UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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ASM INDEX 30 FUND, INC.
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ASM INDEX 30 FUND, INC.
410 Park Avenue
New York, New York 10022
May 10, 1999
Dear Stockholder:
A special meeting of stockholders of ASM Index 30 Fund, Inc., a
Maryland corporation ("ASM"), will be held at the principal executive offices
of ASM at 410 Park Avenue, New York, New York 10022, on June 11, 1999, at
12:00 p.m. local time (the "Special Meeting"). Formal notice of the Special
Meeting appears on the next page and is followed by the Proxy Statement.
In the attached Proxy Statement, stockholders are being requested to
consider and approve the proposed merger (the "Reorganization") of ASM with and
into the ORBITEX Focus 30 Fund (the "New Orbitex Fund"), a separate,
newly-created series of Orbitex Group of Funds, a business trust organized under
the laws of the State of Delaware (the "Orbitex Group of Funds"), pursuant to an
Agreement and Plan of Reorganization, dated as of April 26, 1999, by and between
ASM and the Orbitex Group of Funds, whereby the New Orbitex Fund, as the
surviving entity in the Reorganization, would succeed to and assume all of ASM's
assets and liabilities. The New Orbitex Fund will generally have the same
investment objectives and policies as ASM, except that the New Orbitex Fund
will operate as an actively-managed fund. THE VALUE OF EACH ASM STOCKHOLDER'S
ACCOUNT WITH THE NEW ORBITEX FUND IMMEDIATELY AFTER THE REORGANIZATION WILL
BE THE SAME AS THE VALUE OF SUCH STOCKHOLDER'S ACCOUNT WITH ASM IMMEDIATELY
PRIOR TO THE REORGANIZATION. THE REORGANIZATION IS INTENDED TO QUALIFY AS A
TAX-FREE REORGANIZATION.
Orbitex Management, Inc., a New York corporation ("Orbitex
Management"), has served as the interim investment adviser to ASM since March 1,
1999, pursuant to an interim investment advisory agreement (the "Interim Orbitex
Agreement") approved by the Board of Directors of ASM (the "Board"). The Board
made this appointment after it terminated the engagement of Vector Index
Advisors, Inc. ("Vector") as ASM's investment adviser, following Vector's
announcement that it was planning to file for protection under the U.S.
bankruptcy laws. The Reorganization is designed to permit ASM to become part of
the Orbitex Group of Funds, which Orbitex Management also serves as investment
adviser. As part of the Orbitex Group of Funds, ASM 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.
The Interim Orbitex Agreement terminates by law on July 1, 1999, unless
earlier terminated upon 60 days' notice by either ASM or Orbitex Management.
Orbitex Management has explicitly advised the Board that it will not continue as
adviser to ASM if ASM's stockholders fail to approve the Reorganization. Orbitex
Management has, however, agreed that if ASM's stockholders fail to approve the
Reorganization by the requisite vote, it will continue to serve as interim
investment adviser to ASM for a reasonable period of time until a replacement
adviser is selected or until ASM is liquidated. The Board believes that in such
a case the prospects of finding a replacement adviser would be minimal. Thus, a
failure to approve the Reorganization by the requisite vote likely will result
in the liquidation of ASM.
After careful consideration, the Board has unanimously approved the
Reorganization and recommends that you read the enclosed materials carefully and
then vote "FOR" the Reorganization. It is important that you sign and return
your proxy card because approval of the Reorganization requires a minimum number
of affirmative votes.
You are cordially invited to attend the Special Meeting. If you do not
expect to attend the Special Meeting, the Board requests that you take a moment
to sign and return your proxy cards in the enclosed postage paid return
envelope. If we do not hear from you after a reasonable amount of time, you may
receive a telephone call from our proxy solicitor, Automatic Data Processing,
reminding you to vote your shares.
Sincerely,
W. Keith Schilit
Acting Chairman of the Board of Directors
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ASM INDEX 30 FUND, INC.
410 Park Avenue
New York, New York 10022
(800) 333-4276
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on June 11, 1999
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To the stockholders of ASM Index 30 Fund, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the
"Special Meeting") of ASM Index 30 Fund, Inc., a Maryland corporation ("ASM"),
will be held at the principal executive offices of ASM at 410 Park Avenue, New
York, New York 10022 on June 11, 1999, at 12:00 p.m., local time, for the
following purposes:
1. To consider and approve a reorganization (the "Reorganization")
in which ASM will be merged with and into the ORBITEX Focus 30
Fund (the "New Orbitex Fund"), a separate, newly-created series
of Orbitex Group of Funds, a business trust organized under the
laws of the State of Delaware (the "Orbitex Group of Funds"),
pursuant to an Agreement and Plan of Reorganization, dated as of
April 26, 1999 (the "Reorganization Agreement"), by and between
the Orbitex Group of Funds and ASM, whereby the New Orbitex Fund,
as the surviving entity in the Reorganization, will succeed to
all of ASM's assets, in exchange for which each share of common
stock, par value $0.001 per share, of ASM outstanding (the "ASM
Common Stock") will represent one no par, Class D share of
beneficial interest of the New Orbitex Fund and the New Orbitex
Fund will assume all of ASM's liabilities.
2. 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.
ASM's stockholders of record as of the close of business on April 9,
1999 (the "Record Date") are entitled to notice of, and to vote at, the Special
Meeting or any adjournment thereof. On the Record Date, 1,259,834.863 shares of
ASM common stock were issued and outstanding and entitled to vote.
A copy of the Reorganization Agreement is attached as Appendix A to the
attached Proxy Statement and forms a part of such Proxy Statement.
THE BOARD HAS UNANIMOUSLY APPROVED THE REORGANIZATION AS BEING
IN THE BEST INTEREST OF ASM'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE REORGANIZATION.
STOCKHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE BOARD
OF DIRECTORS OF ASM. YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM
AT THE SPECIAL MEETING. PROXIES 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 ASM 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
M. Fyzul Khan
May 10, 1999 Secretary
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ASM INDEX 30 FUND, INC.
410 Park Avenue
New York, New York 10022
(800) 333-4276
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PROXY STATEMENT
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This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board") of ASM Index 30
Fund, Inc., a Maryland corporation ("ASM"), for use at a special meeting of the
stockholders of ASM to be held in connection with the proposed merger (the
"Reorganization") of ASM with and into the ORBITEX Focus 30 Fund (the "New
Orbitex Fund"), a separate, newly created 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 ASM at 410 Park Avenue,
New York, New York 10022 on June 4, 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 proxy statement and the
accompanying materials will first be mailed to stockholders on or about May 10,
1999.
In the Reorganization:
o Each outstanding share of ASM's common stock (including fractional
shares) will be converted into an equal number of shares (or
fractions thereof) of the New Orbitex Fund;
o The New Orbitex Fund will generally have the same investment
objectives and policies as ASM, except that the New Orbitex Fund
will operate as an actively-managed fund, will be permitted to
use options and futures contracts and will be authorized to invest
up to 10% of its assets in the securities of companies that are
not included in the Dow Jones Industrial Average but are included
in the S&P 500 Stock Index; and
o Orbitex Management will continue as the investment adviser to the
New Orbitex Fund.
This proxy statement provides you with detailed information about the
proposed Reorganization. We encourage you to read this entire document
carefully.
One or more representatives of PricewaterhouseCoopers LLP, independent
accountants to ASM, are expected to be present at the special meeting of
stockholders of ASM and will have an opportunity to make a statement if they so
desire. Such representatives are expected to be available to respond to
appropriate questions from stockholders.
ASM WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED OCTOBER 31, 1998 TO ANY ASM STOCKHOLDER REQUESTING THAT
REPORT. REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE IN WRITING TO ASM INDEX 30
FUND, INC., C/O MUTUAL FUND SERVICES CO., INC. ("MFS"), P.O. BOX 7177, 6000
MEMORIAL DRIVE, DUBLIN, OHIO 43017, OR BY CALLING 1-800-445-2763. MFS PROVIDES
ADMINISTRATIVE, ACCOUNTING AND TRANSFER AGENCY SERVICES TO ASM.
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ASM'S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 1 DESCRIBED
IN THE NOTICE OF SPECIAL MEETING OF STOCKHOLDERS.
The date of this proxy statement is May 10, 1999
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained in other parts of this proxy statement. We urge you to
review this entire proxy statement.
QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
Q: What is the purpose of the Reorganization?
A: The principal purpose of the reorganization is to permit Orbitex
Management to continue to serve as investment adviser. Orbitex
Management replaced our previous investment adviser. Orbitex Management
was selected by ASM's board of directors after a careful review of
candidates for the position and is already serving as interim
investment adviser to ASM pending completion of the Reorganization.
Q: Why doesn't ASM simply sign a new investment advisory agreement with
Orbitex Management?
A: The corporate structure that will result from the Reorganization will
be consistent with the way Orbitex Management serves its other existing
mutual fund clients and, therefore, will allow Orbitex Management to
serve the New Orbitex Fund more efficiently than if it were to continue
serving ASM in its current form.
Q: What are the benefits of the proposed Reorganization?
A: We believe the reorganization should offer the following benefits:
o The Reorganization will ensure the continued services of our
investment adviser (Orbitex Management), which has substantial
resources and capabilities.
o Holders of Class D shares of beneficial interest in the New
Orbitex Fund will have the benefit of exchange privileges with
Class A shares of beneficial interest in the Orbitex Group of
Funds.
o The New Orbitex Fund, as part of the Orbitex Group of Funds,
will have the benefit of marketing and administrative
resources significantly greater than those available to ASM in
the past.
o Because the New Orbitex Fund's investment policies permit the
use of options and futures contracts, it has the potential to
deliver higher returns.
o Expenses of managing the New Orbitex Fund can be spread over
the several classes of securities that are to be issued by the
New Orbitex Fund.
Q: What will happen if the Reorganization is not completed?
A: We believe that if the proposed Reorganization is not completed, it is
likely that ASM will be forced to liquidate. ASM's interim investment
advisory agreement with Orbitex Management provides that if the
Reorganization is not approved by the requisite vote of ASM's
stockholders, Orbitex Management will not be required to continue to
provide investment advisory services to ASM beyond a reasonable
transitional period required for ASM to retain another adviser or
liquidate. ASM's board of directors believes that, in that situation,
it is unlikely ASM would be able to retain another investment adviser
and so the probable result would be a liquidation of ASM.
Q: What are the detriments of the proposed Reorganization?
A: We expect the Reorganization to have the following detriments:
o The expense ratio of the New Orbitex Fund is likely to be
higher than ASM's has been.
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o Because the New Orbitex Fund's investment policies permit the
use of options and futures contracts, it will be subject to
greater risk of loss.
o Because the New Orbitex Fund will not invest its assets solely
in the securities of the companies that comprise the Dow Jones
Industrial Average ("DJIA") and will not invest in the
securities of the companies that comprise the DJIA in the same
manner as ASM, the performance of the New Orbitex Fund will
not track the performance of the DJIA as closely as did the
performance of ASM.
Q: What will happen to the ASM shares in my account?
A: The ASM shares in your account (including fractional shares) will be
converted into an identical number of shares (or fractions thereof) in
the New Orbitex Fund. The net asset value per share 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 mail your signed proxy card in the enclosed return envelope as
soon as possible, so that your shares can be voted at the special
stockholders' meeting on June 4, 1999.
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
ASM Index 30 Fund, Inc.
410 Park Avenue
New York, New York 10022
Telephone: (212) 891-7900
Fax: (212) 891-7939
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 stockholders' 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 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 ASM nor our
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 ASM and ASM's stockholders.
ASM
ASM is a Maryland corporation registered as an investment company under
the Investment Company Act of 1940, as amended. ASM's investment objective is to
achieve total return through a combination of capital appreciation and current
income. ASM limits its investments to the common stocks of the 30 companies that
make up the well-known Dow Jones Industrial Average (the "DJIA"), all of which
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are listed on the New York Stock Exchange. The stocks of these companies are
widely known and represent major American corporations engaged in a variety of
industries. ASM invests at least 95% of its assets in an equal number of shares
of each of these 30 companies, without regard to the share prices of the
individual stocks, with the goal of tracking the total return of the DJIA. The
balance of any assets not invested in these companies is normally held in cash
or cash equivalents. At April 26, 1999, ASM's net asset value was $27.2 million.
THE NEW ORBITEX FUND
The New Orbitex Fund was organized as a separate fund within the
Orbitex Group of Funds. The number of Class D shares of beneficial interest of
the New Orbitex Fund issued in the Reorganization will correspond to the number
of shares of ASM Common Stock issued and outstanding under Maryland law
immediately prior to the Reorganization. Class D shares will only be offered to
the ASM stockholders. The Class D shares will be no-load and not subject to a
sales or distribution ("Rule 12b-1") charge. The New Orbitex Fund will also
offer Class A, Class B and Class D Shares.
The New Orbitex Fund will invest substantially all of its assets in the
30 companies that comprise the DJIA. Orbitex Management, however, does not
intend to invest in an equal number of shares of each such company. Instead,
Orbitex Management intends to adjust the weighting of the New Orbitex Fund's
investments among the 30 companies in an attempt to increase the return of the
New Orbitex Fund by investing a greater portion of the New Orbitex Fund's assets
in those companies in the DJIA that Orbitex Management believes will perform
better than other companies in the DJIA and reducing the weighting of those
companies that Orbitex Management believes will perform worse. Additionally,
Orbitex Management is authorized to invest up to 10% of the New Orbitex Fund's
assets in the securities of the companies that are not included in the DJIA but
are included in the S&P 500 Stock Index in an attempt to increase the return of
the New Orbitex Fund.
ORBITEX GROUP OF FUNDS
The Orbitex Group of Funds, like ASM, 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.
Currently, the Orbitex Group of Funds consists of three funds, the Orbitex
Strategic Natural Resources Fund, the Orbitex Info-Tech & Communications Fund
and the Orbitex Growth Fund. Each fund is a separate investment portfolio and
has its own investment objectives, programs, policies and restrictions. The
Orbitex Strategic Natural Resources Fund seeks capital growth through a flexible
policy of investing in securities of companies engaged in natural resource
industries and industries supportive to natural resource industries. The Orbitex
Info-Tech & Communications Fund seeks superior long-term capital growth through
selective investment in communication, information and related technology
companies. The Orbitex Growth Fund seeks long-term growth of capital through
investment in securities of companies of all sizes that offer potential for
growth. Additionally, each 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 a 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 a 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.
Each fund is managed by Orbitex Management, which directs the
day-to-day operations of each 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.
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ORBITEX MANAGEMENT, INC.
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 wholly-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 which provides investment services to
individuals and institutions including Canadian unit trusts.
Orbitex Management acts as adviser to the Orbitex Group of Funds. As of
April 6, 1999, Orbitex Management, its subsidiary Orbitex Capital Strategies and
its affiliate Orbitex Management Ltd. have had an aggregate of approximately
$1.2 billion in investment company and other portfolio assets under management.
THE REORGANIZATION
In the Reorganization:
o Each outstanding share of ASM's common stock (including
fractional shares) will be converted into an equal number of
Class D Shares (or fractions thereof) of the New Orbitex Fund.
o The New Orbitex Fund will generally have the same investment
objectives and policies as ASM except that the New Orbitex
Fund will operate as an actively-managed fund, will be
permitted to use options and futures contracts and will be
authorized to invest up to 10% of its assets in the securities
of the companies that are not included in the DJIA but are
included in the S&P 500 Stock Index.
o Orbitex Management will continue as the investment adviser to
the New Orbitex Fund and will be entitled to an investment
management fee at an annual rate equal to 0.75 of 1%.
o The New Orbitex Fund will, by operation of law, succeed to all
of ASM's assets and all of its liabilities.
o ASM's existing board of directors will be replaced by the
board of trustees of the Orbitex Group of Funds, none of whom
is a member of ASM's board.
THE SPECIAL MEETING OF STOCKHOLDERS
TIME, PLACE: ASM's special meeting of stockholders is
scheduled to be held at 12:00 p.m., on
June 4, 1999 at its principal executive
offices at 410 Park Avenue, New York,
New York 10022.
RECORD DATE: ASM's board of directors has fixed the
close of business on April 9, 1999 as
the record date (the "Record Date")
for the determination of ASM's
stockholders entitled to notice of and
to vote at the special meeting of
stockholders. On the Record Date,
1,259,834.863 shares of ASM'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 ASM's outstanding
shares of common stock is required to
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approve the Reorganization and the
Reorganization Agreement. Broker
non-votes and abstentions will have
the same effect as votes against
Reorganization.
QUORUM: The presence, in person or by proxy, at
the special meeting of one-third of
ASM'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
proxy statement is properly signed and
returned, it will be voted in accordance
with the instructions on that proxy
card. If no instructions are specified,
the shares represented by the proxy card
will be voted "FOR" the Reorganization.
RECOMMENDATION OF ASM'S
BOARD OF DIRECTORS: ASM'S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE
REORGANIZATION.
<PAGE>
PROPOSAL
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TO CONSIDER AND APPROVE THE PROPOSED REORGANIZATION
AND THE REORGANIZATION AGREEMENT
GENERAL
On March 9, 1999, the Board of Directors of ASM (the "Board")
unanimously approved, and recommended that the ASM Stockholders approve, an
Agreement and Plan of Reorganization (the "Reorganization Agreement") by and
between ASM and the Orbitex Group of Funds substantially in the form attached
hereto as Appendix A. The Reorganization Agreement provides, among other things,
for the merger of ASM, a Maryland corporation, into the ORBITEX Focus 30 Fund
(the "New Orbitex Fund"), a separate, newly-created series of the Orbitex Group
of Funds, whereby the New Orbitex Fund will be the surviving entity. Each ASM
Stockholder will receive for his or her shares of ASM Common Stock an equal
number of no par, Class D shares of beneficial interest of the New Orbitex Fund
(each an "NOF Share" and together the "NOF Shares"). (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 interim investment adviser to ASM. 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 principal purpose of the Reorganization is to permit Orbitex
Management to continue to serve as investment adviser. Orbitex Management
replaced ASM's previous investment adviser. On December 23, 1998, at a meeting
of the independent directors of the Board, the directors voted to notify ASM's
former advisor, Vector Index Advisers, Inc. ("Vector"), of the termination of
the management agreement, dated November 1, 1997, by and between ASM and Vector
(the "Vector Agreement"), effective sixty days after delivery of such notice of
termination, following Vector's announcement that it planned to seek protection
under the U.S. bankruptcy laws. In seeking a replacement for Vector, the Board
interviewed several potential replacement advisers, including Orbitex
Management. Orbitex Management agreed to serve as interim investment adviser to
ASM and to assume Vector's obligation to ASM under an expense reimbursement
receivable if, among other things, the Board would agree to recommend the
Reorganization to the ASM 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 ASM, 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 ASM
Stockholders, the Board, considering the best interests of the ASM Stockholders,
took into account all such factors as they deemed relevant, but gave no greater
weight to any of the following factors. Among such factors were the following:
nature, quality and extent of the services furnished by Orbitex Management; the
proposed advisory fee and cap; the advantages and possible disadvantages to ASM
of having a manager which also serves as adviser to other series within a fund;
the investment record of Orbitex Management; the proposed modification of ASM's
investment policy to allow for the possible future use of options and futures
strategies; the investment of up to 10% of the New Orbitex Fund's assets in the
securities of the companies that are not included in the DJIA but are included
in the S&P Stock Index; 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 risks assumed by Orbitex Management;
possible benefits to Orbitex Management from serving as manager to ASM; the
financial resources of Orbitex Management; and the importance of obtaining high
quality professional services for ASM.
Orbitex Management currently serves as interim adviser pursuant to a
management agreement, dated February 26, 1999 and effective March 1, 1999, by
and between ASM and Orbitex Management (the "Interim Orbitex Agreement"). The
Board approved the Interim Orbitex Agreement on February 26, 1999. The Interim
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
7
<PAGE>
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 120 day period following the termination of the prior agreement. The
terms and conditions of the Interim Orbitex Agreement are substantially the same
as those of the Vector Agreement; however, Orbitex has not continued Vector's
voluntary agreement to limit ASM's expenses to 0.18% of the average daily net
assets of ASM. Under the Interim Orbitex Agreement, Orbitex Management maintains
a continuous investment program for ASM by making decisions and placing orders
to buy, sell or hold particular securities. Orbitex Management also supervises
all matters relating to the operation of ASM and obtains its corporate officers,
clerical staff, office space, equipment and services. Under the Interim
Management Agreement, Orbitex Management is entitled to receive a monthly fee at
an annual rate of 0.08 of 1% of ASM's average daily net assets for services
provided to ASM. In addition to the fee payable to Orbitex Management, ASM 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 ASM 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 ASM and the
legal obligations with respect to which ASM may have to indemnify its officers
and directors.
The Interim Orbitex Agreement terminates pursuant to the provisions of
Rule 15a-4 discussed above on July 1, 1999, unless earlier terminated by either
ASM or Orbitex Management upon 60 days' notice to the other party. Orbitex
Management has explicitly advised the Board that it will not continue as adviser
to ASM if the ASM Stockholders fail to approve the Reorganization. Orbitex
Management has, however, agreed that if the ASM Stockholders fail to approve the
Reorganization by the requisite vote, it will continue to serve as interim
investment adviser to ASM for a reasonable period of time until a replacement
adviser is selected or until ASM is liquidated. The Board believes that in such
a case the prospects of finding a replacement adviser would be minimal. Thus, a
failure to approve the Reorganization by the requisite vote will likely result
in the liquidation of ASM.
PROCEDURES FOR THE REORGANIZATION
In order to accomplish the Reorganization, the New Orbitex Fund was
organized as a separate fund within the Orbitex Group of Funds. The number of
NOF Shares corresponds to the number of shares of ASM Common Stock issued and
outstanding on the Record Date under Maryland law. Prior to the proposed
Reorganization, the New Orbitex Fund will have nominal assets and no
liabilities. The obligations of each of ASM and the Orbitex Group of Funds to
consummate the Reorganization are conditioned upon several customary conditions
having been satisfied, including without limitation the approval of the
Reorganization by the requisite number of ASM Stockholders and the effectiveness
of the Orbitex Group of Fund's post-effective amendment to its registration
statement under the Securities Act of 1933, as amended, relating to the New
Orbitex Fund. At the effective time of the Reorganization as defined in the
Reorganization Agreement (the "Effective Time"), ASM will be merged with and
into the New Orbitex Fund, as a result of which the New Orbitex Fund, as the
surviving entity in the Reorganization, will acquire and assume all of ASM's
assets and liabilities. Each share of ASM Common Stock outstanding (including
fractional shares) prior to the Reorganization will represent one NOF Share (or
fraction thereof) after the Reorganization. The value of each ASM Stockholder's
account with the New Orbitex Fund immediately after the Reorganization will be
the same as the value of such ASM Stockholder's account with ASM immediately
prior to the Reorganization.
It will not be necessary for holders of certificates representing
shares of ASM Common Stock to exchange their certificates for new certificates
representing the NOF Shares following consummation of the Reorganization. New
certificates will not be issued by ASM after the Reorganization to the ASM
Stockholders unless specifically requested in writing. ASM Stockholders who have
not been issued certificates and whose shares are held in an open account will
automatically have those shares transferred to an open account of the New
Orbitex Fund and designated as NOF Shares.
8
<PAGE>
At the Effective Time, an investment advisory agreement in the form
attached hereto as Appendix B (the "New Orbitex Fund Agreement"), by and between
the Orbitex Group of Funds and Orbitex Management, in respect of the New Orbitex
Fund will become effective.
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 wholly-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 which provides investment services to
individuals and institutions including Canadian unit trusts.
Orbitex Management acts as adviser to the Orbitex Group of Funds. As of
April 6, 1999, Orbitex Management, its subsidiary ORBITEX Capital Strategies and
its affiliate Orbitex Management Ltd. have an aggregate of approximately $1.2
billion in investment company and other portfolio assets under management.
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 years for his or
her own account or in the capacity of director, officer, partner or trustee. All
directors and officers have as their business address 410 Park Avenue, New York,
New York 10022. Each director or principal executive of Orbitex Management that
is an officer or trustee of the Orbitex Group of Funds is indicated by an
asterisk next to his or her name.
<TABLE>
<S> <C> <C>
Name, Age and Position with Orbitex Management and
Business Address Age Principal Occupation within the Past Five Years
---------------- -- -----------------------------------------------
BASHAR N. AZZOUZ 40 Chief Trader and Portfolio Manager. Vice
President, Societe Generale, New York (Foreign
Exchange) (1995-1996); Director, Swiss Bank
Corporation, New York (Foreign Exchange)
(1993-1995).
* THOMAS T. BACHMANN 52 Co-Chairman of the Board of Directors
(1996-present). 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 KAHN 27 Legal Counsel and Secretary (March 1998-present);
Corporate Secretary of Orbitex Group of Funds;
Attorney at CIBC Oppenheimer (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).
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
Name, Age and Position with Orbitex Management and
Business Address Age Principal Occupation within the Past Five Years
---------------- -- -----------------------------------------------
* 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).
COURTNEY D. SMITH 47 Executive Vice President and Chief Investment
Officer. Senior Vice-President, BerSec
International (Broker/Dealer) (1996); Managing
Director, Daishin Securities Co., Ltd. (Securities
Representative Office) (1994-1996).
</TABLE>
DESCRIPTION OF THE NEW ORBITEX FUND AGREEMENT
The New Orbitex Fund Agreement by and between the Orbitex Group of
Funds and Orbitex Management in respect to the New Orbitex Fund is substantially
identical to the management agreement by and between the Orbitex Group of Funds
and Orbitex Management in respect of each of the other funds in the Orbitex
Group of Funds. Pursuant to the terms of the New Orbitex Fund Agreement, Orbitex
Management, subject to the general supervision of the trustees of the Orbitex
Group of Funds (the "Trustees") and in conformance with the stated policies of
the New Orbitex Fund, will render investment supervisory and corporate
administrative services to the New Orbitex Fund. It will be the responsibility
of Orbitex Management to perform, or supervise the performance of, services in
connection with the New Orbitex Fund, including (i) the development of a
continuing program for the management of the New Orbitex Fund's assets; (ii) the
placement of buy, sell or exchange orders, or other trade 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 New Orbitex Fund
Agreement, Orbitex Management will be entitled to receive a management fee at an
annual rate of 0.75 of 1%. In addition, Orbitex Management has agreed to waive
its management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratio of the New Orbitex Fund in
respect of the Class D shares does not exceed 0.60 of 1% until January 1, 2000
and 0.75 of 1% until July 1, 2000. The Board believes the increase in the
management fee from the fee currently being paid by ASM is justified due to the
fact that at the Effective Time the New Orbitex Fund, while continuing primarily
to focus its investments in the securities of the 30 companies that comprise the
Dow Jones Industrial Average ("DJIA"){1}, will not function as an index fund as
has ASM and will be authorized to invest up to 10% of its assets in the
securities of the companies that are not included in the DJIA but are included
in the S&P 500 Stock Index. Therefore, instead of the "passive" management
involved in an index fund, the assets of the New Orbitex Fund will be actively
managed by Orbitex Management. As a result, Orbitex Management will be required
to determine which securities to buy or sell based on its research and analysis
**FOOTNOTES**
{1} "Dow Jones Industrial Average" and "DJIA" are the property of Dow Jones &
Company, Inc. ASM is neither affiliated with, nor endorsed by, Dow Jones
& Company, Inc.
10
<PAGE>
of the companies comprising the DJIA. In addition, Orbitex Management may in the
future engage in options and futures hedging strategies for the New Orbitex
Fund.
The information set forth below shows what ASM'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 ASM's assets as of April 26,
1999 of approximately $27.2 million.
12 MONTHS ENDED DECEMBER 31, 1998
---------------------------------
% OF AVERAGE
DAILY NET ASSETS AMOUNT OF FEE % CHANGE
---------------- ------------- --------
MANAGEMENT FEE
Present Fee 0.08% $ 25,319.0
Proposed Fee 0.75% $237,365.0
--------------- -----------
Difference 0.67% $212,046.0 837%
ADMINISTRATIVE FEE
Present Fee N/A $25,000.00
Proposed Fee 0.10% $31,649.00
---------- -----------
Difference N/A $ 6,649.00 27%
The following table describes the fees and expenses that an ASM
Stockholder may pay in connection with an investment in ASM today and in the New
Orbitex Fund on a pro forma basis.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES ASM NEW ORBITEX FUND
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) FUND CLASS D PRO FORMA
- --------------------------------------------------------------------------------
Maximum Sales Charge (load)on Purchases None None
(as a percentage ofoffering price)
Sales Charge on Reinvested Dividends None None
Redemption Fees None None
Exchange Fees None None
11
<PAGE>
- --------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES ASM NEW ORBITEX FUND
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) FUND CLASS D PRO FORMA
- --------------------------------------------------------------------------------
Advisory Fee 0.08% 0.00%
Other Annual Expenses 1.08% 0.60%
- --------------------- ----- -----
Total Fund Operating Expenses 1.16%{2} 0.60%{3}
The following example{4} indicates both for the current expenses of ASM
and the pro-forma expenses of the New Orbitex Fund, 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 ASM: $118.0 $368.0 $638.0 $1,409.0
Pro-Forma of the
New Orbitex Fund: $ 61.0 $192.0 $335.0 $ 750.0
The New Orbitex Fund Agreement may be terminated at any time by either
party thereto, without the payment of any penalty, upon 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 the New Orbitex
Fund 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 the New Orbitex Fund may also be held by other funds
for which Orbitex Management acts as a manager or adviser. Securities may be
held by, or be appropriate investments for, the New Orbitex Fund 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 the New Orbitex Fund, or other funds 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 the New Orbitex Fund are
not exclusive under the terms of the New Orbitex Fund Agreement and Orbitex
Management is also free to, and does, render such services to others.
