
attached as Exhibit A and the following described
documents, each of which is incorporated herein by
reference:
1. The Statement of Additional Information of the
Orbitex Group of Funds, as filed with the
Securities and Exchange Commission on July 12,
1999 (File No. 333-20635) of the Orbitex Group
of Funds as part of the Post-Effective Amendment
to its Registration Statement on Form N-1A.
Such Statement of Additional Information may
obtained without charge by writing to or calling
the Orbitex Group of Funds at the address or
telephone number listed above.
2. The Statement of Additional Information of
ADGVF, as filed with the Securities and Exchange
Commission on July 31, 1998 (File No. 2-76762)
as part of the Post-Effective Amendment to its
Registration Statement on Form N-1A. Such
Statement of Additional Information can be
obtained without charge by writing to American
Diversified Global Value Fund, Inc., c/o PFPC
Inc., 400 Bellevue Parkway, Suite 108,
Wilmington, Delaware 19809, or by calling
1-800-348-5032.
This Statement of Additional Information is not
a prospectus and should be read in conjunction with
the Prospectus/Proxy Statement, dated August 18, 1999,
which has been filed by the Orbitex Group of Funds
("Orbitex") in connection with a Special Meeting of
Stockholders of the American Diversified Global Value
Fund ("ADGVF"), that has been called to vote on an
Agreement and Plan of Reorganization, dated July 8,
1999, by and between Orbitex and American Diversified
Funds, Inc., and the transactions contemplated
thereby. Copies of the Prospectus/Proxy Statement may
be obtained at no charge by writing to Orbitex at the
address listed above or by calling the toll free
number listed above.
EXHIBIT A
[THIS PAGE INTENTIONALLY LEFT BLANK]
A-9
<TABLE>
<CAPTION>
Pro Forma Combining Statement of Net Assets
(Unaudited)
American American
Diversified Orbitex Growth Diversified Orbitex Growth
Global Value Fund Global Value Fund
Fund Total Description Fund Total
- ------------ -------------- -------- ------------------------------------- ------------- --------------- ------------
Shares/par Shares/par Shares/par Market Value Market Value Market Value
- ------------ -------------- ------------ ------------- --------------- ------------
COMMON STOCKS - 13.75%
<S> <C> <C> <C> <C> <C> <C>
Broadcasting - 0.36%
- 1,900 1,900 US Satellite Broadcasting
Company, Inc., Class A (a) 33,963 33,963
Computers & Business Equipment - 0.65%
- 1,000 1,000 Intel Corp. 61,187 61,187
Cosmetics & Toiletries - 0.45%
- 450 450 Proctor & Gamble Co. 42,216 42,216
Diversified Manufacturing - 0.56%
- 500 500 General Electric Co. 52,750 52,750
Drugs & Health Care - 0.61%
- 500 500 Pfizer, Inc. 57,531 57,531
Financial Services - 1.33%
- 1,000 1,000 Citigroup, Inc. 75,250 75,250
- 1,400 1,400 Hambrecht & Quist Group (a) 49,350 49,350
124,600 124,600
Food & Beverages - 0.47%
- 600 600 Anheuser-Busch Companies,
Inc. 43,875 43,875
Insurance - 0.56%
- 450 450 American International Group,
Inc. 52,847 52,847
International Oil - 0.74%
- 700 700 Chevron Corp. 69,825 69,825
Oil Field Service - 0.51%
- 1,800 1,800 BJ Services Co. (a) 48,150 48,150
Retail - 1.96%
- 1,000 1,000 Home Depot, Inc. 59,937 59,937
- 1,200 1,200 Lowe's Companies, Inc. 63,300 63,300
- 2,025 2,025 Staples, Inc. (a) 60,750 60,750
183,987 183,987
Software - 1.81%
- 400 400 American Online 57,100 57,100
- 900 900 Electronic Arts, Inc. (a) 45,731 45,731
- 700 700 Microsoft Corp. (a) 56,919 56,919
- 50 50 pcOrder. Com, Inc., Class A (a) 3,091 3,091
- 200 200 Ziff-Davis, Inc. (a) 7,050 7,050
169,891 169,891
Telecommunications Equipment - 0.64%
- 1,000 1,000 Lucent Technologies, Inc. 60,125 60,125