Set forth below is a table listing the other funds for which Orbitex
Management currently acts as investment adviser, together with certain
information concerning the investment advisory fees paid by each such fund, all
of which are funds within the Orbitex Group of Funds.
**FOOTNOTES**
{2} Prior to March 1, 1999, ASM's prior adviser voluntarily agreed to waive
fees and reimbursement expenses so that the expense ratio would not
exceed 0.18%.
{3} Orbitex Management has agreed to waive its management fee and to
reimburse expenses, other than extraordinary or non-recurring expenses,
so that the expense ratio of the New Orbitex Fund does not exceed 0.60
of 1% until January 1, 2000 and 0.75 of 1% until July 1, 2000.
{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 ASM's expense levels. This example is the same
whether an ASM 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.
12
<PAGE>
<TABLE>
<CAPTION>
Advisory Fee
-------------------------------------------------
<S> <C> <C>
Net Assets Annualized Rate
at April 6, (percentage of
1999 average daily
Fund (in millions) net assets)
Orbitex Strategic Natural Resources Fund $ 4.3 1.25%
Orbitex Info-Tech & Communications Fund $52.9 1.25%
Orbitex Growth Fund $ 1.6 0.75%
</TABLE>
The description of the New Orbitex Fund Agreement is qualified in its
entirety by reference to the New Orbitex Fund Agreement which is attached hereto
as Appendix B.
INVESTMENT STYLE
ASM's current investment objective is to track the total return of the
30 companies that make up the DJIA, all of which are listed on the New York
Stock Exchange. The stocks of these companies are widely known and represent
major American corporations engaged in a variety of industries. ASM currently
seeks to achieve its investment objectives by limiting its investments to the
common stocks of these companies. ASM invests at least 95% of its assets in an
equal number of shares of each of these 30 companies, without regard to the
share prices of the individual stocks. The balance of any assets not invested in
these companies is normally held in cash or cash equivalents.
The New Orbitex Fund will have a different management style from the
ASM Fund. Rather than continue to operate as an index-style fund as has ASM, the
Board believes that it is in the best interests of the ASM Stockholders to
employ the investment style of the New Orbitex Fund as an actively-managed fund.
Accordingly, while the New Orbitex Fund will invest primarily all of its assets
in the 30 companies that comprise the DJIA, Orbitex Management does not intend
to invest in an equal number of shares of each such company. Instead, Orbitex
Management intends to adjust the weighting of the New Orbitex Fund's investments
among the 30 companies in an attempt to increase the return of the New Orbitex
Fund by investing a greater portion of the New Orbitex Fund's assets in those
companies in the DJIA that Orbitex Management believes will perform better than
other companies in the DJIA and reducing the weighting of those companies that
Orbitex Management believes will perform worse. Orbitex Management will also be
authorized to invest up to 10% of the New Orbitex Fund's assets in the
securities of the companies that are not included in the DJIA but are included
in the S&P 500 Stock Index (the "S&P 500"). In addition, the Board believes that
the New Orbitex Fund's assets may be invested more effectively if the New
Orbitex Fund is permitted to use a portion of its assets to engage in option and
futures transactions (collectively, "Derivative Transactions"). Orbitex
Management will maintain a portion of the New Orbitex Fund's assets in cash to
process transactions of beneficial owners and to pay expenses. In order to
reduce the negative effect this uninvested cash would have on the New Orbitex
Fund's performance, Orbitex Management may purchase or sell futures and options
contracts. Such an investment strategy will enable the New Orbitex Fund's cash
balance to produce a return similar to that of the underlying security or index
on which the contract is based. Orbitex Management does not intend to engage in
transactions in futures and options contracts for speculative purposes, but it
may, to a limited extent, engage in such transactions for the purpose of
offsetting investment risk. This is an investment strategy that Orbitex
Management intends to use only upon the future receipt of approval by the Board
of Trustees of the Orbitex Group of Funds expressly adopting this strategy.
The Board believes that in a rapidly changing market it may become
important for the New Orbitex Fund to have the flexibility to purchase such
options and futures contracts and engage in these strategies because, while
under certain market conditions the securities of the DJIA may be deemed most
appropriate for purchase by the New Orbitex Fund, under other market conditions
such other types of instruments and investment techniques may be deemed
necessary for the New Orbitex Fund to achieve its investment objectives. By
expanding the universe of instruments the New Orbitex Fund may at a future date
purchase and the investment techniques in which the New Orbitex Fund may engage,
13
<PAGE>
Orbitex Management will be given the opportunity to adjust the New Orbitex
Fund's portfolio from time to time in such manner as it then deems appropriate.
ASM's fundamental investment restrictions are virtually identical to
those of the New Orbitex Fund except that ASM cannot purchase or sell futures or
options contracts and the New Orbitex Fund may purchase or sell such contracts.
While the New Orbitex Fund's fundamental investment restrictions do not prevent
it from purchasing or selling futures or options contracts, Orbitex Management
will not enter into such contracts unless the Board of Trustees of the Orbitex
Group of Funds approves the use of such contracts.
The text of ASM's investment restrictions and the New Orbitex Fund's
investment restrictions are attached hereto as Appendix D.
PRINCIPAL INVESTMENT RISKS. As an actively-managed fund and as a fund
that is permitted to invest up to 10% of its assets in securities of companies
that are not included in the DJIA but are included in the S&P 500, there will be
an increased risk that the New Orbitex Fund's returns will deviate from the
returns of the DJIA. For example, the New Orbitex Fund's returns may be worse
than those of the DJIA if Orbitex Management's judgments and decisions regarding
the relative weighting of the securities held of each of the 30 companies is
incorrect. In addition, gains and losses on Derivatives Transactions depend on
Orbitex Management's ability to correctly predict the direction of securities
prices or other factors. Risks in the use of these derivatives include: (a) the
risk that securities prices or other factors affecting the value of ASM's
investments do not move in the directions being hedged against, in which case
ASM will have incurred the cost of the derivative (either its purchase price or,
by writing an option, losing the opportunity to profit from increases in the
value of the securities covered) with no tangible benefit; (b) imperfect
correlation between the prices of derivatives and the movements of the
securities prices being hedged; (c) the possible absence of a liquid secondary
market for any particular derivative at any time; (d) the potential loss if the
counterpart to the transaction does not perform as promised; and (e) the
possible need to defer closing out certain positions to avoid adverse tax
consequences. In particular, the risk of loss from certain types of futures
transactions is potentially unlimited.
THE ORBITEX GROUP OF FUNDS
GENERAL. The Orbitex Group of Funds, like ASM, 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
financial statements of the Orbitex Group of Funds for the period ended April
30, 1998 are incorporated by reference into this proxy statement from the
Orbitex Group of Funds' annual report for the fiscal year ended April 30, 1998
and its semi-annual report for the period ended October 31, 1998, each attached
hereto as Appendix C.
The Orbitex Group of Funds was established pursuant to an Agreement and
Declaration of Trust, dated December 31, 1996, as amended (the "Trust
Instrument"). Currently, the Orbitex Group of Funds consists of three funds, the
Orbitex Strategic Natural Resources Fund, the Orbitex Info-Tech & Communications
Fund and the Orbitex Growth Fund. Each fund is a separate investment portfolio
and has its own investment objectives, programs, policies and restrictions. The
Orbitex Strategic Natural Resources Fund seeks capital growth through a flexible
policy of investing in securities of companies engaged in natural resource
industries and industries supportive to natural resource industries. The Orbitex
Info-Tech & Communications Fund seeks superior long-term capital growth through
selective investment in communication, information and related technology
companies. The Orbitex Growth Fund seeks long-term growth of capital through
investment in securities of companies of all sizes that offer potential for
growth. Additionally, each 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 a 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 a 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.
14
<PAGE>
Each fund is managed by Orbitex Management, which directs the
day-to-day operations of each fund. State Street Bank and Trust Company serves
as administrator, custodian, accounting services agent, transfer agent and
dividend dispensing agent for each fund.
MANAGEMENT OF THE ORBITEX GROUP OF FUNDS. Trustees and officers of the
Orbitex Group of Funds, together with information as to their principal business
occupations during the last five years, are shown below. Each Trustee who is
considered an "interested person" of the Orbitex Group of Funds (as defined in
Section 2(a)(19) of the 1940 Act) (as "Interested Person") is indicated by an
asterisk next to his or her name.
<TABLE>
<S> <C> <C>
Name, Age and Position with the Orbitex Group of Funds and
Business Address Age Principal Occupation within the Past Five Years
---------------- --- -----------------------------------------------
RONALD ATLBACH 51 Trustee of the Orbitex Group of Funds. Chairman,
1540 West Park Avenue Paul Sebastian, Inc. (perfume distributor)
Ocean, New Jersey 07712 (1994-present); President, Olcott Corporation
(perfume distributor) (1992-1994).
* THOMAS T. BACHMANN 52 Trustee of the Orbitex Group of Funds.
410 Park Avenue Co-Chairman of the Board of Trustees, Orbitex
New York, NY 10022 Management (investment management) (1996-present);
Chairman, Orbitex Management, Ltd. (investment
management) (1986-present).
* OTTO J. FELBER 66 Trustee of the Orbitex Group of Funds. President
250 Bloor Street East of Felcom Capital, Corp. (1985-present); President
Suite 300 and Vice-Chairman, Altamira Management Ltd.
Toronto, Ontario (investment management) (1987-1997).
Canada M2W 1E6
STEVE HAMRICK 47 Trustee of the Orbitex Group of Funds. Chairman,
Carey Financial Corp. Carey Financial Corporation (1995-present); Chief
50 Rockefeller Plaza Executive Officer, Wall Street Investor Services
New York, NY 10020 (brokerage) (1994-1995); Senior Vice President,
PaineWebber Incorporated (1988-1994).
M. FYZUL KHAN 27 Legal Counsel and Corporate Secretary of the
410 Park Avenue Orbitex Group of Funds (March 1998-present);
New York, NY 10022 Attorney at CIBC Oppenheimer (August 1997-March
1998); law student at Widener University School of
Law(September 1994-June 1997).
JOHN MORGAN 69 Trustee of the Orbitex Group of Funds. Chairman
32 Edge Hill Road and Director, CIBC Trust Company (1997-present);
Westmount Vice President, Midland Walwyn (investment
Quebec, Canada, H34 1E9 banking) (1990-1997).
* JAMES L. NELSON 49 Chairman, President, Assistant Treasurer and
410 Park Avenue Assistant Secretary of the Orbitex Group of Funds.
New York, NY 10022 Director and Chief Executive Officer, Orbitex
Management, Inc., Chief Executive Officer and
President, Orbitex, Inc. (business development)
(1995-present); President AVIC Group International
(communications) (1993-1995); President,
Eaglescliff Corporation (consulting)
(1986-present).
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
Name, Age and Position with the Orbitex Group of Funds and
Business Address Age Principal Occupation within the Past Five Years
---------------- --- -----------------------------------------------
KIMBERLY RATZ 38 Treasurer of the Orbitex Group of Funds. Chief
410 Park Avenue Financial Officer, America's Mortgage Source
New York, NY 10022 (Mortgage Banking) (1996-1997); Chase Manhattan
Mortgage (Mortgage Banking) (finance Manager)
(1988-1996)
RICHARD EDWARD STIERWALT 44 Trustee of the Orbitex Group of Funds. Chief
410 Park Avenue Executive Officer, President and Director.
New York, NY 10022 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).
</TABLE>
Each Trustee of the Orbitex Group of Funds who is not an Interested
Person of the Orbitex Group of Funds or Orbitex Management receives an annual
fee of $5,000. The Orbitex Group of Funds also reimburses each such Trustee for
travel and other expenses incurred in attending such meetings.
Portfolio Transactions and Brokerage Practices of the Orbitex Group of
Funds. Subject to the general supervision of the Trustees, Orbitex Management
will be responsible for making decisions with respect to the purchase and sale
of portfolio securities on behalf of the New Orbitex Fund. Orbitex Management
will also be responsible for the implementation of those decisions, including
the selection of broker-dealers to effect portfolio transactions, the
negotiation of commissions, and the allocation of principal business and
portfolio brokerage.
In purchasing and selling the portfolio securities of the New Orbitex
Fund, it will be Orbitex Management's policy to obtain quality execution at the
most favorable prices through responsible broker-dealers and, in the case of
agency transactions, at competitive commission rates where such rates are
negotiable. However, under certain conditions, the New Orbitex Fund could pay
higher brokerage commissions in return for brokerage and research services. In
selecting broker-dealers to execute the New Orbitex Fund's portfolio
transactions, consideration will be given to such factors as the price of the
security, the rate of the commission, the size and difficulty of the order, the
reliability, integrity, financial condition, general execution and operational
capabilities of competing brokers and dealers, their expertise in particular
markets and the brokerage and research services that they can provide to Orbitex
Management or the New Orbitex Fund. It would not be the policy of Orbitex
Management to seek the lowest available commission rate where it is believed
that a broker or dealer charging a higher commission rate would offer greater
reliability or provide better price or execution.
Transactions on stock exchanges involve the payment of brokerage
commissions. In transactions on stock exchanges in the United States, these
commissions would be negotiated. Traditionally, commission rates have generally
not been negotiated on stock markets outside the United States. In recent years,
however, an increasing number of overseas stock markets have adopted a system of
negotiated rates, although a number of markets continue to be subject to an
established schedule of minimum commission rates. It is expected that equity
securities will ordinarily be purchased in the primary markets, whether
over-the-counter or listed, and that listed securities may be purchased in the
over-the-counter market if such market is deemed the primary market. In the case
of securities traded on the over-the-counter markets, there would be generally
no stated commission, but the price usually would include an undisclosed
commission or markup. In underwritten offerings, the price would include a
disclosed, fixed commission or discount.
With respect to equity securities, Orbitex Management would effect
principal transactions on behalf of the New Orbitex Fund with a broker or dealer
who furnishes brokerage and/or research services, designate any such broker or
16
<PAGE>
dealer to receive selling concessions, discounts or other allowances or
otherwise deal with any such broker or dealer in connection with the acquisition
of securities in underwritings. The prices the New Orbitex Fund would pay to
underwriters of newly-issued securities usually include a concession paid by the
issuer to the underwriter. Orbitex Management may receive research services in
connection with brokerage transactions, including designations in fixed price
offerings.
Orbitex Management receives a wide range of research services from
brokers and dealers covering investment opportunities throughout the world,
including information on the economies, industries, groups of securities,
individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the
countries in which a Fund's portfolio is likely to be invested. Orbitex
Management cannot readily determine the extent to which commissions charged by
brokers reflect the value of their research services, but brokers occasionally
suggest a level of business they would like to receive in return for the
brokerage and research services they provide. To the extent that research
services of value are provided by brokers, Orbitex Management may be relieved of
expenses which it might otherwise bear. In some cases, research services are
generated by third parties but are provided to Orbitex Management by or through
brokers.
Certain broker-dealers which provide quality execution services also
furnish research services to Orbitex Management. Orbitex Management has adopted
a brokerage allocation policy embodying the concepts of Section 28(e) of the
Securities Exchange Act of 1934, as amended, which permits an investment adviser
to cause its clients to pay a broker which furnishes brokerage or research
services a higher commission than that which might be charged by another broker
which does not furnish brokerage or research services, or which furnishes
brokerage or research services deemed to be of lesser value, if such commission
is deemed reasonable in relation to the brokerage and research services provided
by the broker, viewed in terms of either that particular transaction or the
overall responsibilities of Orbitex Management with respect to the accounts as
to which it exercises investment discretion. Accordingly, Orbitex Management may
assess the reasonableness of commissions in light of the total brokerage and
research services provided by each particular broker. Orbitex Management may
also consider sales of the Orbitex Group of Funds' shares as a factor in the
selection of broker-dealers.
Portfolio securities will not be purchased from or sold to Orbitex
Management, or any affiliated person of Orbitex Management, except to the extent
permitted by rule or order of the Securities and Exchange Commission (the
"SEC").
CERTAIN COMPARATIVE INFORMATION ABOUT MARYLAND FUNDS AND DELAWARE FUNDS
SUMMARY OF THE TRUST INSTRUMENT AND BY-LAWS. The New Orbitex Fund 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 the New Orbitex Fund will be governed by the Trust Instrument, the Orbitex
Group of Funds' By-Laws (the "By-Laws") and applicable Delaware law, rather than
by ASM's Articles of Incorporation, ASM's By-Laws and Maryland Law. The
operations of the New Orbitex Fund 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 the New Orbitex
Fund. 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 the New Orbitex Fund 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 ASM. Under Maryland
Law, a director of ASM 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 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 would 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
17
<PAGE>
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 ASM have substantially similar rights
under ASM'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 ASM
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
statutory or other authority, however, limiting Beneficial Owner liability does
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 the New Orbitex Fund'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 ASM, Maryland law permits
ASM 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 ASM. In addition, ASM'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
18
<PAGE>
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. ASM's By-laws, however, require ASM 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 ASM provide that a special meeting of stockholders may be called by
(i) the Chairman of the Board, (ii) the President of ASM, (iii) a majority of
the Board's 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 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 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. ASM'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. The ASM Articles of Incorporation requires
one-third 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 months or more and who own at least five percent
of the shares of ASM may inspect the books of account and stock ledger of ASM.
The New Orbitex Fund's Beneficial Owners have the same rights to inspect the
records, accounts and books of the New Orbitex Fund 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
ASM, 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. ASM 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.
ASM Stockholders on the Record Date may obtain copies of the organizational
documents of ASM by calling the telephone number set forth on the first page of
this Proxy.
NO DISSENTERS' RIGHTS OF APPRAISAL
Maryland law does not entitle the ASM Stockholders to appraisal rights
(i.e., to demand and receive fair value of their stock) in the event of a merger
involving the stock of an open-end investment company registered with the SEC,
such as the Orbitex Group of Funds. Consequently, the ASM Stockholders will be
bound by the terms of the Reorganization Agreement if approved at the Special
19
<PAGE>
Meeting. Any of the ASM Stockholders, however, may redeem his or her shares at
net asset value prior to the closing date of the Reorganization.
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 ASM into the New Orbitex Fund pursuant to the
Reorganization Agreement will not give rise to the recognition of income, gain
or loss for federal income tax purposes to ASM or the ASM Stockholders. An ASM
Stockholder's adjusted basis for tax purposes in shares of the New Orbitex Fund
after the Reorganization will be the same as his or her adjusted basis for tax
purposes in the shares of ASM Common Stock immediately before the
Reorganization. Each ASM 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 treated under the pooling method of
accounting.
EXPENSES
The expenses related to the Reorganization will be borne by Orbitex
Management.
REQUIRED VOTE
The affirmative vote of two-thirds of the votes of shares of ASM Common
Stock entitled to vote on Proposal 1 is required to approve Proposal 1. For
purposes of the vote for Proposal 1, abstentions and broker non-votes will have
the same effect as votes cast against Proposal 1.
RECOMMENDATION OF THE ASM BOARD OF DIRECTORS
The Board has unanimously approved the Reorganization and has
determined that the Reorganization is in the best interests of ASM and that the
interests of existing stockholders of ASM will not be diluted as a result of
the Reorganization. The ASM BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE
REORGANIZATION.
20
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
-----------------------------------------------
To the knowledge of the Board, the following persons owned of record 5%
or more of ASM Common Stock outstanding shares at March 9, 1999:
<TABLE>
<CAPTION>
<S> <C> <C>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- ----------------------------------------------------- ------------------------------------- --------------------------------
Donaldson Lufkin & Jenrette 5.9%
Pershing Division
Jersey City, NJ 07311-2052
National Financial Services Corp. 12.6%
Church Street Station, 5th Floor
P.O. Box 3908
New York, NY 10008-3908
National Investor Services 7.3%
For the Exclusive Benefit of Our Customers
55 Water Street
New York, NY 10041
FTC & Co. 16.3%
Attn: Datalynx
House Account
P.O. Box 173736
Denver, CO 80217-3736
</TABLE>
As of March 9, 1999, the officers and directors of ASM owned less than 1% of
ASM.
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 or any
adjournments 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 ASM and officers and employees of Orbitex
Management.
Automatic Data Processing ("ADP") has been retained to assist in the
solicitation of proxies. ADP will be paid approximately $3,500 by Orbitex
Management. Orbitex Management will reimburse ADP for its related out-of-pocket
21
<PAGE>
expenses. The solicitation of proxies will be largely by mail, but may include,
without additional cost to ASM, telephone, telegraphic or oral communications by
directors, officers or employees of Orbitex Management.
The expense of preparation, printing and mailing this proxy statement
and the other proxy materials that accompany the 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 ASM Common Stock.
RESPECTFULLY SUBMITTED,
M. Fyzul Khan
Secretary
Dated: May 10, 1999
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO
WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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.
22
<PAGE>
APPENDIX A
--------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
by and between
ORBITEX GROUP OF FUNDS
and
ASM INDEX 30 FUND, INC.
Dated as of April 29, 1999
--------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I CERTAIN DEFINITIONS......................................1
ARTICLE II THE MERGER...............................................3
2.1. The Merger...............................................3
2.2. Effective Time...........................................3
2.3. Closing..................................................4
2.4. Trustees and Officers of the Surviving Entity............4
2.5. Effects of the Merger....................................4
2.6. Further Assurance........................................4
ARTICLE III CONVERSION OF SHARES.....................................4
3.1. Conversion of Capital Stock..............................4
3.2. Exchange of Certificates.................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE FUND...............5
4.1. Organization and Qualification...........................5
4.2. Authority, Authorization and Enforceability..............5
4.3. Capitalization...........................................5
4.4. Subsidiaries.............................................6
4.5. No Conflicts.............................................6
4.6. Financial Statements; No Undisclosed Liabilities.........6
4.7. Books and Records........................................6
4.8. Legal Proceedings........................................7
4.9. No Brokers or Finders....................................7
4.10. Investment Company Registration..........................7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE TRUST..............7
5.1. Organization and Qualification...........................7
5.2. Authority, Authorization and Enforceability..............7
5.3. Capitalization...........................................8
5.4. No Conflicts.............................................8
5.5. Legal Proceedings........................................8
5.6. No Brokers or Finders....................................8
ARTICLE VI PRE-CLOSING COVENANTS....................................8
A-2
<PAGE>
Page
----
6.1. Investigations and Examinations..........................8
6.2. Conduct of Business......................................8
6.3. No Shopping..............................................8
6.4. Covenant to Proceed......................................9
6.5. Notice of Material Changes...............................9
6.6. Regulatory Approvals.....................................9
6.7. No Default...............................................9
6.8. Preparation of Proxy Materials...........................9
6.9. Financial Statements.....................................9
ARTICLE VII CONDITIONS TO THE CLOSING...............................10
7.1. Conditions Precedent to the Obligations of the
Fund to Complete the Closing..........................10
7.2. Conditions Precedent to the Obligations of the
Trust to Complete the Closing.........................11
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............13
ARTICLE IX TERMINATION.............................................13
ARTICLE X MISCELLANEOUS...........................................13
10.1. Publicity; Confidentiality..............................13
10.2. Waivers and Amendments..................................14
10.3. Governing Law...........................................14
10.4. Notices.................................................14
10.5. Binding Effect; Assignment..............................16
10.6. Variations in Pronouns..................................16
10.7. Counterparts............................................16
10.8. Complete Agreement......................................16
10.9. Headings................................................16
10.10. Severability of Provisions..............................16
EXHIBITS
EXHIBIT A - Officer's Certificate of the Trust
A-3
<PAGE>
EXHIBIT B - Secretary's Certificate of the Trust
EXHIBIT C - Opinion of Counsel to the Trust
EXHIBIT D - Officer's Certificate of the Fund
EXHIBIT E - Secretary's Certificate of the Fund
EXHIBIT F - Opinion of Counsel to the Fund
ANNEX
ANNEX A - Investment Policies of the Series
A-4
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") dated as of
April 26, 1999, by and between Orbitex Group of Funds, a Delaware business
trust (the "TRUST"), and ASM Index 30 Fund, Inc., a Maryland corporation (the
"FUND").
WHEREAS, the Board of Trustees of the Trust and the Board of Directors of
the Fund have each determined that it is advisable and in the best interests of
their respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which the Fund would merge with
and into Trust and the Trust would be the surviving entity (the "MERGER"); and
WHEREAS, Orbitex Management, Inc., a New York corporation ("ORBITEX"), has
been engaged pursuant to a Management Agreement, dated February 28, 1999 and
effective March 1, 1999, by and between Orbitex and the Fund to serve as
interim investment advisor to the Fund in accordance with Rule 15a-4 under the
1940 Act; and
WHEREAS, it is the intention of the parties that the Merger shall qualify
as a tax-free reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE"), and shall, for accounting purposes, be accounted
for under the "pooling of interests" method of accounting; and
WHEREAS, the Trust and the Fund desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
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.
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person.
"AUTHORITIES" has the meaning specified in Section 2.2.
"BOOKS AND RECORDS" means the Fund's or the Trust'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.
A-5
<PAGE>
"BUSINESS COMBINATION" means, with respect to any Person, any merger,
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.
"CERTIFICATES" has the meaning specified in Section 2.2.
"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, other than a ground lease.
"DELAWARE LAW" has the meaning specified in Section 2.1 hereof.
"DECLARATION OF TRUST" has the meaning specified in Section 5.1.
"DISCLOSURE LETTER" has the meaning specified in Section 4.8.
"EFFECTIVE TIME" has the meaning specified in Section 2.2.
"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 the Trust, 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.
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"MERGER" has the meaning specified in the recitals.
"NEW ADVISORY AGREEMENT" means the Management Agreement, to be dated the
Closing Date, by and between Orbitex and the Trust, pursuant to which Orbitex
will serve as adviser to the New OGF Series.
"NEW OGF SERIES" has the meaning specified in Section 3.1.
"NEW OGF SERIES SHARE" has the meaning specified in Section 3.1.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"1933 ACT" means the Securities Act of 1933, as amended.
"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.
"SEC" means the U.S. 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 MERGER
2.1. THE MERGER. At the Effective Time, upon the terms and subject to
the conditions of this Agreement, the Fund shall be merged with and into the
Trust in accordance with the General Corporation Law of the State of Maryland
(the "GCLM") and Title 12 of the Delaware Code (the "DELAWARE LAW"). The Trust
shall be the surviving entity in the Merger (the "SURVIVING ENTITY"). As a
result of the Merger, the outstanding shares of capital stock of the Fund shall
be converted or cancelled in the manner provided in Article III.
2.2. EFFECTIVE TIME. At the Closing, articles of merger (the "ARTICLES
OF MERGER") and a certificate of merger (the "CERTIFICATE OF MERGER" and,
together with the Articles of Merger, the "CERTIFICATES") shall be duly
prepared and executed by the Trust and the Fund and thereafter delivered to the
State Department of Taxation and Assessment of the State of Maryland and the
Secretary of State of the State of Delaware (the "AUTHORITIES") for filing, in
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accordance with the applicable requirements of the GCLM and the Delaware Law,
on, or as soon as practicable after, the Closing Date. The Merger shall become
effective at the time of the filing of the Certificates with the Authorities or
at such other time as may be specified in the Certificates (the "EFFECTIVE
TIME").
2.3. CLOSING. The closing of the Merger (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 VI or, if permissible, waived in
accordance with this Agreement, or on such other date as the parties hereto
mutually agree (the "CLOSING DATE").
2.4. TRUSTEES AND OFFICERS OF THE SURVIVING ENTITY. From and after the
Effective Time, 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 Effective Time, 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.