Telephone - 3.08%
- 300 300 AT&T Corp. 15,150 15,150
- 1,700 1,700 MCI WorldCom, Inc. (a) 139,719 139,719
- 400 400 Qwest Communications
International, Inc. (a) 34,175 34,175
- 1,050 1,050 SBC Communications, Inc. 58,800 58,800
- 400 400 Sprint Corp. 41,025 41,025
288,869 288,869
TOTAL COMMON STOCKS - (Cost
$1,245,486) 1,289,816 1,289,816
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Principal Principal
Amount Amount
SHORT TERM INVESTMENTS (Cost $8,145,160) 86.84%
-
- 174,000 174,000 State Street Bank and Trust -
Co., 4.500% due 5/3/1999 174,000 174,000
188,244 - 188,244 Chase Institutional Money 188,244 - 188,244
Market
7,800,000 - 7,800,000 US Treasury Bill 4.15%, 5/20/99 7,782,916 - 7,782,916
7,971,160 174,000 8,145,160
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS
(Cost $9,390,646) - 100.59% 7,971,160 1,463,816 9,434,976
OTHER ASSETS AND
LIABILITIES - -0.59% (67,046) 12,047 (54,999)
NET ASSETS - 100% $ 7,904,114 $ 1,475,863 $ 9,379,977
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Combining Statement of Assets and Liabilities
as of April 30, 1999
(Unaudited)
American Pro Forma Pro Forma
Diversified Orbitex
Global Value Growth Fund Combined Adjustments Combined
Fund
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Assets
Investment in Securities, at
value (See accompanying
schedule) $ 7,782,915.86 $ 1,289,816.00 $ 9,072,731.86 $ 9,072,731.86
Short term investments (See
accompanying schedule) 188,243.74 174,000.00 362,243.74 362,243.74
Total investments 7,971,159.60 1,463,816.00 9,434,975.60 9,434,975.60
Cash 39,040.00 443.00 39,483.00 39,483.00
Receivable for fund
shares sold - 195.00 195.00 195.00
Receivable due from adviser 54,648.46 40,378.00 95,026.46 95,026.46
Deferred organizational
expenses - 13,111.00 13,111.00 13,111.00
Interest and dividends
receivable 9,516.68 380.00 9,896.68 9,896.68
Other receivables 17,711.00 2,163.00 19,874.00 19,874.00
Total assets 8,092,075.74 1,520,486.00 9,612,561.74 9,612,561.74
Liabilities
Reserve for uncollectable
assets 72,711.00 - 72,711.00 72,711.00
Payable for fund shares
redeemed 39,992.42 - 39,992.42 39,992.42
Distributions payable - 1,374.00 1,374.00 1,374.00
Payable for pricing 811.35 - 811.35 811.35
Payable state and
local taxes 17.22 - 17.22 17.22
Payable for postage 206.37 - 206.37 206.37
Liquidation reserve 27,140.35 - 27,140.35 27,140.35
Payable for Trustee fees - 1,251.00 1,251.00 1,251.00
Other payables and
accrued expenses 47,083.49 41,998.00 89,081.49 89,081.49
Total Liabilities 187,962.20 44,623.00 232,585.20 232,585.20
Net Assets $ 7,904,113.54 1,475,863.00 $ 9,379,976.54 $ 9,379,976.54
Net Assets consist of:
Paid in capital $ 8,252,967.96 1,269,888.00 $ 9,522,855.96 $ 9,522,855.96
Distributions in excess net
investment income (26,671.84) - $ (26,671.84) (26,671.84)
Accumulated undistributed net
realized gain (loss)
on investments (322,182.58) 161,645.00 (160,537.58) (160,537.58)
Net Unrealized appreciation
(depreciation) on
investments - 44,330.00 44,330.00 44,330.00
Net Assets 7,904,113.54 1,475,863.00 9,379,976.54 9,379,976.54
CLASS A SHARES
Net assets $ 7,904,113.54 $ 1,421,648.00 $ 9,325,761.54 $ 9,325,761.54
Net assets value per share
(based on shares of
beneficial interest
outstanding, par value
$.01 per share) 15.95 18.66 18.66
Maximum sales charge 0.00% 5.75% 5.75%
Offering price per share 15.95 19.80 19.80
Total shares outstanding
at end of period 495,664.00 76,173.00 571,837.00 (72,078.07)(A) 499,758.93
CLASS B SHARES
Net assets $ - $ 54,215.00 $ 54,215.00 $ 54,215.00
Net asset value and offering
price per share (based on
shares of beneficial
interest outstanding,
par value $.01 per share) - 18.61 18.61 18.61
Total shares outstanding
at end of period - 2,913.00 2,913.00 $ 2,913.00
Investments, at cost $ 7,971,160.00 $ 1,419,486.00 $ 9,390,646.00 $ 9,390,646.00
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Combining Statement of Operations
as of April 30, 1999
(Unaudited)
American Pro Forma Pro Forma
Diversified Orbitex
Global Value Growth Fund Combined Adjustments Combined
Fund
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Investment Income
Interest income $ 102,369.55 5,041.00 107,410.55 $ 107,410.55
Dividend income 89,799.81 5,997.00 95,796.81 95,796.81
Short term discount earned 103,822.85 - 103,822.85 103,822.85
Other income (121.39) - (121.39) (121.39)
Amortization of Bond Discount (20.08) - (20.08) (20.08)
Foreign taxes withheld - (26.00) (26.00) (26.00)
Total investment income 295,850.74 $ 11,012.00 306,862.74 $ 306,862.74
Expenses
Management fee 81,742.29 8,089.00 89,831.29 (16,097.22)(B) 73,734.07
Professional fees 29,306.93 48,387.00 77,693.93 (29,306.93)(C) 48,387.00
Administration fee 29,921.59 62,711.00 92,632.59 (29,921.59)(B) 62,711.00
Transfer agent fees 14,272.96 45,755.00 60,027.96 (5,472.96)(B) 54,555.00
Tax expenses 843.42 - 843.42 - 843.42
Pricing expenses 15,164.91 - 15,164.91 (15,164.91)(C) -
Liquidation expense 55,000.00 - 55,000.00 (42,963.70)(C) 12,036.30
Trustees' compensation 11,347.03 4,117.00 15,464.03 (11,347.03)(C) 4,117.00
Custodian fees and expenses 17,733.07 51,268.00 69,001.07 - 69,001.07
Registration fees 23,327.13 23,811.00 47,138.13 (20,995.42)(C) 26,142.71
Distribution fees:
Class A Shares 28,937.63 4,257.00 33,194.63 6,073.08(B) 39,267.71
Class B Shares - 143.00 143.00 - 143.00
Amortization of organizational
expense - 3,770.00 3,770.00 - 3,770.00
Miscellaneous 19,865.22 4,921.00 24,786.22 - 24,786.22
Total expenses before reductions 327,462.18 257,229.00 584,691.18 (165,196.68) 419,494.50
Fees reduced by credits allowed
by the custodian - (570.00) (570.00) (570.00)
Expense reductions (99,192.80) (236,419.00) (335,611.80) 101,477.62(D) (234,134.18)
Total expenses 228,269.38 20,240.00 248,509.38 (63,719.06)(D) 184,790.32
Net investment income 67,581.36 $ (9,228.00) 58,353.36 $ 63,719.06) $ 122,072.42
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on
investment securities 326,206.56 170,778.00 496,984.56 496,984.56
Net realized gain (loss) on written
options - 545.00 545.00 545.00
Total net realized gain (loss) 326,206.56 171,323.00 497,529.56 497,529.56
Change in net unrealized appreciation
(depreciation) on investment
securities 777,962.23 (14,256.00) 763,706.23 763,706.23
Net gain (Loss) 1,104,168.79 157,067.00 1,261,235.79 1,261,235.79
Net increase (decrease) in net
assets resulting from operations 1,171,750.15 $147,839.00 $1,319,589.15 $ (63,719.06) $1,383,308.21
</TABLE>
American Diversified Global Value and
Orbitex Growth Fund
Notes to Pro Forma Combining Financial Statements
(Unaudited)
The accompanying unaudited Pro Forma Combining Schedule of Investments and
Statement of Assets and Liabilities as of April 30, 1999 and the unaudited Pro
Forma Combining Statement of Operations for the twelve months ended April 30,
1999 are intended to present the financial condition and related results of
operations of American Diversified Global Value Fund as if the reorganization
with Orbitex Growth Fund, had been consummated at May 1, 1998. Had the pro forma
adjustments not included the effect of the voluntary expense limitations, Pro
Forma Combined Expense reductions would have been $63,719, resulting in Pro
Forma Combined Net Interest Income and Pro Forma Combined Net Increase in Net
Assets resulting from operations of $58,353 and $1,319,589, respectively.