2.5. EFFECTS OF THE MERGER. As a result of the Merger, all of the
assets, properties, rights, privileges, powers and franchises of the Fund and
all of the debts, liabilities, obligations and expenses, incurred, contracted
or otherwise existing of or with respect to the Fund shall belong to, be vested
in and become the assets, properties, rights, privileges, powers and franchises
and the debts, obligations and liabilities of the New OGF Series (and not of
the Trust generally or of any other series of the Trust); provided, that none
of the assets of any other series of that Trust shall belong to, and except
as otherwise expressly provided in the Declaration of Trust, none of the debts,
liabilities, obligations or expenses incurred, contracted or otherwise
existing of or with respect to the Trust generally or any other series of the
Trust shall be enforceable against the assets of the New OGF Series. Without
limiting the generality of the foregoing, the obligations of the Fund to
indemnify and hold harmless the directors of the Fund for their actions in
their capacity as such prior to the Merger, including the obligation to advance
expenses, to the maximum extent permitted by law, shall by virtue of the Merger
and without further action on the part of any party be and become the
obligation and liability of the New OGF Series and any successor thereto. In
furtherance thereof, the Trustees shall not approve or effect for three years
following the Closing any transaction which shall not approve or effect on
behalf of or in respect of the New OGF Series at any time during the three
years following the Closing any merger, consolidation or corporate reorganiza-
tion, or any sale (in a single transaction or series of related transactions)
of all or substantially all of the assets of the New OGF Series, unless under
the terms of the transaction the surviving sucessor or transference entity is
contractually bound by the obligations described in Section 2.5. Subject to
the foregoing, the effects of the Merger shall be provided in the applicable
provisions of the GCLM and the Delaware Law.
2.6. FURTHER ASSURANCE. Trust and the Fund and the shall take such
further action as may be necessary or desirable and proper to consummate the
transactions contemplated hereby.
ARTICLE III
CONVERSION OF SHARES
3.1. CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder hereof, each Fund
Share shall be converted into the right to receive one no par value Class D
share of
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beneficial interest (each, a "NEW OGF SERIES SHARE") of a newly-created series
(the "NEW OGF SERIES") of the Trust having substantially the investment
policies set forth on Annex A to this Agreement. Each fraction of a Fund Share
outstanding at the Effective Time shall be converted into the same fraction of
a New OGF Series Share.
3.2. EXCHANGE OF CERTIFICATES. As soon as practicable after the Closing,
the Trust shall establish an open account in the share records of the Trust in
the name of each stockholder of the Fund, and representing the respective pro
rata number of Trust Shares due such stockholder. Certificates for Fund Shares
issued prior to the Effective Time shall represent outstanding New OGF Series
Shares after the Effective Time. Stockholders of the Fund who have not been
issued certificates and whose shares are held in open account with Mutual Fund
Services Co., Inc., as the Fund's transfer agent, shall be transferred to an
open account with American Data Services, Inc. in its capacity as the transfer
agent for the New OGF Series.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Trust as follows:
4.1. ORGANIZATION AND QUALIFICATION. The Fund 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
the Fund or its properties and assets.
4.2. AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance by the Fund of this Agreement and the consummation of
the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of the Fund (the "BOARD") and the Board has resolved to
recommend the Merger to the Fund's stockholders and to call a special meeting
of the stockholders for the purpose of approving the Merger and this Agreement,
to be held as promptly as is practicable after the execution of the Agreement,
but in no event later than 30 days after the Trust 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 eligible to vote on the matter at the
Fund's stockholders meeting or any adjournment thereof, no other corporate
action on the part of the Fund or its stockholders is necessary to authorize
the execution, delivery and performance of this Agreement by the Fund or the
consummation by the Fund of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Fund and is a
legal, valid and binding obligation of the Fund enforceable in accordance with
its terms.
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4.3. CAPITALIZATION. The authorized capital of the Fund consists of
1,000,000,000 shares of common stock, par value $0.001 per share, of which
as of March 31, 1999 shares were issued and 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.
4.4. SUBSIDIARIES. The Fund has no subsidiaries.
4.5. NO CONFLICTS. Except for consents, approvals, or waivers to be
received prior to Closing, the execution, delivery and performance by 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 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.
4.6. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) (i) Prior to the execution of this Agreement, the Fund has
delivered to the Trust true and complete copies of the audited balance sheet of
the Fund as of April 30, 1998, 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
PricewaterhouseCoopers LLP and all letters from such accountants with respect
to the results of such audits; and
(ii) 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.
(b) Except as reflected or reserved against in the balance sheet
included in the Fund's audited April 30, 1998 balance sheet or in the notes
thereto, or as further described in Schedule 4.6(b), there are no
Liabilities against, relating to or affecting the Fund or any of its 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.
4.7. BOOKS AND RECORDS. The minute books and other similar records of
the Fund as made available to the Trust prior to the execution of this
Agreement contain a true and complete record of all action taken at all
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meetings and by all written consents in lieu of meetings of the stockholders,
the board of directors and committees of the board of directors of the Fund.
The stock transfer ledgers and other similar records of the Fund as made
available to the Trust 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 Fund does not have any Books and Records which
have not been made available to the Trust.
4.8. LEGAL PROCEEDINGS. Except as set forth in a letter from the Fund to
the Trust dated the date of this Agreement (the "Disclosure Letter"), there is
no Action or Proceeding pending or, to the best of the Fund's knowledge,
threatened against, relating to or affecting the Fund.
4.9. NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
the Fund 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.
4.10. INVESTMENT COMPANY REGISTRATION. The Fund 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. The
Fund has delivered to the Trust a true and complete copy of the Fund's
currently effective Form N-1A, as filed with the SEC, and has made available to
the Trust all state, federal and foreign registration forms, all prior Form N-
1A filings and all reports filed by the Fund with the SEC under the 1940 Act
and the rules promulgated thereunder or otherwise and under similar state and
foreign statutes within the last five years, and will provide to the Trust such
forms and reports as are filed from and after the date hereof and prior to the
Closing Date. The information contained in such forms and reports was or will
be 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 Fund has timely computed and
publicized its 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 Fund as follows:
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5.1. ORGANIZATION AND QUALIFICATION. The Trust was organized pursuant to
an Agreement and Declaration of Trust, dated December 31, 1996 (the
"DECLARATION OF TRUST"), under the laws of the State 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.
5.2. AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. The execution,
delivery and performance of this Agreement by the Trust and the consummation of
the transactions contemplated herein have been duly and validly authorized by
all necessary corporate action on the part of the Trust. This Agreement has
been duly and validly executed and delivered by the Trust and is a legal, valid
and binding obligation of the Trust enforceable against it in accordance with
its terms.
5.3. CAPITALIZATION. The New OGF Series 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 the New OGF Series.
5.4. NO CONFLICTS. Except for consents, approvals, or waivers to be
received prior to Closing, the execution, delivery and performance of this
Agreement by the Trust 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 the Trust is a party or by which it or its assets are bound,
(ii) result in a breach or violation by the Trust 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.
5.5. LEGAL PROCEEDINGS. There is no Action or Proceeding pending or, to
the best of the Trust's knowledge, threatened against, relating to or affecting
the Trust 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 or its
properties and assets.
5.6. NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
the Trust in connection with the negotiation, execution or performance of this
Agreement or the consummation of the transactions contemplated herein, is or
will be entitled to any broker's or finder's or similar fees or other
commissions as a result of the consummation of such transactions.
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ARTICLE VI
PRE-CLOSING COVENANTS
From the date of the execution of this Agreement through the Closing Date:
6.1. INVESTIGATIONS AND EXAMINATIONS. Each party will cooperate and will
cause its representatives and agents to cooperate, in all reasonable respects
in connection with the performance by the other party of its inspection and
examination of such party.
6.2. CONDUCT OF BUSINESS. Each party will (i) conduct its business in
the ordinary and normal course of business consistent with past practice in all
material respects and (ii) comply with any Law and Order applicable to such
business.
6.3. NO SHOPPING. Each party agrees that it will not directly or
indirectly solicit, initiate or encourage submission of proposals or offers
from any Person or entity (other than the parties to this Agreement and their
Affiliates) relating to any Business Combination involving such party or
participate in any negotiations regarding, or furnish to any other Person any
information with respect to such party for the purposes of, or otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to seek or effect any such
Business Combination. Each party shall promptly notify the other party if any
proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made and shall describe in detail the terms and conditions of any
proposal or offer made.
6.4. COVENANT TO PROCEED. Each party hereto covenants to use all
reasonable efforts within its control (i) to prevent the breach of any
representation or warranty of such party hereunder, (ii) to satisfy all
covenants of such party and closing conditions hereunder, (iii) to cooperate
with the other party hereto and to take or cause to be taken all other actions
and do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions contemplated by this
Agreement and (iv) to promptly cure any breach of a representation, warranty or
covenant of such party hereunder upon its learning of same.
6.5. NOTICE OF MATERIAL CHANGES. Each party will notify the other
parties 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.
6.6. REGULATORY APPROVALS. Each party will (i) use best efforts and
proceed diligently and in good faith as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to Governmental or Regulatory Bodies required of the respective party
or its respective Affiliates to consummate the transactions contemplated hereby
and (ii) provide such other information and communications to such Governmental
or Regulatory Bodies as each such Governmental or Regulatory Body may
reasonably request in connection therewith. Each party will provide prompt
notification to the other party when any such consent, approval, action, filing
or notice referred to in clause (i) above is obtained, taken, made or given, as
applicable, and, prior to the Closing, will advise the other party of any
communications (and, unless precluded by Law, provide copies to the other party
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of any such communications that are in writing) with any Governmental or
Regulatory Body regarding any of the transactions contemplated herein.
6.7. NO DEFAULT. No party hereto shall do any act or intentionally omit
to do any act which would cause a breach of any representation, warranty,
covenant or agreement by it under this Agreement.
6.8. PREPARATION OF PROXY MATERIALS. The Fund and the Trust shall
cooperate with each other in the preparation of the proxy statement and other
materials (collectively, the "PROXY MATERIALS") required to be delivered to the
Fund's stockholders pursuant to the 1940 Act and any other applicable federal
or state securities laws in connection with the Merger, this Agreement and the
New Advisory Agreement and to cause such Proxy Materials to be filed with the
SEC as promptly as practicable after the execution of this Agreement.
6.9. FINANCIAL STATEMENTS. On or before April 30,1999, the Fund shall
cause to be prepared and delivered to the Trust the audited balance sheets of
the Fund as of March 31, 1999 and the related audited statements of operations
and cash flows of the Fund for the period then ended, including the footnotes
thereto, together with the unqualified opinions thereon of
PricewaterhouseCoopers LLP, which shall be prepared in accordance with GAAP and
shall fairly present the financial position of the Fund as of such date and the
results of operations and cash flows for the period then ended.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.1. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE FUND TO COMPLETE THE
CLOSING. The obligations 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 Fund.
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Trust contained in this Agreement shall be true, correct and
complete in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of such Closing Date except as
expressly stated herein to be made as of a specified 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.
(b) NO INJUNCTIONS. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of this Agreement or the related transactions shall be in effect.
(c) SEC RELATED MATTERS. The Trust shall have filed with the SEC a
post-effective amendment to its registration statement under the 1940 Act and
the 1933 Act on Form N-1A relating to the New OGF Series Shares and that
registration statement shall have become effective and no order shall have
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issued withdrawing, suspending or terminating such effectiveness, no stop order
shall have been issued with respect to the New OGF Series Shares and no
proceeding for any such purpose shall have been initiated or threatened by the
SEC.
(d) CLOSING CERTIFICATES. The Trust shall have delivered to the Fund a
certificate, dated the Closing Date and executed by the Chairman of the Board,
the President or any Executive or Senior Vice President of the Trust,
substantially in the form and to the effect of Exhibit A hereto, and a
certificate, dated the Closing Date and executed by the Secretary or Assistant
Secretary of the Trust, substantially in the form and to the effect of
EXHIBIT B hereto.
(e) OPINION OF COUNSEL. The Fund shall have received an opinion of
Rogers & Wells LLP, counsel to the Trust, dated the Closing Date, substantially
in the form and to the effect of EXHIBIT C hereto.
(f) TAX OPINION OF COUNSEL. The Fund shall have received an opinion
from Rogers & Wells LLP, counsel to the Trust, to the effect that the Merger
will constitute a tax free reorganization as defined in Section 368(a) of the
Code.
(g) CLOSING DOCUMENTS. The Trust will execute and deliver, or cause to
be executed and delivered, to the Fund all documents reasonably requested by
the Fund 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.
(h) FUND STOCKHOLDERS' MEETING. The Merger and the other transactions
contemplated by this Agreement shall have been approved by the holders of a
majority of the Fund Shares entitled to vote on the merger, in accordance with
the requirements of the GCLM and Section 2 of Article VII of the Fund's
Articles of Incorporation.
(i) The Fund shall have received the written opinion of Deloitte &
Touche LLP, dated the Closing Date to the effect that the Merger will qualify
for pooling of interests treatment under Accounting Principles Board Opinion
No. 16 if consumated in accordance with the provisions of this Agreement.
7.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE TRUST TO COMPLETE THE
CLOSING. The obligations of the Trust 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.
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Fund 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 such Closing Date except as
expressly stated herein to be made as of a specified date. The Fund 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 them
on or prior to such Closing Date.
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(b) NO INJUNCTIONS. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of this Agreement or the related transactions shall be in effect.
(c) SEC RELATED MATTERS. Confirmation shall have been received from the
SEC or its staff that the Fund is duly registered as a diversified, open-end
management investment company under the 1940 Act.
(d) CLOSING CERTIFICATES. The Fund 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 or 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.
(e) OPINION OF COUNSEL. The Trust shall have received an opinion of
Stradley, Ronon, Stevens & Young, LLP, counsel to the Fund, dated the Closing
Date, substantially in the form and to the effect of EXHIBIT F hereto.
(f) TAX OPINION OF COUNSEL. The Trust shall have received an opinion
from Rogers & Wells LLP, counsel to the Trust, to the effect that the Merger
will constitute a tax free reorganization as defined in Section 368(a) of the
Code.
(g) CLOSING DOCUMENTS. The Fund 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.
(h) GOVERNMENTAL AND REGULATORY CONSENTS AND APPROVALS. Other than the
filing provided for by Section 2.2, 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 the
New OGF Series, 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 Merger to the Trust or
the New OGF Series.
(i) GOOD STANDING CERTIFICATES. The Fund 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 Fund
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 Fund is in good standing or subsisting in such jurisdiction, listing all
charter documents of the Fund on file and attesting to its payment of all
franchise or similar taxes, and (c) a certificate from the Secretary of State
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of the State of Maryland 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.
(j) DUE DILIGENCE. The Trust shall have completed, to its satisfaction,
its due diligence investigation of the Fund.
(k) FUND'S STOCKHOLDERS' MEETING. Each of the proposals contained in
the Proxy Materials shall have been ratified or approved, as the case may be,
by the requisite vote of the Fund's stockholders, each in accordance with the
GCLM.
(l) FINANCIAL STATEMENTS. The Trust shall have received from the Fund
the financial statements to be delivered pursuant to Section 6.9, which
financial statements shall be substantially consistent with the financial data
contained in the financial statements previously furnished to the Trust by the
Fund.
(m) The Trust shall have received a written opinion of Deloitte & Touche
LLP, dated the Closing Date to the effect that the Merger will qualify for
pooling of interests treatment under Accounting Principles Board Opinion
No. 16 if consumated in accordance with the provisions of this Agreement.
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 Fund of any of its
representations, warranties or covenants contained in this Agreement;
PROVIDED, that the Fund shall have been given written notice of such
breach and a reasonable opportunity to cure such breach;
(c) by the Fund 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
A-17
<PAGE>
(d) by either party if the Closing hereunder does not occur by
August 1, 1999.
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
10.1. PUBLICITY; CONFIDENTIALITY. No publicity release or public
announcement concerning this Agreement or the transactions contemplated herein
shall be made by either party hereto without advance approval thereof by the
other party hereto; PROVIDED, HOWEVER, that (i) approval by such other party of
any proposed press release or other public disclosure shall not be unreasonably
withheld or delayed and (ii) if any such party is advised by legal counsel that
such public disclosure by such party is required by Law or by any listing
agreement with any national securities exchange or automated quotation system
to which such party is subject, such party may make such disclosure without
the prior approval of the other party hereto, provided that the disclosing
party, to the extent practicable, first provides the other party with a copy or
draft of such proposed disclosure and provides such other party an opportunity
to review and comment thereon.
10.2. WAIVERS AND AMENDMENTS. This Agreement may be amended, superseded,
canceled, 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.
10.3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any judicial proceeding
brought against any of the parties to this Agreement on any dispute arising out
of this Agreement or any matter related hereto may be brought in the courts of
the State of New York and, by execution and delivery of this Agreement, each of
the parties hereto accepts the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement.
10.4. NOTICES. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be given by (i) personal
delivery, (ii) United States registered or certified mail (postage prepaid,
return receipt requested) addressed as hereinafter provided, (iii) a nationally
recognized overnight courier or (iv) telephonic facsimile transmission. Notice
shall be sent and deemed given when (i) if personally delivered or via
overnight courier, then upon receipt (or the date delivery is refused) by the
receiving party, or (ii) if mailed, then three business days after being
postmarked, or (iii) if sent via telephonic facsimile transmission, then upon
receipt by a designated facsimile receiving device in the office of the
receiving party.
A-18
<PAGE>
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, Esq.
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:
C/o M. Fyzul Khan
ASM Index 30 Fund, Inc.
410 Park Avenue
18th Floor
New York, NY 10022
Attention: Dan Calabria, Esq.
Telephone: (212) 891-7914
Facsimile: (212) 616-7954
With copies to:
W. Keith Schilit
16215 Villareal
Tampa, FL 33613
Telephone: (813) 908-6446
Facsimile: (813) 908-6556
Stradley, Ronan, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Attention: Steven M. Felsenstein, Esq.
A-19
<PAGE>
Telephone: (215) 564-8074
Facsimile: (215) 564-8120
10.5. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. Except as otherwise provided herein, this Agreement is
not assignable by any party hereto without the prior written consent of the
other parties hereto and any other purported assignment shall be null and void.
10.6. VARIATIONS IN PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
10.7. COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties hereto.
10.8. COMPLETE AGREEMENT. This Agreement, the Disclosure Letter and the
New Advisory Agreement, constitute the complete agreement of the parties with
respect to the subject matter thereof, and supersede all prior agreements or
understandings among the parties hereto.
10.9. HEADINGS. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
10.10. SEVERABILITY OF PROVISIONS. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance, shall be held invalid or unenforceable,
the remaining portion of such provision and the remaining provisions of this
Agreement, or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those
as to which it is held invalid or unenforceable, shall not be affected thereby.
A-20
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.
ORBITEX GROUP OF FUNDS
By:__________________________________
Name: James L. Nelson
Title: President and Chief
Executive Officer
ASM INDEX 30 FUND, INC.
By:__________________________________
Name: W. Keith Schilit
Title: Acting Chairman of the Board
of Directors and Authorized
Signatory
A-21
<PAGE>
ANNEX A
TO MERGER
AGREEMENT
INVESTMENT POLICIES OF THE SERIES
---------------------------------
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:
(i) Purchase securities on margin, except ASM may make margin deposits (a)
in connection with permissible options and futures transactions,
subject to restriction (4) below and (b) on such short-term credits as
may be necessary for the clearance of transactions.
(ii) Make short sales of securities or maintain a short position.
(iii) Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or
emergency purposes or for the clearance of transactions in amounts not
exceeding 10% of its total assets (not including the amount borrowed)
and will not make investments while borrowings in excess of 5% of the
value of the Fund's total assets are outstanding.
(iv) Buy or sell commodities or commodity futures contracts, or buy or
sell real estate, real estate limited partnership interests or other
interests in real estate, except ASM may (a) purchase and sell
securities which are secured by real estate and securities of
companies which invest or deal in real estate and (b) enter into
financial futures transactions and options thereon.
(v) Make loans (except for purchases of publicly-traded debt securities
consistent with the Fund's investment policies).
(vi) Make investments for the purpose of exercising control or management.
(vii) Act as underwriter (except to the extent the Fund may be deemed to be
an underwriter in connection with the sale of securities in the Fund's
investment portfolio).
(viii) Invest 25% or more of its total assets (calculated at the time of
purchase and taken at market value) in any one industry.
(ix) As to 75% of the value of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer (other
than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities), or purchase more than 10% of all
outstanding voting securities of any one issuer.
A-22
<PAGE>
EXHIBIT A
TO MERGER
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 April 9, 1999
(the "MERGER AGREEMENT"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Merger Agreement), by and between the Trust
and ASM Index 30 Fund, 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 Merger Agreement (other than those made as of a specified date
earlier than the date hereof) is true and correct in all material respects on
and as of the date hereof as though made on and as of the date hereof, and each
of the representations and warranties made by the Trust as of specified date
earlier than the date hereof was true and correct in all material respects as
of such earlier date.
(2) Each of the agreements, covenants and obligations
required by the Merger Agreement to be performed or complied with by the Trust
at or before the Closing has been duly 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 June,
1999.
ORBITEX GROUP OF FUNDS
By:_______________________________________
Name: James L. Nelson
Title: President and Chief Executive Officer
A-23
<PAGE>
EXHIBIT B
TO MERGER
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 April 9, 1999 (the "MERGER
AGREEMENT"), by and between the Trust and ASM Index 30 Fund, 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 Merger 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 March ___, 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
Merger Agreement and the transactions contemplated thereby.
4. Each of the following named individuals is a duly elected or
appointed, qualified and acting officer of the Trust who holds, and at all
times since April 9, 1999 has held, the office set opposite such individual's
name, and the signature written opposite the name and title of such officer is
such officer's genuine signature:
James L. Nelson President and Chief
Executive Officer ________________________________
Kimberly S. Ratz Treasurer ________________________________
A-24
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of June,
1999.
ORBITEX GROUP OF FUNDS
By:___________________________
Name: Kevin P. Meehan
Title: Assistant Secretary
I, James L. Nelson, President and Chief Executive Officer of the
Trust, DO HEREBY CERTIFY on behalf of the Trust that Kevin P. Meehan is the
duly elected or appointed, qualified and acting Assistant Secretary of the
Trust, and the signature set forth above is the genuine signature of such
officer.
_________________________
Name: James L. Nelson
Title: President and Chief
Executive Officer
A-25
<PAGE>
EXHIBIT C
TO MERGER
AGREEMENT
[R&W LETTERHEAD]
___________, ____
ASM Index 30 Fund, Inc.
410 Park Avenue
18th Floor
New York, New York 10022
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 April 9, 1999 (the "Merger Agreement"), by
and between the Trust and ASM Index 30 Fund, Inc., a Maryland corporation, and
the transactions contemplated thereby. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Merger Agreement. We are
rendering this opinion to you pursuant to Section 7.1(e) of the Merger
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 Merger 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:
1. 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.
2. The execution, delivery and performance of the Merger 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 Merger Agreement has been duly and validly executed and
delivered by the Trust and is a legal, valid and binding obligation of the
Trust enforceable against it in accordance with its terms.
A-26
<PAGE>
3. The New OGF Series 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 the New OGF Series.
4. The execution, delivery and performance by the Trust of the
Merger 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, and (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"). With respect
to matters concerning the Delaware Law involved in the opinions set forth
above, we draw your attention to the fact that we are not admitted to the Bar
in the State of Delaware and we are not experts in the laws of the State of
Delaware and that any such opinions concerning Delaware Law are based on our
reasonable familiarity with Delaware Law as a result of our prior involvement
in transactions involving such laws.
These opinions may not be relied on by any person or entity other
than you without our prior written consent.
Very truly yours,
A-27
<PAGE>
EXHIBIT D
TO MERGER
AGREEMENT
OFFICER'S CERTIFICATE
---------------------
I, W. Keith Schilit, Acting Chairman of the Board of Directors and
Authorized Signatory of ASM Index 30 Fund, Inc., a Maryland corporation (the
"FUND"), pursuant to Section 7.2(d) of the Agreement and Plan of
Reorganization, dated as of April 9, 1999 (the "MERGER AGREEMENT"; capitalized
terms not defined herein shall have the meanings ascribed to them in the Merger
Agreement), by and between Orbitex Group of Funds, a Delaware business trust,
and the Fund, DO HEREBY CERTIFY on behalf of the Fund that:
(1) Each of the representations and warranties made by the Fund in
the Merger Agreement (other than those made as of a specified date earlier than
the date hereof) is true and correct in all material respects on and as of the
date hereof as though made on and as of the date hereof, and each of the
representations and warranties made by the Fund as of a specified date earlier
than the date hereof was true and correct in all material respects as of such
earlier date.
(2) Each of the agreements, covenants and obligations required by
the Merger Agreement to be performed or complied with by the Fund at or before
the Closing has been duly performed or complied with in all material respects.
IN WITNESS WHEREOF, the Fund has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of June,
1999.
ASM INDEX 30 FUND, INC.
By:__________________________________
Name: W. Keith Schilit
Title: Acting Chairman of the Board
of Directors and Authorized
Signatory
A-28
<PAGE>
EXHIBIT E
TO MERGER
AGREEMENT
SECRETARY'S CERTIFICATE
-----------------------
I, M. Fyzul Khan, Secretary of ASM Index 30 Fund, Inc., a Maryland
corporation (the "FUND"), pursuant to Section 7.2(d) of the Agreement and Plan
of Reorganization, dated as of April 9, 1999 (the "MERGER AGREEMENT"), by and
between Orbitex Group of Funds, a Delaware business trust, and the Fund, DO
HEREBY CERTIFY on behalf of Fund as follows:
(1) Attached hereto as EXHIBIT A is a true, complete and correct
copy of the Articles of Incorporation of the Fund 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 the
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 Fund, 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 Fund.
(2) Attached hereto as EXHIBIT B is a true, complete and correct
copy of the By-Laws of the Fund 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 Directors of the Fund with respect
to the Merger Agreement and the transactions contemplated thereby, which
resolutions were duly and validly adopted at a meeting of the Board of
Directors of the Fund on March __, 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 Fund or any committee thereof relating
to the Merger Agreement and the transactions contemplated thereby.
(4) Attached hereto as EXHIBIT D is a true, complete and correct
copy of the minutes from the Special Meeting of Stockholders of the Fund, held
on June __, 1999, with respect to the Merger Agreement and the transactions
contemplated thereby, which contain resolutions which were duly adopted at a
meeting of the stockholders of the Fund on June __, 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 Merger
Agreement and the transactions contemplated thereby.
A-29
<PAGE>
(5) Each of the following named individuals is a duly elected or
appointed, qualified and acting officer of the Fund who holds, and at all times
since April 9, 1999 has held, the offices set opposite such individual's name,
and the signature written opposite the name and title of such officer is such
officer's genuine signature:
M. Fyzul Khan Secretary _____________________________
A-30
<PAGE>
IN WITNESS WHEREOF, the Fund has caused this Certificate to be executed on its
behalf by the undersigned on and as of the ____ day of June, 1999.
ASM INDEX 30 FUND, INC.
By:__________________________________
Name: M. Fyzul Khan
Title: Secretary
I, W. Keith Schilit, Acting Chairman of the Board of Directors and
Authorized Signatory of Fund, DO HEREBY CERTIFY on behalf of Fund that M. Fyzul
Khan is the duly elected or appointed, qualified and acting Secretary of Fund,
and the signature set forth above is the genuine signature of such officer.
__________________________________
Name: W. Keith Schilit
Title: Acting Chairman of the Board of
Directors and Authorized Signatory
A-31
<PAGE>
EXHIBIT F
TO MERGER
AGREEMENT
[STRADLEY, RONAN LETTERHEAD]
_______________, ____
Orbitex Group of Funds
410 Park Avenue
18th Floor
New York, N.Y. 10022
Dear Sirs:
We have acted as special counsel to ASM Index 30 Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the Agreement and Plan
of Reorganization, dated as of April 9, 1999 (the "Merger Agreement"), by and
between Orbitex Group of Funds, a Delaware business trust, and the Fund and the
transactions contemplated thereby. Capitalized terms not defined herein shall
have the meanings ascribed to them in the Merger Agreement. We are rendering
this opinion to you pursuant to Section 7.2(e) of the Merger Agreement.
In rendering the opinions expressed below, we have examined such
documents and such corporate records of 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 Merger Agreement
and upon certificates of government officials and of the Fund 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 Fund 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 the Fund or its properties
and assets.
2. The execution, delivery and performance by the Fund of the
Merger Agreement and the consummation of the transactions contemplated therein
have been duly and validly authorized by the Board of Directors of the Fund and
by the stockholders and no other corporate action on the part of the Fund or
its stockholders is necessary to authorize the execution, delivery and
performance of the Merger Agreement by the Fund or the consummation by the Fund
A-32
<PAGE>
of the transactions contemplated thereby. The Merger Agreement has been duly
and validly executed and delivered by the Fund and is a legal, valid and
binding obligation of Fund enforceable against the Fund in accordance with its
terms.
3. The authorized capital stock of the Fund consists solely of
______ shares of Common Stock, par value $0.001 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 Fund has no subsidiaries.
5. The execution, delivery and performance by the Fund of the
Merger 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 Fund 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. Fund has timely computed and publicized its 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
Maryland and the General Corporation Law of the State of Maryland.
These opinions may not be relied on by any person or entity other
than you without our prior written consent.
Very truly yours,
A-33
<PAGE>
APPENDIX B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 4th day of June, 1999 between Orbitex Group
of Funds, a Delaware business trust (the "Trust"), and Orbitex Management,
Inc., a New York corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust intends to engage in business as an open-end
management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust is authorized to issue shares of beneficial
interest in separate series, each having its own investment objective or
objectives, policies and limitations;
WHEREAS, the Trust intends to offer shares in several series, one of
which is designated as the ORBITEX Focused 30 Fund (the "Fund"), and the
Trust may offer shares of one or more additional series in the future;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to the Fund
in the manner and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. SERVICES OF THE ADVISER.
1.1 INVESTMENT ADVISORY SERVICES. The Adviser shall act as the
investment adviser to the Fund and, as such, shall (i) obtain and evaluate
such information relating to the economy, industries, business, securities
markets and securities as it may deem necessary or useful in discharging
its responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Fund in a manner consistent with its
investment objective(s), policies and restrictions, and (iii) determine
from time to time securities to be purchased, sold, retained or lent by the
Fund, and implement those decisions, including the selection of entities
with or through which such purchases, sales or loans are to be effected;
provided, that the Adviser will place orders pursuant to its investment
determinations either directly with the issuer or with a broker or dealer,
and if with a broker or dealer, (a) will attempt to obtain the best price
and execution of its orders, and (b) may nevertheless in its discretion
purchase and sell portfolio securities from and to brokers who provide the
Adviser with research, analysis, advice and similar services and pay such
brokers in return a higher commission or spread than may be charged by
other brokers.
The Trust hereby authorizes any entity or person associated with
the Adviser, which is a member of national securities exchange, to effect
any transaction on the exchange for the account of the Trust which is
permitted by Section 11(a) of the Securities Exchange Act of 1934, as
amended, and Rule 11a2-2(T) thereunder, and the Trust hereby consents to
the retention of compensation for such transactions in accordance with
Rule 11a2-2(T)(a)(iv).
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The Adviser shall carry out its duties with respect to the Fund's
investments in accordance with applicable law and the investment
objectives, policies and restrictions set forth in the Fund's then-current
Prospectus and Statement of Additional Information, and subject to such
further limitations as the Trust may from time to time impose by written
notice to the Adviser.
1.2 ADMINISTRATIVE SERVICES. The Adviser shall manage the Trust's
business and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other
agents engaged by the Trust; provided, that the Adviser shall not have any
obligation to provide under this Agreement any direct or indirect services
to the Trust's shareholders, any services related to the distribution of
Trust shares, or any other services which are the subject of a separate
agreement or arrangement between the Trust and the Adviser. Subject to the
foregoing, in providing administrative services hereunder, the Adviser
shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without
cost to the Trust, or pay the cost of, such office space, office equipment
and office facilities as are adequate for the Trust's need.
1.2.2 PERSONNEL. Provide, without remuneration from or other
cost to the Trust, the services of individuals competent to perform all of
the Trust's executive, administrative and clerical functions which are not
performed by employees or other agents engaged by the Trust or by the
Adviser acting in some other capacity pursuant to a separate agreement or
arrangement with the Trust.
1.2.3 AGENTS. Assist the Trust in selecting and coordinating
the activities of the other agents engaged by the Trust, including the
Trust's shareholder servicing agent, custodian, administrator, independent
auditors and legal counsel.
1.2.4 TRUSTEE AND OFFICERS. Authorize and permit the Adviser's
directors, officers and employees who may be elected or appointed as
Trustees or officers of the Trust to serve in such capacities, without
remuneration from or other cost to the Trust.
1.2.5 BOOKS AND RECORDS. Assure that all financial, accounting
and other records required to be maintained and preserved by the Trust are
maintained and preserved by it or on its behalf in accordance with
applicable laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the preparation of (but
not pay for) all periodic reports by the Trust to its shareholders and all
reports and filings required to maintain the registration and qualification
of the Trust and Trust shares, or to meet other regulatory or tax
requirements applicable to the Trust, under federal and state securities
and tax laws.
2. EXPENSES OF THE TRUST.
2.1 EXPENSES TO BE PAID BY ADVISER. The Adviser shall pay all
salaries, expenses and fees of the officers, Trustees and employees of the
Trust who are officers, directors or employees of the Adviser; provided,
however, that the Adviser shall reduce the fee payable to it under this
Agreement and shall reimburse the Fund for expenses[, other than
extraordinary or non-recurring expenses,] incurred by the Fund to the
extent necessary so that the expense ratio of the Fund, in respect of Class
I shares of the Fund only, shall not exceed 0.60 of 1% until January 1,
2000 and 0.75 of 1% until July 1, 2000
In the event that the Adviser pays or assumes any expenses of the
Trust not required to be paid or assumed by the Adviser under this
Agreement, the Adviser shall not be obligated hereby to pay or assume the
same or any similar expense in the future; provided, that nothing herein
contained shall be deemed to relieve the Adviser of any obligation to the
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Trust under any separate agreement or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE TRUST. The Trust shall bear all
expenses of its operation, except those specifically allocated to the
Adviser under this Agreement or under any separate agreement between the
Trust and the Adviser. Subject to any separate agreement or arrangement
between the Trust and the Adviser, the expenses hereby allocated to the
Trust, and not to the Adviser, include but are not limited to:
2.2.1 CUSTODY. All charges of depositories, custodians, and
other agents for the transfer, receipt, safekeeping, and servicing of its
cash, securities, and other property.
2.2.2 SHAREHOLDER SERVICING. All expenses of maintaining and
servicing shareholder accounts, including but not limited to the charges of
any shareholder servicing agent, dividend disbursing agent or other agent
engaged by the Trust to service shareholder accounts.
2.2.3 SHAREHOLDER REPORTS. All expenses of preparing, setting
in type, printing and distributing reports and other communications to
shareholders.
2.2.4 PROSPECTUSES. All expenses of preparing, setting in
type, printing and mailing annual or more frequent revisions of the Trust's
Prospectus and Statement of Additional Information and any supplements
thereto and of supplying them to shareholders.
2.2.5 PRICING AND PORTFOLIO VALUATION. All expenses of
computing the Trust's net asset value per share, including any equipment or
services obtained for the purpose of pricing shares or valuing the Trust's
investment portfolio.
2.2.6 COMMUNICATIONS. All charges for equipment or services
used for communications between the Adviser or the Trust and any custodian,
shareholder servicing agent, portfolio accounting services agent, or other
agent engaged by the Trust.
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services and
expenses of the Trust's legal counsel and independent accountants.
2.2.8 TRUSTEES' FEES AND EXPENSES. All compensation of
Trustees other than those affiliated with the Adviser, all expenses
incurred in connection with such unaffiliated Trustees' services as
Trustees, and all other expenses of meetings of the Trustees and committees
of the Trustees.
2.2.9 SHAREHOLDER MEETINGS. All expenses incidental to holding
meetings of shareholders, including the printing of notices and proxy
materials, and proxy solicitations therefor.
2.2.10 FEDERAL REGISTRATION FEES. All fees and expenses of
registering and maintaining the registration of the Trust under the Act and
the registration of the Trust's shares under the Securities Act of 1933, as
amended (the "1933 Act"), including all fees and expenses incurred in
connection with the preparation, setting in type, printing, and filing of
any Registration Statement, Prospectus and Statement of Additional
Information under the 1933 Act or the Act, and any amendments or
supplements that may be made from time to time.
2.2.11 STATE REGISTRATION FEES. All fees and expenses of taking
required action to permit the offer and sale of the Trust's shares under
securities laws of various states or jurisdictions, and of registration and
qualification of the Trust under all other laws applicable to the Trust or
its business activities (including registering the Trust as a broker-
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dealer, or any officer of the Trust or any person as agent or salesperson
of the Trust in any state).
2.2.12 CONFIRMATIONS. All expenses incurred in connection with
the issue and transfer of Trust shares, including the expenses of
confirming all share transactions.
2.2.13 BONDING AND INSURANCE. All expenses of bond, liability,
and other insurance coverage required by law or regulation or deemed
advisable by the Trustees of the Trust, including, without limitation, such
bond, liability and other insurance expenses that may from time to time be
allocated to the Trust in a manner approved by its Trustees.
2.2.14 BROKERAGE COMMISSIONS. All brokers' commissions and
other charges incident to the purchase, sale or lending of the Trust's
portfolio securities.
2.2.15 TAXES. All taxes or governmental fees payable by or with
respect to the Trust to federal, state or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes.
2.2.16 TRADE ASSOCIATION FEES. All fees, dues and other
expenses incurred in connection with the Trust's membership in any trade
association or other investment organization.
2.2.17 NONRECURRING AND EXTRAORDINARY EXPENSES. Such
nonrecurring and extraordinary expenses as may arise including the costs of
actions, suits, or proceedings to which the Trust is a party and the
expenses the Trust may incur as a result of its legal obligation to provide
indemnification to its officers, Trustees and agents.
3. ADVISORY FEE.
As compensation for all services rendered, facilities provided and
expenses paid or assumed by the Adviser under this Agreement, the Fund
shall pay the Adviser on the last day of each month, or as promptly as
possible thereafter, a fee calculated by applying a monthly rate, based on
the following annual percentage rate, to the Fund's average daily net
assets for the month: 0.75%.
4. RECORDS.
4.1 TAX TREATMENT. The Adviser shall maintain, or arrange for others
to maintain, the books and records of the Trust in such a manner that
treats the Fund as a separate entity for federal income tax purposes.
4.2 OWNERSHIP. All records required to be maintained and preserved
by the Trust pursuant to the provisions or rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the Act and
maintained and preserved by the Adviser on behalf of the Trust are the
property of the Trust and shall be surrendered by the Adviser promptly on
request by the Trust; provided, that the Adviser may at its own expense
make and retain copies of any such records.
5. REPORTS TO ADVISER.
The Trust shall furnish or otherwise make available to the Adviser
such copies of the Trust's prospectus, Statement of Additional Information,
financial statements, proxy statements, reports and other information
relating to its business and affairs as the Adviser may, at any time or
from time to time, reasonably require in order to discharge its obligations
under this Agreement.
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6. REPORTS TO THE TRUST.
The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals
as the Trust may reasonably request.
7. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or
to engage in other business activities.
8. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL.
Neither the Adviser nor any director, officer or employee of the
Adviser performing services for the Trust at the direction or request of
the Adviser in connection with the Adviser's discharge of its obligations
hereunder shall be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with any matter to which
this Agreement relates, and the Adviser shall not be responsible for any
action of the Trustees of the Trust in following or declining to follow any
advice or recommendation of the Adviser or any sub-adviser retained by the
Adviser pursuant to Section 7 of this Agreement; PROVIDED, that nothing
herein contained shall be construed (i) to protect the Adviser against any
liability to the Trust or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of the Adviser's duties, or by reason of the
Adviser's reckless disregard of its obligations and duties under this
Agreement, or (ii) to protect any director, officer or employee of the
Adviser who is or was a Trustee or officer of the Trust against any
liability of the Trust or its shareholders to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
such person's office with the Trust.
9. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or its By-Laws or any
applicable law, regulation or order to which it is subject or by which it
is bound, or to relieve or deprive the Trustees of the Trust of their
responsibility for and control of the conduct of the business and affairs
of the Trust.
10. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first above
written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date of
this Agreement. Thereafter, this Agreement shall continue in effect with
respect to the Fund from year to year, subject to the termination
provisions and all other terms and conditions hereof; PROVIDED, such
continuance with respect to a Fund is approved at least annually by vote of
the holders of a majority of the outstanding voting securities of the Fund
or by the Trustees of the Trust; PROVIDED, that in either event such
continuance is also approved annually by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not parties to this Agreement or
interested persons of either party hereto. The Adviser shall furnish to
the Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal
or amendment thereof.
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11. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing signed by the
parties hereto; PROVIDED, that no such amendment shall be effective unless
authorized (i) by resolution of the Trustees of the Trust, including the
vote or written consent of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons of either party hereto,
and (ii) by vote of a majority of the outstanding voting securities of the
Fund affected by such amendment. This Agreement shall terminate
automatically and immediately in the event of its assignment.
12. TERMINATION OF AGREEMENT.
This Agreement may be terminated at any time by either party hereto,
without the payment of any penalty, upon sixty (60) days' prior written
notice to the other party; PROVIDED, that in the case of termination by the
Fund, such action shall have been authorized (i) by resolution of the
Trust's Board of Trustees, including the vote or written consent of
Trustees of the Trust who are not parties to this Agreement or interested
persons of either party hereto, or (ii) by vote of majority of the
outstanding voting securities of the Fund.
13. USE OF NAME.
The Trust is named the Orbitex Group of Funds and the Fund may be
identified, in part, by the name "Orbitex." The Adviser hereby grants to
the Trust a nonexclusive right and license to use the Orbitex name and as
part of the name of the Trust and the Fund only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have
succeeded to the Adviser's business as adviser or any extension, renewal or
amendment thereof remain in effect. The Trust agrees that it shall acquire
no interest in the name "Orbitex," that all uses thereof by the Trust shall
inure to the benefit of the Adviser and that it shall not challenge the
validity or Adviser's ownership thereof.
14. DECLARATION OF TRUST.
The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust or the Fund, as the case
may be, pursuant to this Agreement shall be limited in all cases to the
Trust or the Fund, as the case may be, and its assets, and the Adviser
shall not seek satisfaction of any such obligation from the shareholders or
any shareholder of the Trust. In addition, the Adviser shall not seek
satisfaction of any such obligations from the Trustees or any individual
Trustee. The Adviser understands that the rights and obligations of any
Fund under the Declaration of Trust are separate and distinct from those of
any and all other Funds. The Adviser further understands and agrees that
no Fund of the Trust shall be liable for any claims against any other Fund
of the Trust and that the Adviser must look solely to the assets of the
pertinent Fund of the Trust for the enforcement or satisfaction of any
claims against the Trust with respect to that Fund.
15. This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
16. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or
provision of the Act and to interpretation thereof, if any, by the United
States courts, or, in the absence of any controlling decision of any such
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court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the Act. Specifically, the terms
"vote of a majority of the outstanding voting securities," "interested
persons," "assignment" and "affiliated person," as used in this Agreement
shall have the meanings assigned to them by Section 2(a) of the Act. In
addition, when the effect of a requirement of the Act reflected in any
provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. CAPTIONS.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
18. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but both of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the
date and year first above written.
ORBITEX GROUP OF FUNDS on behalf of its
ORBITEX Focused 30 Fund
By: ____________________________________
James L. Nelson
President and Chief Executive Officer
ORBITEX MANAGEMENT, INC.
By: ____________________________________
Richard E. Steirwalt
President and Chief Executive Officer
<PAGE>
APPENDIX C
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ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUNDS
Managed by Orbitex Management, Inc.
Performance Review: Orbitex Strategic Natural Resources Fund significantly
outperformed the Lipper Natural Resources Fund Category during the period from
October 23, 1997 (commencement of operations) to April 30, 1998. The total
return for the Fund was 10.74% versus (3.80)%(a) for the Lipper Natural
Resources Fund Category and 22.49%(a) for the S&P 500 Index. The Fund seeks to
achieve its objective through a flexible policy of investing primarily in common
stocks of companies engaged in natural resource industries and industries
supportive to natural resource industries.
This has been a challenging period for most natural resource sectors. The
combination of a strong El Nino, the second warmest winter ever, turmoil in
emerging markets and other Asian countries and increased OPEC production in
November 1997 have prompted a sharp drop off in crude oil prices and other
resources (e.g., gold, aluminum, copper). Crude oil prices have reached the
lowest levels since 1988. OPEC will meet on June 24, 1998 to discuss production
cuts. Some oil projects may have to shut down, because it is not economical to
produce at the low oil prices. Weather experts recently announced that La Nina
is here which could bring us cold winters, hot summers and a pick-up in
hurricane activity. This along with production cuts from OPEC countries should
stabilize prices and we expect to see a better environment by fourth
quarter1998.
On the positive side, natural gas, paper/forest products and select chemical
companies have been strong performers. some of these sectors are beneficiaries
of the lower oil prices. Natural gas prices have remained firm throughout the
period, as that market is looking for a return to more normal weather during the
summer and into next winter. Also, natural gas pipelines are full to capacity
and the strategic United States Reserve Base is declining.
Throughout the period, the Fund benefited from its above average emphasis on
large capitalization, defensive, value-oriented securities within the natural
resource sectors. Noteworthy company performance spanned a diverse group of
sectors. The Fund benefited from its position in Exxon, Western Atlas, Smith
International, Cytec Industries and Phelps Dodge. Despite the strong
fundamentals in the natural gas industry, Coho Energy, Forcenergy and Seagull
Energy were weak performers.
Outlook: Our bias toward large capitalization equities continues as the markets
struggle with the near term concerns of emerging markets and lower oil prices.
however, we see an improved environment toward the end of 1998 as supply/demand
excesses should come into balance with anticipated OPEC and non-OPEC production
cuts. In fact, many natural resource sectors and stocks have rarely, if ever,
sold at such low valuations. We are extremely positive on the longer term
outlook for the natural resources markets.
We appreciate your investment in Orbitex Strategic Natural Resources Fund.
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The following graph shows a comparison of hypothetical investment of $10,000 in
Strategic Natural Resources Fund (assumes reinvestment of all dividends and
distributions and a one time sales charge) versus the Lipper Natural Resources
Fund Category and the S&P 500 Index.
[GRAPH]
CUMULATIVE TOTAL RETURN* SUMMARY
Period Ended
April 30, 1998(a)
-----------------
Strategic Natural Resources Fund 10.74%
Strategic Natural Resources Fund (incl. max. 5.75% sales charge) 4.34%
Lipper Natural Resources fund Category** (3.80)%
S&P 500 Index** 22.49%
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(a) Commencement date of operations for Strategic Natural Resources Fund is
October 23, 1997. Performance for the benchmark is not available from
commencement date of operations through April 30, 1998. For that reason,
performance for the benchmark is shown from November 1, 1997 through April 30,
1998.
* Total return is calculated assuming reinvestment of all dividends. Total
returns would have been lower had the Advisor (Orbitex Management, Inc.) and the
Administrator and Custodian (State Street Bank and Trust Company) not waived or
reimbursed a portion of their fees. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and the
return on investment both will fluctuate and redemption proceeds may be higher
or lower than an investor's original cost.
** The Lipper Natural Resources Fund Category and the S&P 500 Index are
unmanaged indexes whereas the Fund is actively managed. The performance of these
indexes does not reflect any applicable sales charges or other expenses
associated with investment in the Fund; direct investment in these indexes is
not possible. Index performance is not intended to represent the future
performance of Strategic Natural Resources Fund.
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ORBITEX GROUP OF FUNDS
INFO-TECH & COMMUNICATIONS FUND
Managed by Orbitex Management, Inc.
Performance Review: During the period from October 22, 1997 (commencement of
operations) to April 30, 1998, Info-Tech & Communications Fund had a total
return of 30.80%, compared with a total return of 22.49%(a) for the S&P 500
Index and 16.09%(a) for the Lipper Science & Technology Index. The fund seeks to
achieve superior long-term capital growth through selective investment in
companies engaged in the communication, information and related technology
industries.
Towards the end of 1997, the Fund was conservatively positioned in holdings such
as the regional Bell operating companies, AT&T and Sprint. With a more positive
outlook toward the market emerging at the beginning of January, the Fund was
repositioned into more aggressive technology investments. Specifically, the Fund
was focused on the deployment and operation of new communications networks
around the world. With the rapid privatization of public communications services
companies around the world and the rapid consumer and business adoption of the
internet, this area, we believed would be the most timely area into which to
focus the Fund's assets. In turn, we chose to avoid most of the traditional
personal computer hardware and software related companies, which proved to be
particularly fortuitous for the Fund.
Some of the top performing names for the Fund during this period included Nokia,
which increased over 75% from the beginning of the year. We bought Nokia because
of its attractive valuation relative to its growth prospects and its market
domination in cellular handsets over it primary competitors, Motorola and
Ericcson. Nokia continues to be a top holding in the Fund. Lucent, which has
nearly doubled in price since January, was another significant contributor to
the Fund's performance. The market recognized both its strong and predictable
earnings stream as well as its emerging market dominance as the leading supplier
of carrier-class communications equipment. On the services front. WorldCom, with
its pending merger with MCI, stands in our view to emerge as the world's
foremost telecommunications services provider with a single bundled customer
offering of long distance, local, internet and data services. We continue to
believe that following the merger, WorldCom will have tremendous long term
potential. It remains a core holding of the Fund. Lastly, in search of new ideas
to capitalize on the outlook for the internet, the Fund established a position
in OzEmail, the leading internet services provider and search engine in
Australia and New Zealand. Viewed as extremely inexpensive relative to its U.S.
- - based peer group, the stock has effectively doubled since February of this
year. However, we continue to see considerable upside in this largely
under-followed stock, and it constitutes one of the Fund's largest holdings.
Weak performing sectors for the Fund were semi-conductors and our Latin American
holdings. Both Telebras, the phone company of Brazil, and CANTV, the phone
company of Venezuela, proved mildly disappointing during the period. Venezuela
was impacted by falling oil prices, and Telebras's proposed break-up was marred
when the government of Brazil suddenly determined that the break-up would be
treated as a taxable event. Neither position is currently held by the Fund,
given the overall weakness in emerging market currencies as a result of the
current Asia crisis. The Fund's semiconductor holdings, including, Texas
Instruments and Maxim, have been flat to slightly down since being added to the
Fund in early February. However, since these firms operate in specialized
industries, and are not significantly impacted by the memory sector of the
semiconductor industry, we view their long term prospects as favorable. The Fund
maintained a relatively defensive posture, having 29% of its net assets in cash
equivalents as of the end of the reporting period.
Outlook: We believe that many sectors within the technology arena will prove to
be under pressure in the year ahead. Clearly, there is decline in both corporate
and consumer computer hardware demand driven by the lack of adequate networks to
utilize the power of their respective technologies. Hence, we will continue to
focus our investments this year on companies across the globe that are either
providing solutions to the network bottleneck or emerging communications service
companies seeking to deploy network solutions to the corporate and consumer
market place. Many of these companies have high growth prospects and valuations,
and accordingly, are highly priced relative to the market indexes. However, we
utilize a variety of valuation techniques to derive target prices for the
securities in the Fund relative to current market benchmarks. By maintaining
this discipline, we believe we can effectively manage the risk in these often
volatile securities relative to the broad market indexes.
We appreciate your investment in Orbitex Info-Tech & Communications Fund.
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The following graph shows a comparison of a hypothetical investment of $10,000
in Info-Tech & Communications Fund (assumes reinvestment of all dividends and
distributions and a one time sales charge) versus the Lipper Science &
Technology Index and the S&P 500 Index.
[GRAPH]
CUMULATIVE TOTAL RETURN* SUMMARY
Period Ended
April 30, 1998(a)
-----------------
Info-Tech & Communications Fund 30.80%
Info-Tech & Communications Fund (incl. max. 5.75% sales charge) 23.24%
Lipper Science & Technology Index** 16.09%
S&P 500 Index** 22.49%
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(a) Commencement date of operations for Info-Tech & Communications Fund is
October 22, 1997. Performance for the benchmark is not available from
commencement date of operations through April 30, 1998. For that reason,
performance for the benchmark is shown from November 1, 1997 through April
30, 1998.
* Total return is calculated assuming reinvestment of all dividends. Total
returns would have been lower had the Advisor (Orbitex Management, Inc.) and
Administrator and Custodian (State Street Bank and Trust Company) not waived or
reimbursed a portion of their fees. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and the
return on investment both will fluctuate and redemption proceeds may be higher
or lower than an investor's original cost.
** The Lipper Science & Technology Index and the S&P 500 Index are unmanaged
indexes whereas the Fund is actively managed. The performance of these indexes
does not reflect any applicable sales charges or other expenses associated with
investment in the Fund; direct investment in these indexes is not possible.
Index performance is not intended to represent the future performance of
Info-Tech & Communications Fund.
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ORBITEX GROUP OF FUNDS
GROWTH FUND
Managed by Orbitex Management, Inc.
Performance Review: From the commencement of operations of the Fund, October 22,
1997 to April 30, 1998, Orbitex Growth Fund had a return of 19.53%, versus
22.49% for the S&P 500 Index. The objective of the Fund is long-term growth of
capital. The Fund seeks to achieve its objective through investment in
securities believed by Orbitex Management, Inc. to have significant appreciation
potential.
Over the same period of time, the S&P Midcap 400 Index returned 11.05% and the
small capitalization Russell 2000 Index returned only 5.38%. Throughout the
period, the Fund invested in both growth and value oriented stocks, with large,
middle and smaller capitalizations, which probably contributed to the lagging
performance relative to the large-cap, growth-oriented S&P 500 Index. At around
the mid-point of the measurement period, the Fund changed principal managers,
and this contributed to an unusually heavy turnover in shares held by the Fund.
This was done not for reasons of differing style, but for reasons of differing
preferences in terms of industry exposures. The effects of our portfolio
realignment is very difficult to measure, but we believe it had a material
negative impact upon performance.
Despite the dreadful economic collapse in emerging Asia and Japan during the
period, which added significantly to market volatility, domestically both
liquidity and economic growth remained very strong. The pressure upon prices of
commodities of all kinds kept inflation under check, and Gross Domestic Product
and the U.S. savings rates appear to have accelerated concurrently in the first
part of 1998. The capital markets have reflected this prosperity.
The Fund benefited from excellent performances in stocks among many diverse
industry groupings. Financial service companies, such as H.F. Ahmanson, Comerica
and Fleet Financial turned in healthy gains. In the high technology sectors,
companies such as THE, Inc., Visual Networks and Symbol technologies performed
very well.
We had notably poor performances in companies such as Medpartners, Cellegy
Pharmaceuticals and Check Point Software (modest gains were realized on partial
sales of Cellegy and Check Point, which are still held).
Portfolio Composition: The Fund's sector and stock weightings are a result of
bottom-up stock picking across all capitalizations, on the basis of capital
gains potential versus risk. As a result, performance is unlikely to mimic any
one broad index. At this writing, the Fund has taken on a fairly conservative
tilt, given what we believe to be very high valuations achieved in the market by
a number of companies that would otherwise be excellent candidates for the
portfolio. Examples include consumer packaged goods companies, many large
pharmaceutical companies, and many technology companies. In their stead, the
Fund maintains a material but temporary cash position, and a higher weighting
than would be typical in the utility industries.
Outlook: The capital markets are expected to remain in relatively healthy
condition in the near-term, due to very strong growth in the money supply, muted
inflation and the strong U.S. Dollar. We do anticipate an increase in
uncertainty relative to earnings prospects, however, and look for increasing
volatility in stock prices. If we are correct in this assessment, opportunities
to reestablish holdings in attractive sectors (such as those mentioned above) at
prudent prices will emerge before long and the Fund has reserves with which to
act on short order. In the contrary case, in which excessively high-valued
stocks continue upward, the Fund will most likely increase investments in more
value-oriented, lower volatility stocks.
We appreciate your investment in Orbitex Growth Fund.
C-6
<PAGE>
The following graph shows a comparison of a hypothetical investment of $10,000
in Growth Fund (assumes reinvestment of all dividends and distributions and a
one time sales charge) versus the S&P 500 Index.
[GRAPH]
CUMULATIVE TOTAL RETURN* SUMMARY
Period Ended
April 30, 1998(a)
-----------------
Growth Fund- 19.53%
Growth Fund (incl. max. 5.75% sales charge) 12.66%
S&P 500 Index** 22.49%
- ----------
(a) Commencement date of operations for Growth Fund is October 22, 1997.
Performance for the benchmark is not available from commencement date of
operations through April 30, 1998. For that reason, performance for the
benchmark is shown from November 1, 1997 through April 30, 1998.
* Total return is calculated assuming reinvestment of all dividends. Total
returns would have been lower had the Advisor (Orbitex Management, Inc.) and
Administrator and Custodian (State Street Bank and Trust Company) not waived or
reimbursed a portion of their fees. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and the
return on investment both will fluctuate and redemption proceeds may be higher
or lower than an investor's original cost.
** The S&P Index are unmanaged index whereas the Fund is actively managed. The
performance of the index does not reflect any applicable sales charges or other
expenses associated with investment in the Fund; direct investment in the index
is not possible. Index performance is not intended to represent the future
performance of Growth Fund.
C-7
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN HIGH YIELD FUND
Managed by J.P. Morgan Investment Management, Inc.
Performance Review: From the commencement of operations of the Fund, October 20,
1997 to April 30, 1998, Orbitex Asian High Yield Fund had a return of (5.71)%,
versus 11.57%(a) for the Lipper Merging Market Debt Funds Category. The
objective of the Fund is high current income. The Fund seeks to achieve this
objective by investing in primarily in lower rates and unrated debt securities
of companies, financial institutions and governments based in Asia. Capital
appreciation is a secondary objective.
Market Overview: The Asian High Yield Fund was launched into the worst market
that Asian fixed income assets have seen in years. Several countries, including
Thailand, the Philippines, Malaysia, Taiwan, and Korea devalued their
currencies, resulting in a significant deterioration in prices for Asian bonds
and stocks. In addition, virtually a complete evaporation of liquidity in the
region forced some of the countries (Korea, Thailand, and Indonesia) to seek
International Monetary Fund (IMF) balance of payments assistance.
The Asian debt market fell to a low in January 1998 as currencies tumbled.
However, the debt market recovered somewhat as individual governments took steps
to avoid a sovereign default. By the end of the first quarter of 1998, the Asian
market was dominated by two main themes. The first was positive, the improvement
of the liquidity crisis in Asia (except Indonesia). As a result, a fall in Asian
currencies quickly converted trade deficits into surpluses for the affected
countries. This provided the region with billions of dollars a month of inflows
which eased long term funding pressures. The return of liquidity induced rallies
in both Asian equity investments and the emerging market debt which had fallen
for fear of the crisis expanding. The second theme of lower commodity prices was
negative as the Asian economic contraction had far exceeded expectations. This
contraction led to falls in a wide range of commodity prices which faced
increased Asian supply and/or reduced Asian demand. While improved liquidity
tightened emerging market spreads across the board, falling commodity prices
constrained the rally in several markets.
Fund Overview: The Asian High Yield Fund began operations on October 20, 1997
and invested in a number of Asian countries, as well as some non-Asian
countries. Concentrations were established in Indonesia and Thailand where
attractive corporate securities could be found. As the fourth quarter of 1997
unfolded, investments in Korea became particularly compelling and some of the
corporate holdings in Indonesia were reduced to purchase sovereign securities in
Korea. At December 31, 1997, the Fund had an investment allocation of 29% in
Korea, 17% in the Philippines, and 13% in Indonesia.
For the fourth quarter of 1997, the Fund had a negative return of (10.9)%. This
performance was significantly worse than the Salomon Smith Barney High Yield
Market Index which returned 2.38% and the Salomon Smith Barney Broad Investment
Grade Index which returned 2.95%. However, this was much better than Asian
equities which had a negative return of (30.7)% over the same period.
The Fund returned 3.52% for the first quarter 1998. At the beginning of the
quarter, the portfolio was invested in 7 countries. When spreads in Asia began
to look tight relative to similarly rated Latin American bonds, country
allocation was expanded to 13 countries during the quarter to include Malaysia,
Hong Kong, and Japan, as well as a number of Latin American or European
countries. The Fund's holdings in Indonesia were significantly cut back, as
Indonesia's threat to implement a currency board met with widespread
disapproval, including disapproval from the U.S. and IMF. The Fund, which was
most heavily invested in Korea in terms of individual exposure, was well
positioned for the spread tightening which took place over the quarter. Country
allocation in Thailand was also increased slightly but was limited somewhat by
the lack of supply.
We appreciate your investment in Orbitex Asian High Yield Fund.
C-8
<PAGE>
The following graph shows a comparison of a hypothetical investment of $10,000
in Asian High Yield Fund (assumes reinvestment of all dividends and
distributions and a one time sales charge) versus the Lipper Emerging Market
Debt Funds Category.
[GRAPH]
CUMULATIVE TOTAL RETURN* SUMMARY
Period Ended
April 30, 1998(a)
-----------------
Asian High Yield Fund- (5.71)%
Asian High Yield Fund (incl. max. 4.75% sales charge) (10.20)%
Lipper Emerging Market Debt Funds Caregory** 11.57%
- ----------
(a) Commencement date of operations for Asian High Yield Fund is October 20,
1997. Performance for the benchmark is not available from commencement date of
operations through April 30, 1998. For that reason, performance for the
benchmark is shown from November 1, 1997 through April 30, 1998.
* Total return is calculated assuming reinvestment of all dividends. Total
returns would have been lower had the Advisor (Orbitex Management, Inc.) and
Administrator and Custodian (State Street Bank and Trust Company) not waived or
reimbursed a portion of their fees. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and the
return on investment both will fluctuate and redemption proceeds may be higher
or lower than an investor's original cost.
** The Lipper Emerging Markets Debt Funds Category is an unmanaged index whereas
the Fund is actively managed. The performance of the index does not reflect any
applicable sales charges or other expenses associated with investment in the
Fund; direct investment in the index is not possible. Index performance is not
intended to represent the future performance of Growth Fund.
C-9
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN SELECT ADVISORS FUND
Managed by Bankers Trust Company and Asia Strategic Investment Limited
Performance Review and Holdings: For the period from October 31, 1997
(commencement of operations) to April 30, 1998, the Fund declined (2.93)%,
compared with (5.63%)(a) for the MSCI Asia Ex-Japan Free Index, the Fund's
benchmark. The Fund's objective is superior long-term capital growth through
selective investment in Asian companies. The Fund seeks to achieve its objective
by investing at least 65% of its total assets in equity securities of Asian
companies in normal market conditions.
From October 31, 1997 to April 30, 1998, the Asian financial crisis has taken a
huge toll on the currencies and asset value within the region. All regional
markets have undergone tremendous contractions and volatilities. Given the
abnormally poor operating conditions, the Fund was more concerned about capital
preservation and stayed unusually defensive by holding a very high level of
cash. This has caused the Fund's holdings in Asian securities to stay below the
suggested prospectus percentages for some time. The move has enhanced
performance as all the markets declined sharply during the period.
The Fund has maintained a very disciplined approach by investing only when there
is believed to be good value. Relatively large exposures were installed in the
more stable economies of Hong Kong and Singapore, and the weaker "crisis
economies" of Korea, Indonesia, Thailand and Malaysia were generally avoided.
This led to a brief period of underperformance, in the first quarter of 1998,
when the latter markets staged a strong but short lived rally. This was soon
reversed as the poor economic fundamentals re-asserted themselves, and these
markets went into sharp decline again.
As these markets corrected, the Fund has become more active over the recent
weeks in investing its cash. Decisions based on stock selection led to small
positions being placed in Korea, Thailand, and Malaysia,. We have participated
in the recapitalization of two Thai banks, namely Bangkok Bank and Thai Farmers
Bank. This will be an area that we shall be keeping an eye out for
opportunities.
The portfolio's investments are generally composed of large, liquid, index
stocks. We have recently gone overweight in Hong Kong and Singapore preferring
their stronger economic fundamentals and more consistent and sensible policies,
and relatively sound financial systems. Weightings in the crisis economies are a
function of our stock selection process rather than top down considerations.
Thus, we are overweighted in Thailand and neutral in Korea. Our cautious
assessments on Indonesia and the Philippines have not changed, and no weightings
are kept in those markets. We are actively looking for purchases as value
emerges in India and Taiwan.
Outlook: Given the large uncertainties and volatilities in the markets, the Fund
will remain defensive in the near term. Some cash will be kept, and we shall
continue with our disciplined investment approach. We still favor the sounder
and more matured markets of Hong Kong and Singapore, and we shall retain our
cautious approach to the smaller markets where stock selection will be the key.
We appreciate your investment in Orbitex Asian Select Advisors Fund.
C-10
<PAGE>
The following graph shows a comparison of a hypothetical investment of $10,000
in Asian Select Advisors Fund (assumes reinvestment of all dividends and
distributions and a one time sales charge) versus the MSCI Asia Ex-Japan Free
Index.
[GRAPH]
CUMULATIVE TOTAL RETURN* SUMMARY
Period Ended
April 30, 1998(a)
-----------------
Asian Select Advisors Fund- (2.93)%
Asian Select Advisors Fund (incl. max. 5.75% sales charge) (8.54)%
MSCI Asia Ex-Japan Free Index** (5.63)%
- ----------
(a) Commencement date of operations for Asian Select Advisors Fund is October
31, 1997. Performance for the benchmark is not available from commencement date
of operations through April 30, 1998. For that reason, performance for the
benchmark is shown from November 1, 1997 through April 30, 1998.
* Total return is calculated assuming reinvestment of all dividends. Total
returns would have been lower had the Advisor (Orbitex Management, Inc.) and
Administrator and Custodian (State Street Bank and Trust Company) not waived or
reimbursed a portion of their fees. Results represent past performance and do
not indicate future results. The value of an investment in the Fund and the
return on investment both will fluctuate and redemption proceeds may be higher
or lower than an investor's original cost.
** The MSCI Asia Ex-Japan Free Index is an unmanaged index whereas the Fund is
actively managed. The performance of the index does not reflect any applicable
sales charges or other expenses associated with investment in the Fund; direct
investment in the index is not possible. Index performance is not intended to
represent the future performance of Asian Select Advisors Fund.
C-11
<PAGE>
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS
April 30, 1998
- --------------------------------------------------------------------------------
Shares Market
Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 91.21%
Agricultural Machinery - 2.43%
Delta & Pine Land Co. ..................... 3,000 $ 138,188
----------
Aluminum - 2.85%
Alcan Aluminum, Ltd. ...................... 5,000 162,500
----------
Chemicals - 4.90%
Cytec Industries, Inc. (a) ................ 2,000 109,500
Dow Chemical Co. .......................... 1,000 96,687
Du Pont (E.I.) de Nemours and Co. ......... 1,000 72,813
----------
279,000
----------
Gas Exploration - 9.54%
Anderson Exploration, Ltd. (a) ............ 4,000 48,673
Coho Energy, Inc. (a) ..................... 10,000 75,625
Forcenergy, Inc. (a) ...................... 3,000 69,187
Oryx Energy Co. (a) ....................... 4,000 104,500
Seagull Energy Corp. (a) .................. 10,000 170,625
Weatherford Enterra, Inc. (a) ............. 1,500 75,094
----------
543,704
----------
Gas & Pipeline Utilities - 1.66%
Williams Companies, Inc. .................. 3,000 94,875
----------
International Oil - 7.50%
Poco Petroleum, Ltd. (a) .................. 2,000 22,798
Ranger Oil, Ltd. .......................... 17,000 117,938
Santa Fe International Corp. .............. 1,500 58,781
Texaco, Inc. .............................. 2,000 123,000
YPF Sociedad Anonima, ADR.................. 3,000 104,625
----------
427,142
----------
Mining - 10.88%
Barrick Gold Corp. ........................ 4,000 89,750
Freeport-McMoRan Copper & Gold, Inc.,
Class A ................................... 7,000 124,686
Getchell Gold Corp. (a) ................... 3,000 73,875
Greenstone Resources, Ltd. (a) ............ 15,000 91,875
Newmont Mining Corp. ...................... 2,500 80,468
Phelps Dodge Corp. ........................ 1,500 100,688
Placer Dome, Inc. ......................... 4,000 59,000
----------
620,342
----------
See Notes to Financial Statements.
C-12
<PAGE>
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Oil - 12.48%
Atlantic Richfield Co. .................... 2,000 $ 156,000
----------
Canadian 88 Energy Corp. (a) .............. 20,000 97,500
Exxon Corp. ............................... 1,000 72,937
Halliburton Co. ........................... 2,500 137,500
Pennzoil Co. .............................. 1,000 64,063
Triton Energy, Ltd. (a) ................... 1,500 60,188
Unocal Corp. .............................. 3,000 122,812
----------
711,000
----------
Oil & Gas Drilling - 8.70%
Ensco International, Inc. ................. 5,000 141,250
Santa Fe International Corp. .............. 8,000 82,500
Smith International, Inc. (a) ............. 1,500 88,125
Ultramar Diamond Shamrock Corp. ........... 3,000 96,937
UTI Energy Corp. (a) ...................... 5,000 86,875
----------
495,687
----------
Oil & Gas Exploration and Production - 9.34%
Benz Energy, Ltd. (a) ..................... 10,000 12,448
Bonavista Petroleum, Ltd. (a) ............. 13,000 53,184
Canadian Conquest Exploration, Inc. (a) ... 50,000 40,211
EEX Corp. (a) ............................. 10,000 96,875
Global Industries, Inc. (a) ............... 2,500 56,719
Pacalta Resources, Ltd. (a) ............... 5,000 35,666
Probe Exploration, Inc. (a) ............... 15,000 65,037
Total SA, ADR.............................. 2,000 117,500
Ultra Petroleum Corp. (a) ................. 15,000 54,023
----------
531,663
----------
Paper & Related Products - 9.39%
Asia Pulp & Paper Co., Ltd., ADR .......... 4,000 58,250
Champion International Corp. .............. 2,000 107,625
Louisiana-Pacific Corp. ................... 5,000 109,375
Tembec, Inc., Class A (a) ................. 10,000 66,086
Union Camp Corp. .......................... 1,300 78,488
Weyerhaeuser Co. .......................... 2,000 115,250
----------
535,074
----------
Petroleum Services - 10.46%
Baker Hughes, Inc. ........................ 2,500 101,250
Barrington Petroleum, Ltd. (a) ............ 15,000 46,156
Lyondell Petrochemical Co. ................ 3,000 98,625
Noble Drilling Corp. (a) .................. 2,500 80,781
Seven Seas Petroleum, Inc. (a) ............ 2,000 42,500
Veritas DGC, Inc. (a) ..................... 2,000 108,375
Western Atlas, Inc. ....................... 1,500 118,500
----------
596,187
----------
See Notes to Financial Statements.
C-13
<PAGE>
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Software - 0.16%
Mobius Management Systems, Inc. (a) ....... 500 $ 9,250
----------
Steel - 0.92%
AK Steel Holding Corp. .................... 2,500 52,500
----------
TOTAL COMMON STOCKS - (Cost $4,805,529) 5,197,112
----------
SHORT TERM INVESTMENTS (Cost $181,000) - 3.18% Principal
TIME DEPOSIT - 3.18% Amount
----------
State Street Bank and Trust Co.,
5.250%, 05/01/1998 ........................ $ 181,000 181,000
----------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $4,986,529) - 94.39% 5,378,112
OTHER ASSETS AND LIABILITIES - 5.61% 319,722
----------
NET ASSETS - 100.00% $5,697,834
==========
================================================================================
(a)....Denotes non-income producing security.
ADR - American Depository Receipt
See Notes to Financial Statements.
C-14
<PAGE>
ORBITEX GROUP OF FUNDS
INFO - TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 71.81%
Advertising - 4.78%
DoubleClick, Inc. (a) ....................... 2,800 $ 116,725
----------
Business Services - 5.61%
At Home Corp., Series A (a) ............... 1,700 56,631
Nokia Corp., ADR .......................... 1,200 80,250
----------
136,881
----------
Communication Services - 2.36%
China Telecom Hong Kong, Ltd., ADR (a) .... 1,000 38,625
Exodus Communications, Inc. (a) ........... 500 19,000
----------
57,625
----------
Electronics - 16.75%
Altera Corp. (a) .......................... 1,000 40,500
Applied Materials, Inc. (a) ............... 1,000 36,125
ARM Holdings Plc, ADR (a) ................. 500 20,188
Broadcom Corp. (a) ........................ 2,000 96,000
Lexmark International Group, Inc.,
Class A (a) ............................... 600 34,725
Maxim Integrated Products, Inc. (a) ....... 1,500 60,562
Motorola, Inc. ............................ 900 50,062
Texas Instruments, Inc. ................... 1,100 70,469
----------
408,631
----------
Networking Products - 0.90%
Cisco Systems, Inc. (a) ................... 300 21,975
----------
Software - 14.33%
ISS Group, Inc. (a) ....................... 1,000 44,250
Mobius Management Systems, Inc. (a) ....... 1,500 27,750
Ozemail, Ltd., ADR ........................ 10,000 228,125
Visual Networks, Inc. (a) ................. 1,500 49,687
----------
349,812
----------
Telecommunications Equipment - 8.76%
Advanced Radio Telecom Corp. (a) .......... 1,500 21,938
Ascend Communications, Inc. (a) ........... 1,600 69,700
DSC Communications Corp. (a) .............. 1,000 18,000
Lucent Technologies, Inc. ................. 400 30,450
Newbridge Networks Corp. (a) .............. 1,000 29,312
Northern Telecom, Ltd. .................... 400 24,350
Reltec Corp. (a) .......................... 500 19,938
----------
213,688
----------
See Notes to Financial Statements.
C-15
<PAGE>
ORBITEX GROUP OF FUNDS
INFO - TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Telecommunications Services - 6.28%
Metronet Communications Corp., Class B (a) 1,000 $ 25,000
NTL, Inc. (a) ............................. 1,000 39,000
Omnipoint Corp. (a) ....................... 2,200 53,900
Tellabs, Inc. (a) ......................... 500 35,438
----------
153,338
----------
Telephone - 12.04%
BCE, Inc. ................................. 500 21,281
Compania Anonima Nacional Telefonos de
Venezuela, ADR ............................ 1,200 40,200
E. Spire Communications, Inc. (a) ......... 900 17,100
ITC Deltacom, Inc. (a) .................... 500 14,313
Nextlink Communications, Inc., Class A (a) 800 24,000
Powertel, Inc. (a) ........................ 1,600 36,600
Sprint Corp. .............................. 400 27,325
Telecomunicacoes Brasileiras, ADR.......... 400 48,725
WorldCom, Inc. ............................ 1,500 64,172
----------
293,716
----------
TOTAL COMMON STOCKS - (Cost $1,446,288) 1,752,391
----------
SHORT TERM INVESTMENTS (Cost $706,000) - 28.93% Principal
TIME DEPOSIT - 28.93% Amount
--------
State Street Bank and Trust Co.,
5.250%, 05/01/1998 ...................... $ 706,000 706,000
----------
TOTAL INVESTMENTS (COST $2,152,288) - 100.74% 2,458,391
OTHER ASSETS AND LIABILITIES - (0.74)% (18,049)
----------
NET ASSETS - 100.00% $2,440,342
==========
================================================================================
(a) Denotes non-income producing security
ADR - American Depository Receipt
See Notes to Financial Statements.
C-16
<PAGE>
ORBITEX GROUP OF FUNDS
GROWTH FUND
SCHEDULE OF INVESTMENTS
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 101.66%
Advertising - 1.64%
DoubleClick, Inc. (a) ..................... 350 $ 14,591
----------
Air Travel - 4.82%
AMR Corp. (a) ............................. 100 15,237
ASA Holdings, Inc. ........................ 440 16,720
Southwest Airlines Co. .................... 400 10,975
----------
42,932
----------
Auto Parts - 3.56%
CSK Auto Corp. (a) ........................ 700 18,900
Superior Industries International, Inc. ... 400 12,850
----------
31,750
----------
Banks - 1.91%
BankAmerica Corp. ......................... 200 17,000
----------
Broadcasting - 3.67%
Tele-Communications, Inc., Liberty Media
Group, Series A (a) ....................... 500 16,594
Tele-Communications, Inc., TCI Group, Series
A (a) ..................................... 500 16,125
----------
32,719
----------
Business Services - 3.22%
Equifax, Inc. ............................. 400 15,475
Manpower, Inc. ............................ 300 13,219
----------
28,694
----------
Chemicals - 2.17%
Dow Chemical Co. .......................... 200 19,337
----------
Computers & Business Equipment - 1.95%
Symbol Technologies, Inc. ................. 450 17,325
----------
Diversified Manufacturing- 1.91%
General Electric Co. ...................... 200 17,025
----------
Drugs & Health Care - 8.64%
Agouron Pharmaceuticals, Inc. (a) ......... 500 17,000
Amgen, Inc. ............................... 200 11,925
Biogen, Inc. (a) .......................... 100 4,438
Bristol-Myers Squibb Co. .................. 100 10,587
Cellegy Pharmaceuticals, Inc. (a) ......... 1,300 7,394
Merck & Co., Inc. ......................... 100 12,050
RLI Corp. ................................. 250 13,562
----------
76,956
----------
Electric Utilities - 2.95%
Eastern Utilities Assoc. .................. 1,000 26,250
----------
See Notes to Financial Statements.
C-17
<PAGE>
ORBITEX GROUP OF FUNDS
GROWTH FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
Electronics - 5.25%
ARM Holdings Plc, ADR (a) ................. 200 $ 8,075
Maxim Integrated Products, Inc. (a) ....... 250 10,094
SGS-Thomson Microelectronics NV (a) ....... 100 8,450
Texas Instruments, Inc. ................... 100 6,406
Xilinx, Inc. (a) .......................... 300 13,725
----------
46,750
----------
Financial Services - 2.70%
Countrywide Credit Industries, Inc. ....... 250 12,094
Federal National Mortgage Assoc. .......... 200 11,975
----------
24,069
----------
Gas & Pipeline Utilities - 2.73%
Leviathan Gas Pipeline Partners ........... 750 24,328
----------
Homebuilders - 0.96%
Kaufman & Broad Home Corp. ................ 290 8,584
----------
Industrial Machinery - 3.46%
Magna International, Inc., Class A ........ 200 14,912
Tokheim Corp. (a) ......................... 1,000 15,875
----------
30,787
----------
Insurance - 0.96%
20th Century Industries ................... 300 8,550
----------
International Oil - 0.93%
Chevron Corp. ............................. 100 8,269
----------
Metals - 6.18%
Friedman Industries, Inc. ................. 5,775 42,591
Precision Castparts Corp. ................. 200 12,425
----------
55,016
----------
Mining - 3.09%
Getchell Gold Corp. (a) ................... 600 14,775
Homestake Mining Co. ...................... 1,100 12,787
----------
27,562
----------
Networking Products - 2.64%
3Com Corp. (a) ............................ 260 8,889
Cisco Systems, Inc. (a) ................... 200 14,650
----------
23,539
----------
Paper - 4.37%
Pope & Talbot, Inc. ....................... 2,500 38,906
----------
Petroleum Services - 1.06%
Global Marine, Inc. (a) ................... 400 9,425
----------
See Notes to Financial Statements.
C-18
<PAGE>
ORBITEX GROUP OF FUNDS
GROWTH FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- ------------------------------------------------------------------------------
Market
Shares Value
- ------------------------------------------------------------------------------
Real Estate - 2.02%
Catellus Development Corp.(a)................... 300 $ 5,344
Lennar Corp. ................................... 450 12,655
---------
17,999
---------
Retail - 1.36%
Viking Office Products, Inc. (a) ............... 500 12,094
---------
Retail Trade - 1.95%
Longs Drug Stores Corp. ........................ 600 17,362
---------
Savings and Loan - 3.49%
Golden West Financial Corp. .................... 150 15,797
H.F. Ahmanson & Co. ............................ 200 15,250
---------
31,047
---------
Software - 13.99%
Check Point Software Technologies, Ltd. (a) .... 200 5,875
Computer Associate International, Inc. ......... 300 17,569
Electronic Arts, Inc. (a) ...................... 300 13,875
HTE, Inc. (a) .................................. 500 14,000
Pegasystems, Inc. (a) .......................... 700 13,125
Peregrine Systems, Inc. (a) .................... 600 14,475
Transaction Systems Architects, Inc., Class A (a) 300 12,600
Visual Networks, Inc. (a) ...................... 1,000 33,125
---------
124,644
Telecommunications Services - 1.59%
Tellabs, Inc. (a) .............................. 200 14,175
---------
Tobacco - 1.86%
UST, Inc. ...................................... 600 16,538
---------
Transportation - 1.54%
C.H. Robinson Worldwide, Inc. .................. 600 13,725
---------
Trucking & Freight Forwarding - 3.09%
Air Express International Corp. ................ 400 10,500
Expeditores International ...................... 400 17,000
---------
27,500
---------
TOTAL COMMON STOCKS - (Cost $846,862) 905,448
---------
TOTAL INVESTMENTS (COST $846,862) - 101.66% 905,448
OTHER ASSETS AND LIABILITIES - (1.66)% (14,808)
----------
NET ASSETS - 100.00% 890,640
=========
================================================================================
(a) Denotes non-income producing security
ADR - American Depository Receipt
See Notes to Financial Statements.
C-19
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
April 30, 1998
- --------------------------------------------------------------------------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
BONDS AND NOTES - 106.23%
BRAZIL - 1.15%
Government - 1.15%
Republic of Brazil C Bond, 5.00%
with 3.00% Interest Capitalization,
04/15/2014 (a)(b).......................... $ 52,279 $ 43,326
----------
CHINA - 2.46%
Government - 1.22%
Guangdong International Trust
& Investment Corp., 8.750%, 10/24/2016 (c) 50,000 46,000
----------
Municipal - 1.24%
Zhuhai Hwy Co., Ltd., 11.500%, 07/01/2008
(c) ....................................... 50,000 46,750
----------
HONG KONG - 2.56%
Industrial - 1.26%
Hutchison Whampoa, Ltd., 6.950%, 08/01/2007
(c)........................................ 50,000 47,395
----------
Real Estate - 1.30%
Cheung Kong Finance, 5.500%, 09/30/1998 ... 50,000 49,125
----------
INDIA - 6.19%
Energy - 4.93%
Tata Electric Co., 7.875%, 08/19/2007 (c).. 200,000 185,720
----------
Industrials - 1.26%
Reliance Industries, Ltd., 8.125%,
09/27/2005 (c)............................. 50,000 47,500
----------
INDONESIA- 0.92%
Food, Beverage & Tobacco - 0.92%
Sampoerna International Financial Co.,
8.375%,
06/15/2006 (c)........................... 50,000 34,500
----------
JAPAN - 8.71%
Banks - 2.61%
Tokai Preferred Capital Co. LLC, 9.980%,
12/29/2049 (c)(d) 100,000 98,500
----------
Electric Utilities - 6.10%
Tenaga Nasional Berhad, 7.625%, 04/29/2007
(c) 50,000 44,875
Tenaga Nasional Berhad, 7.875%, 06/15/2004
(c) 200,000 184,790
----------
229,665
----------
See Notes to Financial Statements.
C-20
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
KOREA - 37.61%
Banks - 8.75%
Korea Development Bank, 7.000%, 07/15/1999 $ 100,000 $ 98,590
Korea Development Bank, 7.375%, 09/17/2004 250,000 230,825
----------
329,415
----------
Government - 14.55%
Export-Import Bank of Korea, 6.500%,
02/10/2002 ................................ 110,000 100,937
Export-Import Bank of Korea, 6.500%,
11/15/2006 ................................ 200,000 175,000
Export-Import Bank of Korea, 7.100%,
03/15/2007 ................................ 80,000 74,800
Republic of Korea, 8.875%, 04/15/2008 ..... 200,000 197,210
----------
547,947
----------
Industrials - 4.96%
Pohang Iron & Steel, Ltd., 7.500%, 08/1/2002 200,000 187,000
----------
Telecommunications Services - 7.27%
Korea Telecom, 7.625%, 04/15/2007 ......... 100,000 88,744
SK Telecom Co., Ltd., 7.750%, 04/29/2004 .. 200,000 185,250
----------
273,994
----------
Utilities - 2.08%
Korea Electric Power Corp., 6.375%,
12/01/2003 ................................ 90,000 78,300
----------
MALAYSIA - 1.23%
Industrials - 1.23%
Petroliam Nasional Berhad, 7.125%,
08/15/2005 (c)............................. 50,000 46,340
----------
MEXICO - 2.75%
Industrials - 2.75%
AXA SA de CV, 9.000%, 08/04/2004 (c)....... 50,000 49,125
Copamex Industrias SA De CV, 11.375%,
04/30/2004 ................................ 50,000 54,625
----------
103,750
----------
PHILIPPINES - 21.15%
Energy - 9.21%
Ce Casecnan Water & Energy, Inc.,
Senior Note, 11.450%, 11/15/2005 ........ 100,000 105,200
Ce Casecnan Water & Energy, Inc.,
Senior Note, 11.950%, 11/15/2010 ........ 225,000 241,603
----------
346,803
----------
Government - 9.11%
Bangko Sentral Ng Philipinas, 8.600%,
06/15/2027 ................................ 100,000 90,000
ING Bank NV, Floating Rate Note, 02/12/1999
(c)(e)(d)(f) .............................. 100,000 104,250
Republic of Philippines, 8.875%, 04/15/2008 150,000 148,875
----------
343,125
----------
Telephone - 2.83%
Philippine Long Distance Telephone, 10.625%,
06/02/2004 ................................ 100,000 106,470
----------
See Notes to Financial Statements.
C-21
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- --------------------------------------------------------------------------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
RUSSIA - 1.17%
Government - 1.17%
Russia Ministry of Finance, 9.250%,
11/27/2001 ................................ $ 30,000 $ 29,475
Russia Ministry of Finance, 10.000%,
06/26/2007 ................................ 15,000 14,456
----------
43,931
----------
THAILAND - 12.12%
Banks - 4.58%
Bangkok Bank Public Co., Ltd., 7.250%,
09/15/2005 (c) ............................ 200,000 172,340
----------
Industrials - 7.54%
PTTEP International, Ltd., 7.625%,
10/01/2006 (c)............................. 320,000 283,888
----------
TURKEY - 5.37%
Government - 5.37%
Republic of Turkey, 10.000%, 09/19/2007 ... 100,000 102,500
Sultan, Ltd., Floating Rate Note, 8.750%,
06/11/1999 (d) ............................ 100,000 99,760
----------
202,260
----------
UNITED STATES - 2.84%
Government - 2.84%
United States Treasury Note, 6.875%,
05/15/2006 ................................ 100,000 107,062
----------
TOTAL BONDS AND NOTES - (Cost $4,015,710) 4,001,106
----------
PREFERRED STOCKS (Cost $49,716) - 1.32%
CHINA - 1.32% Shares
------
Industrials - 1.32%
Swire Pacific, Ltd., 9.33%, Series 144A(c). 2,200 50,050
----------
TOTAL LONG TERM INVESTMENTS - (Cost $4,065,426) 4,051,156
----------
See Notes to Financial Statements.
C-22
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (continued)
April 30, 1998
- -------------------------------------------------------------------------------
Principal Market
Amount Value
- -------------------------------------------------------------------------------
SHORT TERM INVESTMENTS (Cost $354,755) - 9.42%
UNITED STATES - 9.42%
Government - 9.42%
United States Treasury Bill,
4.850% - 4.990%, 06/25/1998 - 07/09/1998(g) $ 358,000 $ 354,755
----------
TOTAL INVESTMENTS (Cost $4,420,181) - 116.97% 4,405,911
OTHER ASSETS AND LIABILITIES - (16.97)% (639,354)
----------
NET ASSETS - 100.00% $3,766,557
==========
(a) The coupon rate shown on step-up coupon bond represents the rate as of
April 30, 1998.
(b) Bond pays stated or additional interest with "payment-in-kind" (PIK) bonds.
(c) Securities purchased pursuant to Rule 144A of the Securities Act of 1933
and may be resold in transactions exempt from registration, normally only
to qualified institutional buyers. At April 30, 1998, these securities
amounted to $1,442,023, representing 38.29% of the Fund's net assets.
(d) The coupon rate shown on floating rate note represents the rate at April
30, 1998.
(e) Illiquid security restricted as to resale, represents 2.77% (at value) of
the net assets of the Fund, with an acquisition date of 02/12/98 and
acquisition cost of $100,000.
(f) Structured Note which pays an interest amount at either the Philippines
T-Bill rate (currently at 17.7%, resets semi-annually) less 2.25% or LIBOR
plus 100 basis points, whichever is higher at the due date.
(g) The coupon rate represents the annualized yield at date of purchase.
See Notes to Financial Statements.
C-23
<PAGE>
ORBITEX GROUP OF FUNDS
ASIAN SELECT ADVISORS FUND
SCHEDULE OF INVESTMENTS
April 30, 1998
- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 41.60%
HONG KONG - 19.04%
Conglomerates - 4.58%
Hutchison Whampoa ......................... 1,000 $ 6,184
----------
Real Estate - 4.65%
Citic Pacific, Ltd. ....................... 1,000 3,072
Wharf Holdings ............................ 2,000 3,202
----------
6,274
----------
Retail - 4.22%
New World Development Co., Ltd. ........... 2,000 5,693
----------
Telephone - 5.59%
China Telecom, Ltd. ....................... 2,000 3,796
Hong Kong Telecomm ........................ 2,000 3,744
----------
7,540
----------
KOREA - 4.04%
Electric Utilities - 4.04%
Korea Electric Power Corp. ................ 400 5,447
----------
SINGAPORE - 14.18%
Building Materials & Construction - 3.12%
Hong Leong Asia, Ltd. ..................... 5,000 4,202
----------
Electronics - 3.27%
Singapore Technologies .................... 5,137 4,415
----------
Telephone - 3.82%
Singapore Telecommunications, Ltd. ........ 3,000 5,156
----------
Transportation - 3.97%
Keppel Telecom & Transport ................ 8,000 5,359
----------
THAILAND - 4.34%
Banks - 4.34%
Bangkok Bank .............................. 600 1,506
Thai Farmers Bank Public Co., Ltd. ........ 1,900 4,350
----------
5,856
----------
TOTAL COMMON STOCKS - (Cost $57,817) 56,126
----------
TOTAL INVESTMENTS (Cost $57,817) - 41.60% 56,126
OTHER ASSETS AND LIABILITIES - 58.40% 78,795
----------
NET ASSETS -100.00% $ 134,921
==========
See Notes to Financial Statements.
C-24
<PAGE>
ORBITEX GROUP OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1998
<TABLE>
<CAPTION>
Strategic
Natural Info-Tech & Asian High Asian
Resources Communications Growth Yield Select Advisors
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (Note 2)...... $ 5,197,112 $ 1,752,391 $ 905,448 $ 4,051,156 $ 56,126
Short term investments (Note 2)................... 181,000 706,000 - 354,755 -
------------- -------------- ------------ ------------- -------------
Total investments........................... 5,378,112 2,458,391 905,448 4,405,911 56,126
Cash.............................................. 855 2,760 81,923 378,422 85,944
Foreign currency, at value........................ 35,384 - - - 1,065
Receivable for securities sold.................... 372,880 - 18,627 - -
Interest receivable............................... 26 103 - 77,358 -
Dividends receivable.............................. 8,430 498 4,063 1,283 83
Receivable for fund shares sold................... 246,116 133,455 9,413 39,035 -
Receivable due from advisor (Note 3).............. 6,407 14,614 17,142 28,783 22,647
Prepaid expenses.................................. 6,048 6,049 5,381 6,179 5,378
Deferred organizational expenses (Note 2)......... 16,891 16,881 16,881 16,871 16,974
------------- -------------- ------------ ------------- -------------
TOTAL ASSETS.............................. 6,071,149 2,632,751 1,058,878 4,953,842 188,217
LIABILITIES
Payable for securities purchased.................. 310,203 117,894 114,432 376,771 -
Payable for fund shares redeemed.................. - 22,019 - - -
Payable for trustee fees (Note 3)................. 1,000 1,000 1,000 1,000 1,000
Payable for organizational expense (Note 2)....... 4,589 4,589 4,589 4,589 4,589
Payable for line of credit (Note 9)............... - - - 750,000 -
Accrued expenses and other liabilities............ 57,523 46,907 48,217 54,925 47,707
------------- -------------- ------------ ------------- -------------
TOTAL LIABILITIES......................... 373,315 192,409 168,238 1,187,285 53,296
------------- -------------- ------------ ------------- -------------
NET ASSETS............................ $ 5,697,834 $ 2,440,342 $ 890,640 $ 3,766,557 $ 134,921
============= ============== ============ ============= =============
NET ASSETS
Paid-in capital................................... $ 5,484,453 $ 2,164,523 $ 776,356 $ 3,931,613 $ 137,824
Undistributed net investment income............... 119,210 - 13,074 26,364 -
Accumulated net realized gain (loss) on
investments and foreign currency transactions.. (297,412) (30,284) 42,624 (177,150) (1,212)
Net unrealized appreciation (depreciation) on
investments and foreign currency transactions.. 391,583 306,103 58,586 (14,270) (1,691)
------------- -------------- ------------ ------------- -------------
NET ASSETS................................ $ 5,697,834 $ 2,440,342 $ 890,640 $ 3,766,557 $ 134,921
============= ============== ============ ============= =============
NET ASSET VALUE PER SHARE
Net asset value per share (based on shares
of beneficial interest outstanding, par
value $0.01 per share)......................... $ 16.54 $ 19.62 $ 17.93 $ 10.93 $ 14.56
============= ============== =========== ============== =============
Maximum sales charge (Note 1)..................... 5.75% 5.75% 5.75% 4.75% 5.75%
Offering price per share.......................... $ 17.55 $ 20.82 $ 19.02 $ 11.48 $ 15.45
============= ============== ============ ============= =============
Total shares outstanding at end of period......... 344,464 124,389 49,674 344,640 9,265
============= ============== ============ ============= =============
Cost of investments............................... $ 4,986,529 $ 2,152,288 $ 846,862 $ 4,420,181 $ 57,817
============= ============== ============ ============= =============
Foreign currency, at cost......................... $ 35,384 $ - $ - $ - $ 1,065
============= ============== ============ ============= =============
</TABLE>
See Notes to Financial Statements.
C-25
<PAGE>
ORBITEX GROUP OF FUNDS
STATEMENTS OF OPERATIONS
For the Period Ended April 30, 1998 *
<TABLE>
<CAPTION>
Strategic
Natural Info-Tech & Asian High Asian
Resources Communications Growth Yield Select Advisors
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income................................... $ 19,752 $ 2,943 $ 502 $ 122,532 $ 80
Dividend income................................... 157,738 1,726 18,839 1,283 310
Foreign taxes withheld............................ (369) (62) (7) - -
------------ ------------- ----------- ------------- -------------
TOTAL INVESTMENT INCOME........................ 177,121 4,607 19,334 123,815 390
EXPENSES
Custodian fee (Note 3)............................ 45,074 40,820 45,605 36,946 51,513
Administration fee (Note 3)....................... 43,750 43,750 43,750 43,750 43,750
Investment advisor fee (Note 3)................... 25,989 5,113 2,423 17,612 953
Professional fees................................. 24,000 24,000 24,000 24,000 24,000
Transfer agent fee................................ 14,860 15,028 14,893 14,971 14,129
Registration fees................................. 17,000 15,510 15,219 16,404 15,100
Distribution fee (Note 3)......................... 8,316 1,635 1,291 4,227 254
Printing expense.................................. 7,000 7,000 7,000 7,000 7,000
Insurance fee..................................... 2,917 2,917 2,917 2,917 2,917
Trustees' fee (Note 3)............................ 2,000 2,000 2,000 2,000 2,000
Miscellaneous expense............................. 30 28 28 2,001 58
Amortization of organizational expense (Note 2)... 1,963 1,973 1,973 1,983 1,880
Interest expense (Note 9)......................... - - - 1,924 -
------------ ------------- ----------- ------------- -------------
Total expenses before waivers,
reimbursements and custodial credits ......... 192,899 159,774 161,099 175,735 163,554
Expenses waived and reimbursed (Note 3)........... (142,005) (148,028) (154,315) (172,701) (160,290)
Fees reduced by credits allowed by the
custodian (Note 3).......................... (1,091) (1,929) (1,622) (1,110) (1,677)
------------ ------------- ----------- -------------- --------------
NET EXPENSES.................................. 49,803 9,817 5,162 1,924 1,587
------------ ------------- ----------- ------------- -------------
NET INVESTMENT INCOME (LOSS).................. 127,318 (5,210) 14,172 121,891 (1,197)
------------ ------------- ----------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investments.................................... (290,842) (30,284) 41,526 (177,110) (1,212)
Foreign currency related transactions.......... (615) - - - 44
------------ ------------- ----------- ------------- -------------
Total net realized gain (loss).............. (291,457) (30,284) 41,526 (177,110) (1,168)
Net change in unrealized appreciation
(depreciation) on investment transactions...... 391,583 306,103 58,586 (14,270) (1,691)
------------ ------------- ----------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS)............................ 100,126 275,819 100,112 (191,380) (2,859)
------------ ------------- ----------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................................. $ 227,444 $ 270,609 $ 114,284 $ (69,489) $ (4,056)
============ ============= =========== ============= =============
SALES CHARGE PAID TO
FUNDS DISTRIBUTOR, INC. ....................... $ 38,790 $ 47,510 $ 5,248 $ 55,389 $ 1,100
============ ============= =========== ============= =============
</TABLE>
* The commencement of investment operations was October 23, 1997 for Strategic
Natural Resources Fund, October 22, 1997 for Info-Tech & Communications Fund
and Growth Fund, October 20, 1997 for Asian High Yield Fund, and October 31,
1997 for Asian Select Advisors Fund.
See Notes to Financial Statements.
C-26
<PAGE>
ORBITEX GROUP OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended April 30, 1998 *
<TABLE>
<CAPTION>
Strategic
Natural Info-Tech & Asian High Asian
Resources Communications Growth Yield Select Advisors
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income (loss)......................... $ 127,318 $ (5,210) $ 14,172 $ 121,891 $ (1,197)
Net realized gain (loss) on investments and
foreign currency related transactions............. (291,457) (30,284) 41,526 (177,110) (1,168)
Net change in unrealized appreciation
(depreciation) on investment transactions......... 391,583 306,103 58,586 (14,270) (1,691)
----------- ----------- ----------- ------------ ----------
Net increase (decrease) in net assets
resulting from operations......................... 227,444 270,609 114,284 (69,489) (4,056)
----------- ----------- ----------- ------------ ----------
Dividends and distributions to shareholders
from:
Net investment income................................ (7,147) - - (95,628) -
Distributions in excess of net realized gains........ (6,916) - - - -
----------- ----------- ----------- ------------ ----------
Total dividends and distributions to shareholders. (14,063) - - (95,628) -
----------- ----------- ----------- ------------ ----------
Fund share transactions:
Proceeds from fund shares sold....................... 10,833,321 2,171,752 756,356 5,998,122 118,977
Proceeds from reinvestment of dividends.............. 12,051 - - 21,381 -
Cost of fund shares redeemed......................... (5,380,919) (22,019) - (2,107,829) -
----------- ----------- ----------- ------------ ----------
Net increase from fund share transactions......... 5,464,453 2,149,733 756,356 3,911,674 118,977
Total increase in net assets......................... 5,677,834 2,420,342 870,640 3,746,557 114,921
----------- ----------- ----------- ------------ ----------
Net assets:
Beginning of period (Note 8)......................... 20,000 20,000 20,000 20,000 20,000
----------- ----------- ----------- ------------ ----------
End of period ....................................... $ 5,697,834 $ 2,440,342 $ 890,640 $ 3,766,557 $ 134,921
=========== =========== =========== ============ ==========
Number of fund shares:
Shares outstanding at beginning of period (Note 8)... 1,333 1,333 1,333 1,667 1,333
Shares sold.......................................... 709,678 124,204 48,341 528,380 7,932
Shares reinvested.................................... 713 - - 2,010 -
Shares redeemed...................................... (367,260) (1,148) - (187,417) -
------------ ----------- ----------- ------------ ----------
Net increase in shares outstanding................... 343,131 123,056 48,341 342,973 7,932
----------- ----------- ----------- ------------ ----------
Total shares outstanding at end of period......... 344,464 124,389 49,674 344,640 9,265
=========== =========== =========== ============ ==========
Undistributed net investment income at
end of period .................................... $ 119,210 $ - $ 13,074 $ 26,364 $ -
=========== =========== =========== ============ ==========
</TABLE>
* The commencement of investment operations was October 23, 1997 for Strategic
Natural Resources Fund, October 22, 1997 for Info-Tech & Communications Fund
and Growth Fund, October 20, 1997 for Asian High Yield Fund, and October 31,
1997 for Asian Select Advisors Fund.
See Notes to Financial Statements.
C-27
<PAGE>
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
For the Period Ended April 30, 1998 (a)
Selected data based on a share outstanding throughout the period indicated
<TABLE>
<CAPTION>
Strategic
Natural Info-Tech &
Resources Communications Growth Asian High
Fund Fund Fund Yield Fund
---- ---- ---- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 15.00 $ 15.00 $ 15.00 $ 12.00 $ 15.00
--------- --------- --------- --------- ---------
Income (loss) from investment
operations:
Net investment income .................. 0.38 (d) 0 0.26(d) 0.45 0.00
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions .......... 1.22 4.62 2.67 (1.15) (0.44)
--------- --------- --------- --------- ---------
Total income (loss) from investment
operations ............................. (1.60) 4.62 2.93 (0.7) (0.44)
--------- --------- --------- -------- ---------
Less distributions from net investment
income ................................. (0.03) - - (0.37) -
Less distributions in excess of
capital gains .......................... (0.03) - - - -
--------- --------- --------- --------- ---------
Total distributions from net
investment income and net capital gains (0.06) - - (0.37) -
--------- --------- --------- --------- ---------
Net asset value, end of period $ 16.54 $ 19.62 $ 17.93 $ 10.93 $ 14.56
========== ========== ========== ========== =========
Total Return (b) 10.74% 30.80% 19.53% (5.71)% (2.93)
========= ========= ========= ========= =========
Ratios and Supplemental Data:
Net assets, end of period (in 000's) $ 5,698 $ 2,440 $ 891 $ 3,767 $ 135
---
Ratio of expenses to average net
assets (including interest expense) (c) 2.40% 2.40% 1.60% 0.14% 2.50%
Ratio of expenses to average net
assets (including interest expense and
custodial credits) (c) 2.45% 2.88% 2.11% 0.22% 5.14%
Ratio of expenses to average net
assets without expenses waived,
reimbursed and/or reduced by custodial
credits (c) 9.27% 39.06% 50.13% 12.47% 257.54%
Ratio of net investment income (loss)
to average net assets (c) 6.12% (d) -1.27% 4.41% 8.65% (d) (1.89)
Portfolio turnover rate 519% 76% 448% 173% 5%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The commencement of investment operations was October 23, 1997 for
Strategic Natural Resources Fund, October 22, 1997 for Info-Tech &
Communications Fund and Growth Fund, October 20, 1997 for Asian High Yield
Fund, and October 31, 1997 for Asian Select Advisors Fund.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor, Administrator and Custodian not absorbed a
portion of the expenses, total returns would have been lower. Periods less
than one year are not annualized.
(c) Annualized for periods less than one year.
(d) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Advisor during the current fiscal year.
C-28
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
1. Organization
Orbitex Group of Funds (the "Trust") was incorporated in Delaware in December
1996 and is registered under the Investment Company Act of 1940 (the "1940
Act"), as amended, as an open-end management investment company. The Trust is
comprised of five funds (collectively the "Funds" and individually the "Fund")
as follows: Strategic Natural Resources Fund, Info-Tech & Communications Fund,
Growth Fund, Asian High Yield Fund and Asian Select Advisors Fund. Each Fund
operates as a diversified investment company except Asian High Yield Fund which
operates as a non-diversified investment company. The commencement date of
operations for Strategic Natural Resources Fund, Info-Tech & Communications
Fund, Growth Fund, Asian High Yield Fund and Asian Select Advisors Fund was
October 23, 1997, October 22, 1997, October 22, 1997, October 20, 1997 and
October 31, 1997, respectively. All Funds are offered at net asset value plus a
maximum sales load of 5.75%, except for Asian High Yield Fund, which is offered
at net asset value plus a maximum sales load of 4.75%.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
Security Valuation and Transactions
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued, or lacking any
sales, at the last available bid price. Long-term debt obligations are valued at
the mean of representative quoted bid and asked prices for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality and type; however, when the Advisor or Sub-Advisor deems it
appropriate, prices obtained from an independent pricing service will be used.
Short term debt investments with maturities less than 60 days are valued at
amortized cost or original cost plus accrued interest, each of which
approximates fair value.
Foreign securities are valued on the basis of market quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates.
Securities for which current market quotations are not readily available or for
which quotations are not deemed by Orbitex Management, Inc. (the "Advisor") to
be representative of market values are valued at fair value as determined in
good faith by or under the direction of the Trustees.
Investment security transactions are accounted for as of the trade date. Cost is
determined and gains and losses are based upon the specific identification
method for both financial statement and federal income tax purposes.
Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
and income receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions. Purchases
and sales of securities are translated into U.S. dollars at the contractual
currency rates established at the approximate time of the trade.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from currency realized between the trade and settlement dates
on securities transactions and the difference between income accrued versus
income received. The effects of changes in foreign currency exchange rates on
investments in securities are included with the net realized and unrealized gain
or loss on investment securities.
C-29
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1998
Income Taxes
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income and gains to its shareholders and therefore, no provision for
federal income tax has been made. Each Fund is treated as a separate taxpayer
for federal income tax purposes.
Investment Income
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Interest income is recorded on the accrual basis.
Market discount, original issue discount and premium are accreted and amortized
respectively, on a yield to maturity basis. The value of additional securities
received as interest or dividend payments is recorded at their fair value as
income and as the cost basis of such securities.
Expenses
Expenses of the Trust which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds.
Distributions to Shareholders
Income dividends will normally be declared and distributed quarterly for the
Asian High Yield Fund and annually for each of the other Funds. All Funds
declare and pay net realized capital gain distributions annually. The character
of income and gains to be distributed are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Funds, timing differences and
differing characterization of distributions made by each Fund as a whole.
Deferred Organizational Costs
Organizational expenses have been deferred and are being amortized over a period
of five years commencing with operations. The Advisor has agreed with respect to
each of the Funds that, if any of the initial shares of a Fund are redeemed
during such amortization period by the holder thereof, the redemption proceeds
will be reduced for any unamortized organization expenses in the same ratio as
the number of shares redeemed bears to the number of initial shares held at the
time of redemption. The Advisor has paid a majority of the organizational costs
of the Funds and was reimbursed by the Funds.
Repurchase Agreements
Each Fund may enter into repurchase agreements. In a repurchase agreement, a
Fund buys a security and the seller simultaneously agrees to repurchase the
security on a specified future date at an agreed-upon price. The repurchase
price reflects an agreed-upon interest rate during the time the Fund's money is
invested in the security. Because the security constitutes collateral for the
repurchase obligation, a repurchase agreement can be considered a collateralized
loan. The Fund's risk is the ability of the seller to pay the agreed-upon price
on the maturity date. If the seller is unable to make a timely repurchase, the
Fund could experience delays in the receipt of expected proceeds, suffer a loss
in principal or current interest, or incur costs in liquidating the collateral.
The Trustees have established criteria to evaluate the creditworthiness of
parties with which the Funds may enter into repurchase agreements.
C-30
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1998
Structured Notes
Each Fund may invest in structured notes, whose principal amount, redemption
terms or conversion terms are related to specific securities or other indices.
The prices of structured securities have historically been subject to high
volatility and their interest or dividend rates may at times be substantially
lower than prevailing market rates.
Other
There are certain additional risks involved when investing in foreign securities
that are not inherent in domestic securities. These risks may involve foreign
currency exchange rate fluctuations, adverse political and economic developments
and the imposition of unfavorable foreign governmental laws and restrictions.
There is significant potential for continuing economic and political turmoil in
the Pacific Basin and Southeast Asia, such turmoil could have a negative effect
on the share prices of the Funds; particularly the Asian High Yield Fund and the
Asian Select Advisors Fund.
The Strategic Natural Resources Fund, Info-Tech & Communications Fund and Asian
High Yield Fund may focus their investments in certain industries, subjecting
them to greater risk than funds that are more diversified.
3. Fees and Compensation Paid to Affiliates and Other Parties
Advisory Fees
Each Fund has entered into an Investment Advisory Agreement with the Advisor. As
compensation for the services rendered, facilities furnished, and expenses borne
by the Advisor, the Funds will pay the Advisor a fee accrued daily and paid
monthly, at the annualized rate of 1.25% for the Strategic Natural Resources
Fund, 1.25% for the Info-Tech & Communications Fund, 0.75% for the Growth Fund,
1.25% for the Asian High Yield Fund, and 1.50% for the Asian Select Advisors
Fund. The Advisory Agreement also provides that the Advisor may retain
Sub-Advisers at the Advisor's own cost and expense, for the purpose of managing
the investment of the assets of one or more Funds of the Trust.
The Advisor has agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses, net of
waivers and custodial credits, to an annualized rate of 2.40%, 2.40%, 1.60%,
2.00%, and 2.50% for the Strategic Natural Resources Fund, Info-Tech &
Communications Fund, Growth Fund, Asian High Yield Fund and Asian Select
Advisors Fund, respectively, subject to possible reimbursement by the Asian High
Yield Fund in future years if such reimbursement can be achieved within the
foregoing expense limit. The Advisor has agreed to waive or limit its fees and
to pay all operating expenses, not including interest expense but including fee
waivers and custodial credits, of the Asian High Yield Fund for the first 150
days of the Fund's operation and in 60 day intervals thereafter. The waivers for
the advisor's fee for the period ended April 30, 1998 amounted to $25,989,
$5,113, $2,423, $17,612 and $953 for Strategic Natural Resources Fund, Info-Tech
& Communications Fund, Growth Fund, Asian High Yield Fund and Asian Select
Advisors Fund, respectively. The reimbursements for the period ended April
30,1998 amounted to $55,295, $74,137, $80,890, $96,111 and $82,263 for Strategic
Natural Resources Fund, Info-Tech & Communications Fund, Growth Fund, Asian High
Yield Fund and Asian Select Advisors Fund, respectively.
Sub-Advisory Fees
Asian High Yield Fund and Asian Select Advisors Fund both have Sub-Advisory
relationships. Pursuant to separate Sub-Advisory Agreements among each
Sub-Advisor, the Advisor and the Trust, each Sub-Advisor is responsible for the
selection and management of portfolio investments for a Fund, or for its segment
of a particular Fund, in accordance with the Fund's investment objective and
policies and under the supervision of the Advisor.
C-31
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
On a monthly basis, each Sub-Advisor receives a sub-advisory fee, paid by the
Advisor, based on the applicable Fund's average daily net assets as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Asia Strategic J.P. Morgan
Bankers Trust Company Investment Investment
Management Limited Management, Inc.
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asian High Yield - - 0.50% on the first $50
Fund million average daily net
assets of the Fund; 0.45%
on the next $50 million
average daily net assets
of the Fund; and 0.40% on
the average daily net
assets over $100 million
of the Fund
- --------------------------------------------------------------------------------------------------
Asian Select 0.70% of the average 0.50% of the average -
Advisors Fund daily net assets of daily net assets of
the Fund advised by the Fund advised by
Bankers Trust Asia Strategic
Company. Investment
Management Limited
- --------------------------------------------------------------------------------------------------
</TABLE>
Administration Fees
State Street Bank and Trust Company ("State Street") serves as the Administrator
of the Trust. For providing administrative services to the Funds, State Street
will receive from each Fund, a monthly fee at an annual rate of 0.10% of the
first $100 million of each Fund's average daily net assets, plus 0.08% of the
next $100 million of each Fund's average daily net assets, plus 0.06% of each
Fund's average daily net assets in excess of $200 million, subject to certain
minimum requirements. State Street agreed to waive certain fees for the period
ended April 30, 1998 which amounted to $40,014, $41,403, $41,412, $40,544, and
$41,610 for Strategic Natural Resources Fund, Info-Tech & Communications Fund,
Growth Fund, Asian High Yield Fund and Asian Select Advisors Fund, respectively.
Custodian Fees
State Street serves as the Trust's custodian, including holding all portfolio
securities and cash assets of the Trust and providing accounting services
including daily valuation of the shares of each Fund, for which it receives an
annual custody and accounting fee. State Street agreed to waive certain fees for
the period ended April 30, 1998 which amounted to $20,707, $27,375, $29,590,
$18,434 and $35,464 for Strategic Natural Resources Fund, Info-Tech &
Communications Fund, Growth Fund, Asian High Yield Fund and Asian Select
Advisors Fund, respectively.
Distributor
Funds Distributor, Inc. (the "Distributor") serves as the distributor of the
shares of each Fund pursuant to a Distribution Plan and Agreement, pursuant to
Rule 12b-1 under the 1940 Act, between the Distributor and the Trust. The Rule
12b-1 Plan and Agreement provides for payment of a fee to the Distributor at an
annualized rate of 0.30% of the average daily net assets of the Asian High Yield
Fund and 0.40% of the average daily net assets of each of the other Funds.
Trustees Fees
The Funds pay no compensation to their Trustees who are employees of the Advisor
or Sub-Advisors. Trustees who are not Advisor or Sub-Advisor employees receive
an annual fee of $5,000.
C-32
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1998
4. Aggregate Unrealized Appreciation and Depreciation
The identified cost of investments in securities owned by each Fund for federal
income tax purposes and their respective gross unrealized appreciation and
depreciation at April 30, 1998, were as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Identified Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Natural Resources Fund............. $ 5,014,480 $ 429,886 $ 66,254 $ 363,632
Info-Tech & Communications Fund.............. 2,152,288 329,395 23,292 306,103
Growth Fund.................................. 847,500 77,002 19,054 57,948
Asian High Yield Fund........................ 4,420,181 42,108 56,378 (14,270)
Asian Select Advisors Fund................... 57,817 2,219 3,910 (1,691)
</TABLE>
5. Investment Transactions
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government obligations and short-term securities, for the period ended
April 30, 1998, were as follows:
Purchases Sales
- --------------------------------------------------------------------------------
Strategic Natural Resources Fund........ $ 22,061,773 $ 16,965,402
Info-Tech & Communications Fund......... 1,950,955 474,383
Growth Fund............................. 3,178,134 2,372,798
Asian High Yield Fund................... 6,461,606 2,333,508
Asian Select Advisors Fund.............. 61,126 2,097
Purchases and sales of U.S. Government obligations aggregated $2,105,657 and
$1,997,957, respectively, for the Asian High Yield Fund.
6. Beneficial Interest
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders:
5% or Greater Shareholders
--------------------------------
Number % of Fund Held
- --------------------------------------------------------------------------------
Strategic Natural Resources Fund......... 2 48%
Info-Tech & Communications Fund.......... 1 36%
Growth Fund.............................. 4 87%
Asian High Yield Fund.................... 4 70%
Asian Select Advisors Fund............... 3 93%
The following schedule shows the number of affiliates each owning 5% or more of
a Fund and the total percentage of the Fund held by such affiliates:
5% or Greater Affiliates
-----------------------------------------
Fund Name % of Fund Held
- --------------------------------------------------------------------------------
Growth Fund................... James Nelson 6%
Asian Select Advisors Fund.... Konrad Krill 72%
Asian Select Advisors Fund.... Orbitex Management Inc. 14%
C-33
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1998
7. Capital Loss Carryforward
At April 30, 1998, the Info-Tech Communications Fund had available for federal
income tax purposes unused capital losses of $30,284, expiring in the Year 2006.
Under current tax law, capital losses realized after October 31, may be deferred
and treated as occurring on the first day of the following fiscal year. For the
fiscal year ended April 30, 1998, the following Funds have elected to defer
losses occurring between November 1, 1997 and April 30, 1998 under these rules,
as follows:
Capital Currency
Losses Losses
Name of Fund Deferred Deferred
------------ -------- --------
Strategic Natural Resources Fund........ $269,461 $706
Asian High Yield Fund................... 177,282 -
Asian Select Advisors Fund.............. 1,212 -
Such deferred losses will be treated as arising on the first day of the fiscal
year ending April 30, 1999.
8. Initial Capitalization and Offering of Shares
During the period from May 29, 1997 to the commencement of investment operations
for each of the Funds, each Fund had no operations other than those related to
organizational matters, including the initial capital contribution of $20,000
for each Fund and the issuance of 1,333 shares for each of the Funds, with the
exception of the Asian High Yield Fund which issued 1,667 shares. There were no
additional transactions until commencement of investment operations for each of
the Funds.
9. Line of Credit
The Trust participates in a $10 million line of credit provided by Deutsche Bank
AG, New York Branch (the "Bank") under a Credit Agreement (the "Agreement")
dated February 17, 1998. Under the Agreement, each Fund as a separate and
distinct borrower may borrow up to a designated base commitment allocation
specified in the Agreement, plus its pro rata portion of any unused commitment
allocation of the other borrowers under the agreement. Interest is payable in
respect to the unpaid principal amount depending on the type of loan designated
by the borrower. The Funds are charged an annualized commitment fee computed at
a rate equal to 0.10 of 1% on a annual basis of the daily average unutilized
credit balance. The Agreement requires, among other provisions, that the
aggregate outstanding principal amount of the loans made to each borrower under
the Agreement shall not exceed the lesser of (i) 33 1/3% of the value of the
total assets of the borrower less all liabilities and indebtedness not
represented by senior securities; and (ii) any borrower limitations described
for such borrowers in the Trust's prospectus.
During the fiscal year ending April 30, 1998, only the Asian High Yield Fund had
borrowings under the Agreement. The Asian High Yield Fund entered into a NIBOR
based loan agreement on April 16, 1998 in the amount of $750,000, with an
interest rate of 6.15625% (NIBOR rate plus 50 basis points). The expiration date
of the loan is May 15, 1998.
C-34
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
April 30, 1998
10. Subsequent Events (Unaudited)
At the May 27, 1998 Board Meeting, the Trustees voted to accept the resignation
of J.P. Morgan Investment Management, Inc. as the Sub-Advisor on the Asian High
Yield Fund, which will be effective July 1998. The Fund will be managed by its
current investment advisor, Orbitex Management Inc.
Additionally, the Trustees have approved, by unanimous vote, the addition of a
new fund to the series, Orbitex West Coast Fund, and the addition of two new
classes of shares. Class I shares will be an institutional class of shares
offered to qualified institutions and certain fee-based investment and financial
advisors. Class I shares will be offered at net asset value and subject to a
shareholder servicing fee at an annual rate of 0.25% of the average daily net
asset value of the Class I shares beneficially owned by the clients receiving
the service. Class B shares will also be offered at net asset value, without any
initial sales charge. However, there will be a contingent deferred sales charge
on Class B shares which are sold within six years of their purchase date. Class
B shares will also be subject to a distribution fee of 0.75% of the average
daily net assets attributable to Class B shares of the Fund.
C-35
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders of Orbitex Group of Funds,
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the five funds (each a
"Fund") comprising Orbitex Group of Funds (the "Trust") at April 30, 1998, and
the results of each Fund's operations, the changes in each Fund's net assets and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1998 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmation from brokers were not received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
June 12, 1998
C-36
<PAGE>
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
Managed by Orbitex Management Inc.
Performance Review: The period April 30, 1998 to October 31, 1998 has been a
very challenging period for most investors, including natural resource
investors. During the period the Orbitex Strategic Natural Resources Fund Class
A Shares had a total return of (23.46)%, compared to (0.41)% for the S&P 500
Index and (24.42)% for the Lipper Natural Resources Fund Category; however,
since inception (October 23, 1997) to October 31, 1998, the Class A Shares'
performance is (15.24)% compared to 17.42% for the S&P 500 Index and (30.52)%
for the Lipper Natural Resources Fund Category. The Class B Shares' performance
is 3.44% for the period September 21, 1998 (inception) to October 31, 1998. The
Fund seeks to achieve its objective through a flexible policy of investing
primarily in common stocks of companies engaged in natural resource industries
and industries supportive to natural resource industries.
Concerns over global growth, especially from the Pacific Rim and other emerging
countries is prolonging the weakness in commodity prices. Crude oil prices
continue to trade near record low levels despite the Organization of Petroleum
Exporting Countries' ("OPEC") agreement to cut production twice in the past six
months. Additionally, many natural gas and integrated oil companies have cut
back on exploration and production expenditures, negatively impacting the Fund's
holdings in oil service companies like Diamond Offshore Drilling, Petroleum GEO
Services ADR, and Schlumberger Ltd. Seasonally, November through April is a
strong demand period for some natural resources including oil, natural gas,
gold, and copper. Weather experts recently announced that La Nina is here which
may cause a cold winter, thus potentially increasing prices in heating oil and
natural gas. We believe that as a result of the recent decline in oil revenue by
OPEC countries there is tremendous pressure to increase oil prices. The gold and
other precious metals markets should stabilize as we enter the traditionally
strong demand period driven by Christmas buying, the wedding season in India and
the launch of the Chinese new year. The Fund is positioned in Barrick Gold and
Newmont Mining which we believe will benefit from improved precious metals
performance.
During the period, the depressed valuations led to an increase in corporate
stock buybacks and merger and acquisition activity. The Fund continues to place
above average emphasis on large capitalization, defensive, cash rich and cost
cutting securities within the natural resource sector. Despite the difficult
environment, noteworthy company performance spanned a diverse group of sectors.
The Fund benefited from its positions in Exxon Corporation, Stillwater Mining,
Dupont and Fort James. Despite the strong fundamentals in the natural gas
industry, Comstock Resources, EEX Corporation and Nuevo Energy were
disappointing performers.
Outlook: We see an improving environment for the natural resources sector toward
the end of 1998 and into 1999 as oversupplied inventory levels improve (due to
less supply). Production for some of these commodities is slowing or stopping
due to the prolonged weakness in commodity prices. The cure for low commodity
prices is that low commodity prices tend to generate demand. Additionally, the
weaker United States dollar and lower global interest rates should stabilize
growth and put more liquidity into the system; thereby increasing demand for
natural resources. We are extremely positive on the longer term outlook for the
natural resource markets. These companies have rarely, if ever, sold at such low
valuations.
We appreciate your investment in the Orbitex Strategic Natural Resources Fund.
C-37
<PAGE>
Performance Review: During the period from April 30, 1998 to October 31, 1998,
the Info-Tech & Communications Fund Class A Shares had a total return of
(0.71)%, which compares with a total return of (0.41)%, for the S&P 500 Index
and (5.12)% for the Lipper Science & Technology Index; however, since inception
(October 22,1997) to October 31, 1998, the Class A Shares' performance is 29.87%
compared to 17.42% for the S&P 500 Index and 3.33% for the Lipper Science &
Technology Category. The Class B Shares' performance is 6.69% for the period
September 16, 1998 (inception) to October 31, 1998. The Fund seeks to achieve
superior long-term capital growth through selective investment in companies
engaged in the communications, information and related technology industries.
This six-month period for the Fund was an extremely challenging and volatile
period in the stock market. The Fund showed strong relative strength against the
major indexes and its peer group from May through July, posting a peek
performance in mid-July for a year-to-date return of 54% (January 1, 1998,
through July 21, 1998). With the prospect of rising turmoil throughout the
emerging markets, the Fund moved into more conservative holdings consisting of
both domestic and international traditional telecommunications services
companies with a supporting dividend yield. However, few securities in the
market were unaffected by the Russian devaluation of the Ruble, leading stocks
lower in the period of August through the first week of October. At its low
point, the Fund declined to a year-to-date gain of 20%. The Fund repositioned
into more aggressive, attractively valued, smaller capitalization technology
stocks during the ruble crisis that increased performance in the market rally
that ensued in the latter half of October.
Some of the top performing investments for the Fund during the six-month period
included stocks in the semiconductor, software, internet, networking and
telecommunications services sectors. In the semiconductor arena, the Fund
focused on very specialized companies that design communications related
semiconductors, such as PMC Sierra and its data networking chips, Maxim with its
consumer electronics analog chips and Texas Instruments with its digital signal
processor chips (DSP's) used in cellular telephones. In the software arena, the
Fund was particularly successful with its investment in Saville Systems, a
leading vendor of telecommunications billing software. In networking,
investments in Cisco, Northern Telecom, Uniphase, Ascend, FORE and a host of
others, have played a key role in the Fund's performance since the beginning of
the year. In the telecommunications services arena, WorldCom continues to be one
of the Fund's top holdings. With the completion of the MCI merger, WorldCom's
unique, global telecommunications market position continues to be recognized by
the marketplace. Lastly, the internet has played a significant role in the
Fund's performance with investments in Inktomi, E-Bay, DoubleClick, Broadcast
Communications and Ozemail.
The Fund experienced weak performance from its holdings of international
telecommunications stocks. The Fund's investments in Telebras, Portugal Telecom,
Telecom ltalia and Deutsche Telecom, intended to provide downside support, had a
negative impact on the Fund and have been eliminated. Additionally, the Fund's
investments in wireless services stocks Omnipoint and Powertel were a
disappointment. The Fund, however, continues to view these wireless services
stocks as central opportunities in the burgeoning world of wireless phone
service and continues to maintain these investments.
Outlook: While it seems paradoxical to some, technology, driven by the emerging
communications boom occurring on a world-wide basis, has proven to be the flight
to safety sector during the period. A flight to safety implies a degree of
predictability. The communications industry is in its infancy. The emergence of
the strong consumer demand for internet services, corporate demand for
increasing network bandwidth and speed, and the deregulation of the world
telecommunications service providers are bringing new levels of growth and
opportunity for many of today's leading technology companies. It is these growth
opportunities that the Fund continues to focus on going forward. As new,
state-of-the-art networks are established around the world, the long-term
outlook for semiconductors, software, networking and the internet continues to
be extremely compelling. This exciting and complex era of technology securities
continues to capture investor's attention and offers many growth prospects.
We appreciate your investment in the Orbitex Info-Tech & Communications Fund.
C-38
<PAGE>
Performance Review: For the period April 30, 1998 to October 31, 1998, the
Orbitex Growth Fund had a total return of (7.08)% versus (0.41)% for the S&P 500
Index and (6.84)% for the Lipper Growth Fund Category; however, since inception
(October 22, 1997) to October 31, 1998, the Class A Shares' performance is
11.07% compared to 17.42% for the S&P 500 Index and 5.39% for the Lipper Growth
Fund Category. The Class B Shares' performance is 1.15% for the period September
16, 1998 (inception) to October 31, 1998. The Fund seeks to achieve its
objective of long-term growth of capital through investments in securities that
have the potential for significant appreciation.
The mood among investors has shifted significantly since reaching lows on August
31, 1998 and everyone is hoping the value created by this market downturn will
last through year-end. Despite the ongoing concerns in emerging Asian and
Japanese Markets, plus the liquidity concerns with hedge funds, the market
sentiment has turned very bullish as equity prices continue to melt-up. United
States gross domestic product remains stronger than originally expected and the
Federal Reserve has provided liquidity with three interest rate decreases. Also,
the market breadth has broadened and is no longer concentrated in the top growth
stocks. We believe this market breadth is a bullish sign for the general market.
The Fund benefited from concentrated weightings in the pharmaceutical,
financial, and technology areas while underweighting the energy and basic
industry sectors. Notable performers for the period include Schering Plough,
Mellon Bank, Gateway 2000 and General Electric. Disappointing performance for
the period included Atlantic Richfield and FPL Group.
Portfolio Composition: The Fund's sector and stock weighting are a result of
bottom-up stock picking across all capitalizations. The Fund continues to have a
fairly standard approach to record high valuations achieved in the market by a
number of companies in the internet sector. On October 31, 1998, the Fund had a
12% cash position, a material but temporary cash position.
Outlook: We expect the financial markets to remain volatile in the near term as
the markets struggle between lower global interest rates and earnings growth for
1999. Inflation continues to be low and we see no reason for inflation to be a
concern over the near term. Commodity prices remain depressed and there is
little, if any, pricing power. During this environment, the Fund will continue
to seek out quality, value-oriented growth stocks.
We appreciate your investment in the Orbitex Growth Fund.
C-39
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
COMMON STOCKS - 92.87%
Aluminum - 1.75%
Alcan Aluminum, Ltd.............................................. 2,500 $ 63,281
-------------
Building Construction - 1.73%
J. Ray McDermott SA (a).......................................... 2,000 62,750
-------------
Chemicals - 3.71%
Crompton & Knowles Corp.......................................... 3,000 48,188
Du Pont (E.I.) de Nemours and Co. ............................... 1,500 86,250
-------------
134,438
Electric Utilities - 5.83%
FPL Group, Inc. ................................................. 1,500 93,844
PG&E Corp. ...................................................... 1,750 53,265
Unicom Corp. .................................................... 1,700 64,069
-------------
211,178
Gas Exploration - 2.99%
Anderson Exploration, Ltd. (a) .................................. 2,500 25,437
Oryx Energy Co. (a) ............................................. 2,500 35,000
Seagull Energy Corp. (a) ........................................ 4,000 47,750
--------------
108,187
Gas & Pipeline Utilities - 1.03%
K N Energy, Inc. ................................................ 750 37,266
-------------
International Oil - 15.76%
Chevron Corp. ................................................... 1,000 81,500
Conoco, Inc., Class A (a) ....................................... 3,500 87,062
Mobil Corp. ..................................................... 1,000 75,688
Ranger Oil, Ltd. (a) ............................................ 10,000 63,750
Royal Dutch Petroleum Co., NY Shares............................. 2,400 118,200
Texaco, Inc. .................................................... 1,200 71,175
USX-Marathon Group .............................................. 2,250 73,547
-------------
570,922
Life Sciences - 1.63%
Monsanto Co. .................................................... 1,450 58,906
-------------
Mining - 11.08%
Aber Resources, Ltd. (a) ........................................ 3,000 16,818
Apex Silver Mines, Ltd. (a) ..................................... 4,500 41,063
Barrick Gold Corp. .............................................. 2,500 53,437
Freeport-McMoRan Copper & Gold, Inc., Class A ................... 3,500 41,781
Getchell Gold Corp. (a) ......................................... 3,000 52,500
Newmont Mining Corp. ............................................ 3,500 74,375
Normandy Mining, Ltd. ........................................... 20,000 17,888
Phelps Dodge Corp. .............................................. 1,000 57,625
Stillwater Mining Co. (a) ....................................... 1,000 32,375
Viceroy Resource Corp. (a) ...................................... 6,500 13,480
401,342
-------------
See Notes to Financial Statements.
</TABLE>
C-40
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
- ---------------------------------------------------------------------------------------------------------------------
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Oil - 12.26%
Atlantic Richfield Co. .......................................... 1,250 $ 86,094
Canadian 88 Energy Corp. (a) .................................... 7,000 24,951
Exxon Corp. ..................................................... 2,500 178,125
Pennzoil Co. .................................................... 1,000 35,875
Sun Company, Inc. ............................................... 1,000 34,312
Unocal Corp. .................................................... 2,500 84,844
444,201
-------------
Oil & Gas Drilling - 0.85%
Diamond Offshore Drilling, Inc................................... 1,000 30,688
-------------
Oil & Gas Exploration And Production - 21.72%
Anadarko Petroleum Corp.......................................... 2,000 67,750
Baytex Energy, Ltd., Class A (a)................................. 5,000 16,850
Benz Energy, Ltd. (a)............................................ 25,000 11,342
Bonavista Petroleum Ltd. (a)..................................... 2,500 11,909
Burlington Resources, Inc........................................ 2,750 113,266
Canadian Natural Resources, Ltd. (a) ............................ 2,000 34,997
Comstock Resources, Inc. (a) .................................... 6,000 29,625
EEX Corp. (a) ................................................... 10,000 38,750
Enron Corp. ..................................................... 2,000 105,500
Global Industries, Inc. (a) ..................................... 3,500 33,687
Gulf Canada Resources, Ltd. ..................................... 10,000 37,500
Kerr-Mcgee Corp. ................................................ 1,200 47,850
Nuevo Energy Co. (a) ............................................ 2,500 52,969
Pacalta Resources, Ltd. (a) ..................................... 4,000 13,739
Probe Exploration, Inc. (a) ..................................... 10,000 16,202
Sharpe Resources Corp. (a) ...................................... 30,000 13,027
Snyder Oil Corp. ................................................ 3,000 47,812
Suncor Energy Inc. .............................................. 500 15,878
Ultra Petroleum Corp. (a) ....................................... 5,000 6,092
Vastar Resources, Inc. .......................................... 1,500 71,719
-------------
86,464
Oil Field Service - 4.34%
BJ Services Co. (a).............................................. 2,000 40,875
Petroleum Geo-Services, ADR (a) ................................. 1,000 21,375
Schlumberger Ltd. ............................................... 1,000 52,500
Tidewater, Inc. ................................................. 1,500 42,468
-------------
157, 218
Paper & Related Products - 4.30%
Champion International Corp. .................................... 1,500 47,906
Fort James Corp. ................................................ 1,500 60,469
Mead Corp. ...................................................... 1,500 47,437
-------------
155,812
-------------
</TABLE>
See Notes to Financial Statements.
C-41
<PAGE>
ORBITEX GROUP OF FUNDS
INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
October 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Petroleum Services - 2.69%
Phillips Petroleum Co. .......................................... 1,500 64,875
Varco International, Inc. (a) ................................... 3,000 32,438
--------------
97,313
--------------
Retail - 1.20%
- ------------------------------------------------------------------------- 1,000 43,500
--------------
Home Depot, Inc. ................................................
TOTAL COMMON STOCKS - (Cost $3,471,272) 3,363,466
--------------
SHORT TERM INVESTMENT (Cost $441,000)- 12.18% Principal
TIME DEPOSIT - 12.18% Amount
------
State Street Bank and Trust Co.,
4.750%, 11/2/1998 .................................................... $ 441,000 441,000
--------------
TOTAL INVESTMENTS (Cost $3,912,272) - 105.05% 3,804,466
OTHER ASSETS AND LIABILITIES - (5.05)% (182,735)
-------
NET ASSETS - 100.00% $ 3,621,731
- -------------------------------------------------------------------------- ================
</TABLE>
(a) Denotes non-income producing security
ADR - American Depository Receipt
See Notes to Financial Statements.
C-42
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
COMMON STOCKS - 70.19%
Advertising - 2.97%
DoubleClick, Inc. (a) ........................................... 11,600 $ 382,800
---------------
Broadcasting - 1.16%
Broadcast Communications PLC (a) ................................ 3,000 149,625
---------------
Computers & Business Equipment - 8.23%
Apple Computer, Inc. (a) ........................................ 5,000 185,625
Compaq Computer Corp. ........................................... 8,000 253,000
Gateway 2000, Inc. (a) .......................................... 7,000 390,688
Sun Microsystems, Inc. (a) ...................................... 4,000 233,000
---------------
1,062,313
Electronics - 9.82%
Maxim Integrated Products, Inc. (a) ............................. 5,000 178,438
Micron Technology, Inc. (a) ..................................... 5,000 190,000
PMC-Sierra, Inc. (a) ............................................ 11,500 516,062
Texas Instruments, Inc. ......................................... 6,000 383,625
---------------
1,268,125
Networking Products - 7.26%
Cisco Systems, Inc. (a) ......................................... 5,000 315,000
FORE Systems, Inc. (a) .......................................... 22,500 351,563
Newbridge Networks Corp. (a) .................................... 13,200 270,600
---------------
937,163
Software - 4.98%
Concentric Network Corp. (a) .................................... 8,000 194,000
Evolving Systems, Inc. (a) ...................................... 34,500 58,219
Ozemail, Ltd., ADR .............................................. 39,500 390,062
---------------
642,281
Telecommunications Services - 20.44%
GST Telecommunications, Inc. (a) ................................ 22,600 156,787
ICG Communications, Inc. (a) .................................... 30,000 620,625
Metronet Communications Corp., Class B (a) ...................... 2,000 46,000
Northern Telecom, Ltd. .......................................... 14,300 612,219
Omnipoint Corp. (a) ............................................. 75,200 695,600
Saville Systems PLC, ADR (a)..................................... 30,000 506,250
---------------
2,637,481
Telephone - 15.33%
ALLTEL Corp. .................................................... 9,400 440,037
AT&T Corp. ...................................................... 3,500 217,875
Intermedia Communications, Inc. (a) ............................. 28,000 518,000
MCI WorldCom, Inc. (a) .......................................... 10,331 570,788
Powertel, Inc. (a) .............................................. 15,600 232,050
---------------
1,978,750
---------------
TOTAL COMMON STOCKS - (Cost $8,602,410) 9,058,538
---------------
</TABLE>
See Notes to Financial Statements.
C-43
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1998 (Unaudited)
Principal Market
Amount Value
<S> <C> <C>
SHORT TERM INVESTMENTS (Cost $3,106,000)- 24.06%
COMMERCIAL PAPER - 24.06% Prudential Funding Corp.
5.750%, 11/2/1998 $ 3,106,000 $ 3,106,000
-----------------
TOTAL INVESTMENTS (Cost $11,708,410) - 94.25% 12,164,538
OTHER ASSETS AND LIABILITIES- 5.75% $ 741.514
-----------------
NET ASSETS - 100.00% $ 12,906,052
=================
</TABLE>
(a) Denotes non-income producing security
ADR - American Depository Receipt
See Notes to Financial Statements.
C-44
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
GROWTH FUND
SCHEDULE OF INVESTMENTS
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
COMMON STOCKS - 88.29%
Banks - 6.94%......................................................... 850 23,322
Charter One Financial, Inc. ..................................... 500 30,062
Mellon Bank Corp. ............................................... 550 20,866
Summit Bancorp. ................................................. 74,250
Broadcasting - 1.92% 450 ---------------
20,503
Clear Channel Communications, Inc. (a) ..........................
Computers & Business Equipment - 7.46% 500 21,875
Equant NV, NY Shares (a)......................................... 500 27,906
Gateway 2000, Inc. (a) .......................................... 500 30,094
Hewlett-Packard Co. ............................................. 79,875
Consumer Products - 1.55% 500 ---------------
16,531
Fortune Brands, Inc. ............................................
Cosmetics & Toiletries - 2.52% 600 ---------------
26,962
Gillette Co. ....................................................
Diversified - 2.01% 10 ---------------
21,480
Berkshire Hathaway, Inc., Class B (a)............................
Drugs & Health Care - 12.58% 400 19,500
American Home Products Corp. .................................... 300 30,862
Schering-Plough Corp. ........................................... 900 25,144
Tenet Healthcare Corp. (a) ...................................... 400 31,350
Warner-Lambert Co. .............................................. 500 ---------------
27,813
Watson Pharmaceuticals, Inc. (a) ................................ ---------------
134,669
Electrical Equipment - 2.25% 275 ---------------
24,063
General Electric Co. ............................................
Electric Utilities - 5.39% 500 31,281
FPL Group, Inc. ................................................. 700 ---------------
26,381
Unicom Corp. .................................................... ---------------
57,662
Financial Services - 1.37% 400 ---------------
14,625
Household International, Inc. ...................................
Food & Beverages - 2.37% 750 ---------------
25,313
PepsiCo, Inc. ...................................................
Insurance - 6.63% 800 35,750
American Bankers Insurance Group, Inc. .......................... 500 ---------------
35,250
SunAmerica, Inc. ................................................ ---------------
71,000
</TABLE>
See Notes to Financial Statements.
C-44
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
GROWTH FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------- ---------------------- --------------------
Shares Market
Value
- -------------------------------------------------------------------------- ---------------------- --------------------
<S> <C> <C>
Mining - 1.51%
Stillwater Mining Co. (a)........................................ 500 $ 16,188
--------------
Networking Products - 2.35%
Cisco Systems, Inc. (a).......................................... 400 25,200
--------------
Oil - 3.99%
Atlantic Richfield Co............................................ 300 20,663
Unocal Corp...................................................... 650 22,059
--------------
42,722
Oil & Gas Exploration And Production - 2.69%
Burlington Resources, Inc. ...................................... 700 28,831
--------------
Oil Field Service - 5.82%
BJ Services Co. (a) ............................................. 1,000 20,437
BJ's Wholesale Club, Inc. (a) ................................... 800 28,750
Schlumberger Ltd. ............................................... 250 13,125
--------------
62,312
Photography - 2.17%
Eastman Kodak Co. ............................................... 300 23,250
--------------
Retail - 2.03%
Home Depot, Inc. ................................................ 500 21,750
--------------
Retail Trade - 2.60%
Rite Aid Corp. .................................................. 700 27,781
--------------
Software - 3.49%
Electronic Arts, Inc. (a) ....................................... 550 22,619
Oracle Corp. (a) ................................................ 500 14,781
--------------
37,400
Telephone - 6.26%
AT&T Corp. ...................................................... 350 21,788
MCI WorldCom, Inc. (a) .......................................... 400 22,100
SBC Communications, Inc. ........................................ 500 23,156
--------------
67,044
Tobacco - 2.39%
Philip Morris Companies, Inc. ................................... 500 25,563
--------------
TOTAL COMMON STOCKS - (Cost $886,119) 944,974
TOTAL INVESTMENTS (Cost $886,119) - 88.29% 944,974
OTHER ASSETS AND LIABILITIES- 11.71% 125,297
-------------
NET ASSETS - 100.00% 1,070,271
=============
(a) Denotes non-income producing security
</TABLE>
See Notes to Financial Statements.
C-45
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
ASIA HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
October 31, 1998 (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------------
Shares Market
Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT TERM INVESTMENT (Cost $903,000) - 92.40%
United States - 92.40%
Time Deposit - 92.40%
State Street Bank and Trust Co.,
4.750% due 11/2/1998 ......................................... $ 903,000 $ 903,000
-----------
TOTAL INVESTMENTS (Cost $903,000) - 92.40% 903,000
OTHER ASSETS AND LIABILITIES- 7.60% 74, 299
-----------
NET ASSETS - 100.00% $ 977, 299
===========
</TABLE>
See Notes to Financial Statements.
C-46
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1998 (Unaudited)
Strategic
Natural Info-Tech & Asian High
Resources Communications Growth Yield
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (Note 2) $ 3,363,466 $ 9,058,538 $ 944,974 $ --
Short term investments (Note 2)............ 441,000 3,106,000 -- 903,000
----------------------------------------------------------------
Total investments........................ 3,804,466 12,164,538 944,974 903,000
Cash....................................... -- 4,898 46,066 921
Foreign currency, at value (cost $ 131).... 131 -- -- --
Unrealized gain on forward currency contracts 446 -- -- --
Receivable for securities sold............. 133,130 476,735 95,306 238
Interest and Dividends receivable......... 2,386 2,164 605 --
Receivable for fund shares sold............ 3,500 304,952 -- 15,000
Receivable due from advisor (Note 3)....... 92,141 50,793 117,675 127,422
Deferred organizational expenses (Note 2).. 15,127 15,124 15,124 15,124
Other assets............................... 7,785 8,525 6,017 8,563
----------------------------------------------------------------
TOTAL ASSETS........................... 4,059,112 13,027,729 1,225,767 1,070,268
LIABILITIES
Payable to custodian....................... 3,512 -- -- --
Unrealized loss on forward currency contracts 2,606 -- -- --
Payable for securities purchased........... 321,219 -- 69,868 --
Payable for fund shares redeemed........... 22,362 32,189 -- --
Payable for trustee fees (Note 3).......... 1,586 1,578 1,578 1,564
Payable for organizational expenses (Note 2) 4,589 4,589 4,589 4,589
Accrued expenses and other liabilities..... 81,507 83,321 79,461 86,816
------------------------------------------------------------------
TOTAL LIABILITIES...................... 437,381 121,677 155,496 92,969
------------------------------------------------------------------
NET ASSETS............................. $ 3,621,731 $ 12,906,052 $ 1,070,271 $ 977,299
==============---===============---==============---============
NET ASSETS
Paid-in capital............................ $ 4,468,122 $ 12,544,475 $ 998,643 $ 2,045,301
Undistributed net investment income (loss). 117,953 (20,052) 10,942 2,780
Accumulated net realized gain (loss) on
investments and foreign currency transactions (854,378) (74,559) 1,831 (1,070,782)
Net unrealized appreciation (depreciation) on
investments and foreign currency translations (109,966) 456,188 58,855 --
----------------------------------------------------------------
NET ASSETS............................. $ 3,621,731 $ 12,906,052 $ 1,070,271 $ 977,299
============== =============== ============== ============
CLASS A SHARES:
Net assets.................................... $ 3,621,421 $ 12,060,477 $ 1,054,665 $ 977,001
============== =============== ============== ============
Net asset value per share (based on shares of
beneficial interest outstanding, par value
$.01 per share)............................ $ 12.66 $ 19.49 $ 16.66 $ 7.9
============== =============== ============== ============
Offering price per share...................... $ 13.43 $ 20.68 $ 17.68 $ 8.3
============== =============== ============== ============
Total shares outstanding at end of period..... $ 286,146 $ 618,800 $ 63,312 $ 122,525
============== =============== ============== ============
CLASS B SHARES:
Net assets.................................... $ 310 $ 845,575 $ 15,606 $ 298
============== =============== ============== ============
Net asset value and offering price per share
(based on shares of beneficial interest
outstanding, par value$.01 per share)...... $ 12.61 $ 19.46 $ 16.66 $ 7.96
============== =============== ============== ============
Total shares outstanding at end of period..... 25 43,441 937 37
============== =============== ============== ============
Investments, at cost.......................... $ 3,912,272 $ 11,708,410 $ 886,119 $ 903,000
============== =============== ============== ============
</TABLE>
See Notes to Financial Statements.
C-47
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
STATEMENTS OF OPERATIONS
October 31, 1998 (Unaudited)
For the Six Months Ended October 31, 1998 (Unaudited)
Strategic
Natural Info-Tech & Asian High
Resources Communications Growth Yield
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income............................ $ 12,087 $ 47,313 $ 2,641 $ 130,146
Dividend income............................ 32,281 14,886 2,854 1,283
Foreign taxes withheld..................... (430) (440) (26) --
-------------- ----------------- ---------------- --------------
TOTAL INVESTMENT INCOME.................. 43,938 61,759 5,469 131,429
EXPENSES
Custodian fee (Note 3)..................... 42,205 35,284 38,979 35,116
Administration fee (Note 3)................ 42,192 42,045 42,045 41,753
Investment advisor fee (Note 3)............ 24,467 45,251 3,350 17,019
Transfer agent fee......................... 21,408 20,852 20,193 20,504
Professional fees.......................... 19,336 19,253 19,253 19,095
Registration fees.......................... 16,445 14,322 16,134 12,593
Distribution fees (Note 3):
Class A Shares........................... 7,830 14,272 1,779 4,093
Class B Shares........................... -- 453 19 --
Printing expense........................... 4,929 4,906 4,906 4,860
Insurance fee.............................. 2,951 2,941 2,941 2,921
Amortization of organizational expenses (Note 2) 1,763 1,758 1,758 1,747
Trustees' fee (Note 3)..................... 1,711 1,703 1,703 1,690
Interest expense (Note 11)................. -- -- -- 11,796
Miscellaneous expense...................... 1,296 1,289 1,290 4,937
----------------------------------------------------------------
Total expenses before waivers,
reimbursements and custodial credits..... 186,533 204,329 154,350 178,124
Expenses waived and reimbursed (Note 3).... (140,275) (121,926) (146,331) (155,728)
Fees reduced by credits allowed by the
custodian................................ (1,063) (592) (418) (997)
-------------- --------------- -------------- ------------
NET EXPENSES............................. 45,195 81,811 7,601 21,399
-------------- --------------- -------------- ------------
NET INVESTMENT INCOME (LOSS)............. (1,257) (20,052) (2,132) 110,030
-------------- --------------- -------------- ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS Net realized loss on:
Investments.............................. (554,953) (44,275) 40,793) (893,632)
Foreign currency related transactions.... (2,013) -- -- --
-------------- --------------- -------------- ------------
Total net realized loss................ (556,966) (44,275) (40,793) (893,632)
-------------- --------------- -------------- ------------
Net change in unrealized appreciation (depreciation) on:
Investment transactions.................... (499,388) 150,085 269 14,270
Foreign currency related translations...... (2,161) -- -- --
-------------- --------------- -------------- ------------
Total net change in unrealized
appreciation (depreciation)............ (501,549) 150,085 269 14,270
-------------- --------------- -------------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS)......................... (1,058,515) 105,810 (40,524) (879,362)
-------------- --------------- -------------- ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS............................... $ (1,059,772) $ 85,758 $ (42,656) $ (769,332)
============== =============== ============== ============
SALES CHARGE PAID TO
FUNDS DISTRIBUTOR, INC..................... $ 34,695 $ 501,759 $ 7,609 $ 3,514
============== =============== ============== ============
</TABLE>
See Notes to Financial Statements.
C-48
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Strategic Info-Tech &
Natural Communications
Resources Fund Fund
-------------------------------- ----------------------------
Six Months Six Months
Ended Period* Ended Period*
10/31/98 Ended 10/31/98 Ended
(unaudited) 4/30/98 (unaudited) 4/30/98
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income (loss).................. $ (1,257) $ 127,318 $ (20,052) $ (5,210)
Net realized gain (loss) on investments
and foreign currency related transactions.. (556,966) (291,457) (44,275) (30,284)
Net change in unrealized appreciation
(depreciation) on investment transactions.. (501,549) 391,583 150,085 306,103
-------------- --------------- -------------- ------------
Net increase (decrease) in net assets
resulting from operations.................. (1,059,772) 227,444 85,758 270,609
-------------- --------------- -------------- ------------
Dividends and distributions to shareholders
from:
Net investment income:
Class A.................................... -- (7,147) -- --
Class B.................................... -- -- -- --
Distributions in excess of net realized gains -- (6,916) -- --
-------------- --------------- -------------- ------------
Total dividends and distributions to shareholders -- (14,063) -- --
--------------- --------------- -------------- ------------
Fund share transactions (Note 6).............. (1,016,331) 5,464,453 10,379,952 2,149,733
-------------- --------------- -------------- ------------
Total increase (decrease) in net assets...... (2,076,103) 5,677,834 10,465,710 2,420,342
-------------- --------------- -------------- ------------
Net assets:
Beginning of period .......................... 5,697,834 20,000 2,440,342 20,000
-------------- --------------- -------------- ------------
End of period................................. $ 3,621,731 $ 5,697,834 $ 12,906,052 $ 2,440,342
============== =============== ============== ============
Undistributed net investment income (loss) at
end of period.............................. $ 117,953 $ 119,210 $ (20,052) $ --
============== =============== ============== ============
* The commencement of investment operations was October 23, 1997 for Strategic Natural Resources Fund and October 22, 1997 for
Info-Tech & Communications Fund.
</TABLE>
See Notes to Financial Statements.
C-49
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Asian High
Growth Yield
Fund Fund
---------------------------- ------------------------------
Six Months Six Months
Ended Period* Ended Period*
10/31/98 Ended 10/31/98 Ended
(unaudited) 4/30/98 (unaudited) 4/30/98
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income (loss).................. $ (2,132) $ 14,172 $ 110,030 $ 121,891
Net realized gain (loss) on investments
and foreign currency related transactions.. (40,793) 41,526 (893,632) (177,110)
Net change in unrealized appreciation
(depreciation) on investment transactions.. 269 58,586 14,270 (14,270)
-------------- --------------- -------------- -------------
Net increase (decrease) in net assets
resulting from operations.................. (42,656) 114,284 (769,332) (69,489)
-------------- --------------- -------------- ------------
Dividends and distributions to shareholders
from:
Net investment income
Class A Shares............................. -- -- (133,603) (95,628)
Class B Shares............................. -- -- (11) --
Distributions in excess of net
realized gains............................. -- -- -- --
-------------- --------------- -------------- ------------
Total dividends and distributions
to shareholders............................ -- -- (133,614) (95,628)
-------------- --------------- -------------- ------------
Fund share transactions (Note 6).............. 222,287 756,356 (1,886,312) 3,911,674
-------------- --------------- -------------- ------------
Total increase (decrease)in net assets........ 179,631 870,640 (2,789,258) 3,746,557
-------------- --------------- -------------- ------------
Net assets:
Beginning of period........................... 890,640 20,000 3,766,557 20,000
-------------- --------------- -------------- ------------
End of period................................. $ 1,070,271 $ 890,640 $ 977,299 $ 3,766,557
============== =============== ============== ============
Undistributed net investment income at
end of period.............................. $ 10,942 $ 13,074 $ 2,780 $ 26,364
============== =============== ============== ============
* The commencement of investment operations was October 22, 1997 for Growth Fund and October 20, 1997 for Asian High Yield Fund.
</TABLE>
See Notes to Financial Statements.
C-50
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
STRATEGIC NATURAL RESOURCES FUND
Selected data based on a share outstanding throughout each period indicated
Class A Shares Class A Shares Class B Shares
For the Six Months For the Period
Ended For the Period Ended
October 31, 1998 Ended October 31, 1998(a)
(unaudited)(b) April 30, 1998(a) (unaudited)(b)
<S> <C> <C> <C>
Net asset value, beginning of period.......... $16.54 $15.00 $12.22
----------------- -------------------- -----------------
Income (loss) from investment operations:
Net investment income......................... (0.00) 0.38(e) (0.02)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions..... (3.88) 1.22 0.41
------------------- -------------------- ------------------
Total income (loss) from investment operations (3.88) 1.60 0.39
Less distributions from net investment income. -- (0.03) --
Less distributions in excess of capital gains. -- (0.03) --
-- ------ --
Total distributions from net investment income
and net capital gains......................... -- (0.06) --
---------------------- ------------------- -------------------
Net asset value, end of period................ $12.66 $16.54 $12.61
==================== =================== =====================
Total Return (c).............................. (23.46)% 10.74% 3.44%
================== ================= =======================
Ratios and Supplemental Data:
Net assets, end of period (in 000's).......... $3,621 $5,698 $--
Ratio of net expenses to average net assets (including
interest expense) (d)......................... 2.32% 2.40% 2.40%
Ratio of expenses to average net assets (including
interest expense and custodial credits) (d)... 2.37% 2.45% 2.46%
Ratio of total expenses to average net assets before
waivers, reimbursements and custodial credits (d) 9.56% 9.27% 9.26%
Ratio of net investment income (loss) to average
net assets (d)................................ 2.34% 6.12%(e) (1.20)%
Portfolio turnover rate....................... 396% 519% 396%
</TABLE>
- ----------
(a) The commencement of investment operations was October 23, 1997 and
September 21, 1998 for Strategic Natural Resources Fund Class
A Shares and Class B Shares, respectively.
(b) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed method did not accord with the results of
operations.
(c) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor, Administrator and Custodian not absorbed a
portion of the expenses, total returns would have been lower. Total Returns
for periods less than one year are not annualized.
(d) Annualized for periods less than one year.
(e) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Advisor during the current fiscal year.
See Notes to Financial Statements.
C-51
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
INFO-TECH & COMMUNICATIONS FUND
Selected data based on a share outstanding throughout each period indicated
Class A Shares Class A Shares Class B Shares
For the Six Months For the Period
Ended For the Period Ended
October 31, 1998 Ended October 31, 1998(a)
(unaudited) April 30, 1998(a) (unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period.......... $19.62 $15.00 $18.23
------------------- ----------------------- --------------------
Income (loss) from investment operations:
Net investment income......................... (0.03) -- (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions.... (0.10) 4.62 1.24
-------------------- ----------------------- -------------------
Total income (loss) from investment operations (0.13) 4.62 1.23
-------------------- ----------------------- -------------------
Less distributions from net investment income. -- -- --
Less distributions in excess of capital gains. -- -- --
-------------------- ----------------------- -------------------
Total distributions from net investment income
and net capital gains......................... -- -- --
-
Net asset value, end of period................ $19.49 $19.62 $19.46
==================== ======================== ==================
Total Return (b).............................. (0.71)% 30.80% 6.69
====================== ======================== ==================
Ratios and Supplemental Data:
Net assets, end of period (in 000's).......... $12,060 $2,440 $846
Ratio of net expenses to average net assets
(including interest expense) (c).............. 2.26% 2.40% 2.40%
Ratio of expenses to average net assets (including
interest expense and custodial credits) (c)... 2.28% 2.88% 2.01%
Ratio of total expenses to average net assets before waivers,
reimbursements and custodial credits (c)...... 5.67% 39.06% 4.19%
Ratio of net investment income (loss) to average
net assets (c)................................ (0.55)% (1.27)% (1.21)%
Portfolio turnover rate....................... 219% 76% 219%
</TABLE>
- --------------
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Info-Tech & Communications Fund Class A
Shares and Class B Shares, respectively.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor, Administrator and Custodian not absorbed a
portion of the expenses, total returns would have been lower. Total Returns
for periods less than one year are not annualized.
(c) Annualized for periods less than one year.
See Notes to Financial Statements.
C-52
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
GROWTH FUND
Selected data based on a share outstanding throughout each period indicated
Class A Shares Class A Shares Class B Shares
For the Six Months For the Period
Ended For the Period Ended
October 31, 1998 Ended October 31, 1998(a)
(unaudited) April 30, 1998(a) (unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period.......... $17.93 $15.00 $16.46
----------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income......................... (0.09) 0.26(d) (0.01)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions..... (1.18) 2.67 0.21
------------------------------------------------------------------------
Total income (loss) from investment operations (1.27) 2.93 0.20
Less distributions from net investment income. -- -- --
Less distributions in excess of capital gains. -- -- --
-----------------------------------------------------------------------------
Total distributions from net investment
income and net capital gains.................. -- -- --
-----------------------------------------------------------------------------
Net asset value, end of period................ $16.66 $17.93 $16.66
========================================================================
Total Return (b).............................. (7.08)% 19.53% 1.15%
======================== =================================================
Ratios and Supplemental Data:
Net assets, end of period (in 000's).......... $1,055 $891 $16
Ratio of net expenses to average net assets
(including interest expense) (c).............. 1.70% 1.60% 2.00%
Ratio of expenses to average net assets (including
interest expense and custodial credits) (c)... 1.80% 2.11% 2.07%
Ratio of total expenses to average net assets before waivers,
reimbursements and custodial credits (c)...... 34.67% 50.13% 26.98%
Ratio of net investment income (loss) to average
net assets (c)................................ 1.71% 4.41%(d) (0.24)%
Portfolio turnover rate....................... 458% 448% 458%
</TABLE>
- ---------------
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Growth Fund Class A Shares and Class B
Shares, respectively.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor, Administrator and Custodian not absorbed a
portion of the expenses, total returns would have been lower. Total Returns
for periods less than one year are not annualized.
(c) Annualized for periods less than one year.
(d) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Advisor during the current fiscal year.
See Notes to Financial Statements.
C-53
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
ASIA HIGH YIELD FUND
Selected data based on a share outstanding throughout each period indicated
Class A Shares Class A Shares Class B Shares
For the Six Months For the Period
Ended For the Period Ended
October 31, 1998 Ended October 31, 1998(a)
(unaudited) April 30, 1998(a) (unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period.......... $10.93 $12.00 $8.22
-----------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income......................... 0.51 0.45 0.03
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions..... (2.90) (1.15) 0.02
-----------------------------------------------------------------------
Total income (loss) from investment operations (2.39) (0.70) (0.05)
Less distributions from net investment income. (0.57) (0.37) (0.31)
Less distributions in excess of capital gains. -- -- --
------------------------------------------------------------------------
Total distributions from net investment income
and net capital gains......................... (0.57) (0.37) (0.31)
------------------------------------------------------------------------
Net asset value, end of period................ $7.97 $10.93 $7.96
========================================================================
Total Return (b).............................. (22.38)% (5.71)% 0.59%
========================================================================
Ratios and Supplemental Data:
Net assets, end of period (in 000's).......... $977 $3,767 $--
Ratio of net expenses to average net assets
(including interest expense) (c).............. 1.57% 0.14% 2.00%
Ratio of expenses to average net assets (including
interest expense and custodial credits) (c)... 1.64% 0.22% 2.20%
Ratio of total expenses to average net assets before waivers,
reimbursements and custodial credits (c)...... 13.02% 12.47% 25.35%
Ratio of net investment income (loss) to average
net assets (c)................................ 8.05% 8.65% 3.28%
Portfolio turnover rate....................... 118% 173% 118%
</TABLE>
- ----------------
(a) The commencement of investment operations was October 20, 1997 and
September 21, 1998 for Asian High Yield Fund Class A Shares
and Class B Shares, respectively.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor, Administrator and Custodian not absorbed a
portion of the expenses, total returns would have been lower. Total Returns
for periods less than one year are not annualized.
(c) Annualized for periods less than one year.
See Notes to Financial Statements.
C-54
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (unaudited)
1. Organization
Orbitex Group of Funds (the "Trust") was incorporated in Delaware in December
1996 and is registered under the Investment Company Act of 1940 (the "1940
Act"), as amended, as an open-end management investment company. The Trust is
comprised of four funds (collectively the "Funds" and each individually a
"Fund") as follows: Strategic Natural Resources Fund, Info-Tech & Communications
Fund, Growth Fund and Asian High Yield Fund. Each Fund operates as a diversified
investment company, except Asian High Yield Fund, which operates as a
non-diversified investment company. The Funds offer both Class A and Class B
Shares. Class A Shares are offered at net asset value plus a maximum sales load
of 5.75%, except for Asian High Yield Fund, which is offered at net asset value
plus a maximum sales load of 4.75%. Class B Shares are offered subject to a
contingent deferred sales charge and will convert to Class A Shares when they
have been outstanding approximately eight years.
The Asian Select Advisors Fund was liquidated on August 31, 1998.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
Security Valuation and Translations
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued, or lacking any
sales, at the last available bid price. Long-term debt obligations are valued at
the mean of representative quoted bid and asked prices for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality and type; however, when the Advisor or Sub-Advisor deems it
appropriate, prices obtained from an independent pricing service will be used.
Short-term debt investments with maturities less than 60 days are valued at
amortized cost or original cost plus accrued interest, each of which
approximates fair value.
Foreign securities are valued on the basis of market quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates.
Securities for which current market quotations are not readily available or for
which quotations are not deemed by Orbitex Management, Inc. (the "Advisor") to
be representative of market values are valued at fair value as determined in
good faith by or under the direction of the Trustees.
Investment security transactions are accounted for as of the trade date. Cost is
determined and gains and losses are based upon the specific identification
method for both financial statement and federal income tax purposes.
Foreign Currency Translations
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
and income receipts and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions. Purchases
and sales of securities are translated into U.S. dollars at the contractual
currency rates established at the approximate time of the trade.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from currency realized between the trade and settlement dates
on securities transactions and the difference between income accrued versus
income received. The effects of changes in foreign currency exchange rates on
investments in securities are included with the net realized and unrealized gain
or loss on investment securities.
C-55
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1998 (unaudited)
Income Taxes
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income and gains to its shareholders and therefore, no provision for
federal income tax has been made.
Each Fund is treated as a separate taxpayer for federal income tax purposes.
Investment Income
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Interest income is recorded on the accrual basis.
Market discount, original issue discount and premium are accreted and amortized
respectively, on a yield to maturity basis. The value of additional securities
received as interest or dividend payments is recorded as income and as the cost
basis of such securities.
Expenses
Expenses of the Trust, which are directly identifiable to a specific Fund, are
allocated to that Fund. Expenses, which are not readily identifiable to a
specific Fund, are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. Each Fund's income, expenses (other than the fees mentioned above) and
realized and unrealized gains and losses are allocated proportionally each day
between the classes based upon the relative net assets of each class.
Distributions to Shareholders
Income dividends will normally be declared and distributed quarterly for the
Asian High Yield Fund and annually for each of the other Funds. All Funds
declare and pay net realized capital gain distributions annually. The character
of income and gains to be distributed are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Funds, timing differences and
differing characterization of distributions made by each Fund as a whole.
Deferred Organizational Costs
Organizational expenses have been deferred and are being amortized over a period
of five years commencing with operations. The Advisor has agreed with respect to
each of the Funds that, if any of the initial shares of a Fund are redeemed
during such amortization period by the holder thereof, the redemption proceeds
will be reduced for any unamortized organization expenses in the same ratio as
the number of shares redeemed bears to the number of initial shares held at the
time of redemption.
Repurchase Agreements
Each Fund may enter into repurchase agreements. In a repurchase agreement, a
Fund buys a security and the seller simultaneously agrees to repurchase the
security on a specified future date at an agreed-upon price. The repurchase
price reflects an agreed-upon interest rate during the time the Fund's money is
invested in the security. Because the security constitutes collateral for the
repurchase obligation, a repurchase agreement can be considered a collateralized
loan. The Fund's risk is the ability of the seller to pay the agreed-upon price
on the maturity date. If the seller is unable to make a timely repurchase, the
Fund could experience delays in the receipt of expected proceeds, suffer a loss
in principal or current interest, or incur costs in liquidating the collateral.
The Trustees have established criteria to evaluate the creditworthiness of
parties with which the Funds may enter into repurchase agreements.
Structured Notes
Each Fund may invest in structured notes, whose principal amount, redemption
terms or conversion terms are related to specific securities or other indices.
The prices of structured securities have historically been subject to high
volatility and their interest or dividend rates may at times be substantially
lower than prevailing market rates.
C-56
<PAGE>
Other
There are certain additional risks involved when investing in foreign securities
that are not inherent in domestic securities. These risks may involve foreign
currency exchange rate fluctuations, adverse political and economic developments
and the imposition of unfavorable foreign governmental laws and restrictions.
There is significant potential for continuing economic and political turmoil in
the Pacific Basin and Southeast Asia, such turmoil could have a negative effect
on the share prices of the Funds; particularly the Asian High Yield Fund.
The Strategic Natural Resources Fund, Info-Tech & Communications Fund and Asian
High Yield Fund may focus their investments in certain industries, subjecting
them to greater risk than funds that are more diversified.
3. Fees and Compensation Paid to Affiliates and Other Parties
Advisory Fees
Each Fund has entered into an Investment Advisory Agreement with the Advisor. As
compensation for the services rendered, facilities furnished, and expenses borne
by the Advisor, the Funds will pay the Advisor a fee accrued daily and paid
monthly, at the annualized rate of 1.25% for the Strategic Natural Resources
Fund, 1.25% for the Info-Tech & Communications Fund, 0.75% for the Growth Fund
and 1.25% for the Asian High Yield Fund. The Advisory Agreement also provides
that the Advisor may retain Sub-Advisers at the Advisor's own cost and expense,
for the purpose of managing the investment of the assets of one or more Funds of
the Trust.
Through August 31, 1998, the Advisor had agreed to waive or limit its fees and
to pay certain operating expenses to the extent necessary to limit total fund
operating expenses net of waivers and custodial credits to an annualized rate of
2.40%, 2.40%, 1.60%, and 2.00% for Class A Shares of the Strategic Natural
Resources Fund, Info-Tech & Communications Fund, Growth Fund and Asian High
Yield Fund, respectively, subject to possible reimbursement by the Funds if such
reimbursement can be achieved within the foregoing expense limits. Effective
September 1, 1998, the Advisor has changed the expense limit on Class A Shares
of the Strategic Natural Resources Fund, Info-Tech & Communications Fund, and
Growth Fund, to 2.00 % annually of the Funds' relative average net assets.
The Advisor has agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses net of
waivers and custodial credits to an annualized rate of 2.40%, 2.40%, 2.00%, and
2.00% for Class B Shares of the Strategic Natural Resources Fund, Info-Tech &
Communications Fund, Growth Fund and Asian High Yield Fund, respectively,
subject to possible reimbursement by the Funds if such reimbursement can be
achieved within the foregoing expense limits.
In addition, the Advisor has agreed to waive or limit its fees and to pay all
operating expenses, not including interest expense but including fee waivers and
custodial credits, of the Class A Shares of the Asian High Yield Fund for the
period from May 1, 1998 through June 15, 1998. This expense limit was changed to
an annualized rate of 1.00% for the period from June 16, 1998 through September
16, 1998. Effective September 17, 1998 this limit was changed to 2.00%.
The waivers for the Advisor's fee for the period ended October 31, 1998 amounted
to $24,467, $45,251, $3,350, and $8,421 for Strategic Natural Resources Fund,
Info-Tech & Communications Fund, Growth Fund and Asian High Yield Fund,
respectively. The reimbursements for the period ended October 31, 1998 amounted
to $97,422, $58,547, $124,852, and $129,360 for Strategic Natural Resources
Fund, Info-Tech & Communications Fund, Growth Fund and Asian High Yield Fund,
respectively.
Sub-Advisory Fees
For the period May 1, 1998 to May 31, 1998, the Asian High Yield Fund had a
Sub-Advisory relationship with J. P. Morgan Investment Management Inc. Pursuant
to a Sub-Advisory Agreement between the Sub-Advisor, the Advisor and the Trust,
the Sub-Advisor was responsible for the selection and management of portfolio
investments for the Fund, in accordance with the Fund's investment objective and
policies and under the supervision of the Advisor.
C-57
<PAGE>
The Sub-Advisor received a sub-advisory fee, paid by the Advisor of: 0.50% on
the first $50 million average daily net assets of the Fund; 0.45% on the next
$50 million average daily net assets of the Fund; and 0.40% on the average daily
net assets over $100 million of the Fund.
Effective May 31, 1998, J. P. Morgan Investment Management Inc. resigned as the
Sub-Advisor for the Fund. The Fund is currently
being managed by the Advisor.
Administration Fees
State Street Bank and Trust Company ("State Street") serves as the Administrator
of the Trust. For providing administrative services to the Funds, State Street
will receive from each Fund, a monthly fee at an annual rate of 0.10% of the
first $100 million of each Fund's average daily net assets, plus 0.08% of the
next $100 million of each Fund's average daily net assets, plus 0.06% of each
Fund's average daily net assets in excess of $200 million, subject to certain
minimum requirements. State Street agreed to waive certain fees for the period
ended October 31, 1998, which amounted to $18,386, $18,128, $18,129 and $17,947
for Strategic Natural Resources Fund, Info-Tech & Communications Fund, Growth
Fund and Asian High Yield Fund, respectively.
Custodian Fees
State Street also serves as the Trust's custodian, including holding all
portfolio securities and cash assets of the Trust and providing accounting
services which includes daily valuation of the shares of each Fund. For its
services State Street receives an annual custody and accounting fee which is
paid monthly.
Distributor
Funds Distributor, Inc. (the "Distributor") serves as the distributor of the
shares of each Fund pursuant to a Distribution Plan and Agreement, pursuant to
Rule 12b-1 under the 1940 Act, between the Distributor and the Trust. The Rule
12b-1 Plan and Agreement for Class A Shares provides for payment of a fee to the
Distributor at an annualized rate of 0.30% of the average daily net assets of
the Class A Shares of the Asian High Yield Fund and 0.40% of the average daily
net assets of the Class A Shares of the other Funds. The Rule 12b-1 Plan and
Agreement for Class B Shares provides for payment of a fee to the Distributor at
an annualized rate of 1.00% of the average daily net assets of the Class B
Shares of each Fund.
Trustees Fees
The Funds pay no compensation to their Trustees who are employees of the Advisor
or Sub-Advisors. Trustees who are not Advisor or Sub-Advisor employees receive
an annual fee of $5,000.
C-58
<PAGE>
4. Aggregate Unrealized