The pro forma adjustments to these pro forma financial statements are
comprised of:
(a) Reflects the conversion of American Diversified Global Value Fund
shares as of April 30, 1998.
(b) Reflects adjustments to the acquiring fund contractual fee
obligation.
(c) Adjustment reflects expected savings when the two funds become
one.
(d) Reflects adjustment to the level of the acquiring fund's
voluntary expense reimbursement.
The unaudited pro forma combining statements should be read in conjunction
with the separate annual audited financial statements as of April 30, 1999 for
Orbitex Growth Fund, and March 31, 1999 for Amercan Diversified Global Value
Fund, which are incorporated by reference in the Statement of Additional
Information to the Proxy Statement and Prospectus.
Capitalization
Reinvest price: $ 18.66
(Unaudited) (Unaudited) Pro Forma
OGF - Class A ADGVF Combined
Aggregate Net Assets 1,421,648 7,904,119 9,325,761
Shares Outstanding 76,173 495,669 499,759
5
PART C
________________________
OTHER INFORMATION
Item 15. Indemnification - Reference is made to Article VI of the
Registrant's Amended Declaration of Trust previously filed in the
Registration Statement on January 29, 1997 and to the subsection of the
Prospectus/Proxy Statement entitled "Liability of Directors in Maryland and
Trustees in Delaware" under the caption "Certain Comparative Information
about Maryland funds and Delaware funds" in Part A of this Registration
Statement.
The Registrant will indemnify its Trustees and officers to the extent
permitted by law. Indemnification may not be made if the Trustee or officer
has incurred liability by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties in the conduct of his office
("Disabling Conduct"). The means of determining whether indemnification
shall be made are (1) 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) ote 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) ndependent 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) e provides security for his agreement
to repay; (2) the Registrant is insured against loss by reason of lawful
advances; (3) the Trustees who are not interested persons and are not
parties to the proceedings, or independent counsel in a written opinion,
determine that there is a reason to believe that the Trustee or officer
will be found entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to Trustees, officers,
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
Trustee, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by
the final adjudication of such issue.
Item 16. Exhibits - References are to Registrant's Post-Effective Amendment to
its Registration Statement on Form N-1A, as filed with the Securities and
Exchange Commission on July 12, 1999 (the "N-1A Registration Statement")
(File No. 333-20635).
(1) Declaration of Trust of Orbitex Group of Funds (the "Trust"), dated
December 13, 1996, previously filed in the Registrant's Registration
Statement on January 29, 1997 (File No. 333-20635) is incorporated by
reference into this Registration Statement.
(2) By-Laws of the Orbitex Group of Funds previously filed in the Registrant's
Registration Statement on January 29, 1997 (File No. 333-20635) are
incorporated by reference into this Registration Statement.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization, dated July 8, 1999, by and between
the Orbitex Group of Funds and ADGVF (included as Annex A to Registrant's
Prospectus/Proxy Statement contained in Part A of this Registration
Statement).
(5)(a) Declaration of Trust of Orbitex Group of Funds (the "Trust"), dated
December 13, 1996, previously filed in the Registrant's Registration
Statement on January 29, 1997 (File No. 333-20635) is incorporated by
reference into this Registration Statement.
(5)(b) By-Laws of the Orbitex Group of Funds previously filed in the
Registrant's Registration Statement on January 29, 1997 (File No.
333-20635) are incorporated by reference into this Registration Statement.
(6)(a) Investment Advisory Agreement, dated June 1, 1997, by and between the
Orbitex Group of Funds and Orbitex Management, Inc. on behalf of OGF, the
Orbitex Info-Tech & Communications Fund and the Orbitex Strategic Natural
Resources Fund and Orbitex Management, Inc. previously filed in the N-1A
Registration Statement is incorporated by reference into this Registration
Statement.
(6)(b) Investment Advisory Agreement by and between the Orbitex Group of Funds
and Orbitex Management, Inc. on behalf of the Orbitex Health &
Biotechnology Fund and the Orbitex Cash Reserves Fund previously filed in
the N-1A Registration Statement is incorporated by reference into this
Registration Statement.
(6)(c) Investment Advisory Agreement, by and between the Orbitex Group of Funds
and Orbitex Management, Inc. on behalf of the Orbitex Focus 30 Fund
previously filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(7)(a) Distribution Agreement, dated June 1, 1997, between the Orbitex Group of
Funds and Funds Distributor, Inc. on behalf of OGF, the Orbitex Info-Tech &
Communications Fund and the Orbitex Strategic Natural Resources Fund
previously filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(7)(b) Form of Distribution Sub-Agreement, previously filed in Pre-Effective
Amendment No. 2 to the Registration Statement, dated September 26, 1997
(File No. 333-20635), is incorporated by reference into this Registration
Statement.
(7)(c) Distribution Agreement on behalf of the Orbitex Health & Biotechnology
Fund, the Orbitex Prime Reserves Fund and the Orbitex Cash Focus 30 Fund
previously filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(8) Not Applicable.
(9)(a) Custodian Contract, dated May 14, 1997, by and between the Orbitex Group
of Funds and State Street Bank and Trust Company on behalf of OGF, the
Orbitex Info-Tech & Communications Fund and the Orbitex Strategic Natural
Resources Fund previously filed in the N-1A Registration Statement is
incorporated by reference into this Registration Statement.
(9)(b) Custodian Contract on behalf of the Orbitex Health & Biotechnology Fund,
the Orbitex Prime Reserves Fund and the Orbitex Cash Focus 30 Fund
previously filed in the N-1A Registration Statement is incorporated
reference into this Registration Statement.
(10)(a) Class A Distribution Plan and Agreement pursuant to Rule 12b-1 under the
Investment Company Act of 1940, dated June 1, 1997, and amended January 21,
1998, previously filed in the N-1A Registration Statement is incorporated
by reference into this Registration Statement.
(10)(b) Class B Distribution Plan and Agreement pursuant to Rule 12b-1 under the
Investment Company Act of 1940, dated May 27, 1998, previously filed in
Post-Effective Amendment No. 4 to the Registration Statement, dated August
19, 1998 (File No. 333-20635), is incorporated by reference into this
Registration Statement.
(10)(c) Shareholder Services Plan and Shareholder Servicing Agreement
(Non-Rule 12-1 Plan) approved May 7, 1998 previously filed in the
Registrant's Post-Effective Amendment No. 4 to the Registration Statement,
dated August 19, 1998 (File No. 333-20635), is incorporated by reference
into this Registration Statement.
(11) Opinion and Consent of Rogers & Wells LLP, counsel to the Registrant, with
respect to the legality of the Class A Shares of the Orbitex Growth Fund is
filed herewith.
(12) Opinion and Consent of Rogers & Wells LLP with respect to tax matters is
filed herewith.
(13)(a) Transfer Agency and Service Agreement, dated May 14, 1997, by and
between the Orbitex Group of Funds and State Street Bank and Trust Company
on behalf of OGF, the Orbitex Info-Tech & Communications Fund and the
Orbitex Strategic Natural Resources Fund previously filed in the N-1A
Registration Statement is incorporated by reference into this Registration
Statement.
(13)(b) Transfer Agency and Service Agreement on behalf of the Orbitex Health &
Biotechnology Fund, the Orbitex Cash Reserves Fund and the Orbitex Focus 30
Fund previously filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(13)(c) Administration Agreement, dated May 14, 1997, by and between the Orbitex
Group of Fund and State Street Bank and Trust Company on behalf of OGF, the
Orbitex Info-Tech & Communication Fund and the Orbitex Strategic Natural
Resources Fund previously filed in the N-1A Registration Statement is
incorporated by reference into this Registration Statement.
(13)(d) Administration Agreement on behalf of the Orbitex Health & Biotechnology
Fund, the Orbitex Prime Reserves Fund and the Orbitex U.S. Focus 30 Fund
previously filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(13)(e) Form of Individual Retirement Account Agreement previously filed in the
Registrant's Pre-Effective Amendment No. 2 to the Registration Statement,
dated September 26, 1997 (File No. 333-20635), is incorporated by reference
into the Registration Statement.
(14)(a) Consent of the Registrant's Independent Accountants, dated ___________
__, 1999, filed herewith.
(14)(b) Consent of ADGVF's Independent Accountants, dated ________ __, 1999, is
filed herewith.
(15)(a) Financial Statements of the Registrant previously filed in the N-1A
Registration Statement are incorporated by reference into this Registration
Statement.
(15)(b) Financial Statements of ADGVF contained in its Post-Effective Amendment
to its Registration Statement on Form N-1A, dated April 23, 1999 (File No.
333-20635), are incorporated by reference into the Registration Statement.
(16) Power of Attorney, dated March 28, 1999, contained in the N-1A Registration
Statement is incorporated by reference into this Registration Statement.
(17) Registrant's Prospectus, dated July ___, 1999, is incorporated by reference
to the Prospectus filed by Registrant on July ___, 1999, pursuant to Rule
497 (File No. 333-20635).
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act (17
CFR 230.145(c)), the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment shall be deemed to be a
new registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial
bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the registrant, in the City of New York
and State of New York, on the 18th day of August, 1999.
ORBITEX GROUP OF FUNDS
By:____________________
James L. Nelson
Trustee and President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
Otto J. Felber* Trustee August 18, 1999
James L. Nelson Trustee, President August 18, 1999
And Chief Executive
Officer
Kimberly Ratz Treasurer and August 18, 1999
Principal Financial
and Accounting
Officer
Ronald Altbach* Trustee August 18, 1999
Thomas Bachmann* Trustee August 18, 1999
Richard E. Stierwalt Trustee and August 18, 1999
Assistant Secretary
Stephen H. Hamrick* Trustee August 18, 1999
*By: /s/ James L. Nelson
James L. Nelson, Attorney-in-Fact
EXHIBIT LIST
Exhibit 1 Opinion and Consent of Rogers & Wells LLP, counsel to the
Registrant, with respect to the legality of the securities of the
Orbitex Group of Funds).
Exhibit 2 Opinion and Consent of Rogers & Wells LLP with respect to tax
matters.
Exhibit 3 Consent of PricewaterhouseCoopers LLP, independent accountants to
the Registrant, dated _______, 1999.
Exhibit 4 Consent of Tait, Weller & Baker, independent accountants to
ADGVF, dated _______, 1999.
1 The present fee is determined by administrative and overhead costs rather
than by a fixed percentage of average daily net assets.
2 Orbitex Management has contractually agreed to waive its management fee and
to reimburse expenses, other than extraordinary or non-recurring expenses,
so that through April 30, 2000 the expense ratio with respect to Class A
Shares of OGF does not exceed 2.00%. Thereafter, Orbitex Management may
discontinue this waiver and reimbursement at any time without notice.
3 Prior to March 1, 1999, ADGVF's prior adviser voluntarily agreed to waive
fees and reimbursement expenses so that the expense ratio would not exceed
1.88%.
4 This example is based on the same hypothetical factors used by other funds
in their prospectuses: a $10,000 investment, 5% total return each year and
no change in ADGVF's expense levels. This example is the same whether an
ADGVF Stockholder sold his or her shares at the end of the period or kept
them. This example is for comparison only since actual returns and expenses
will be different.
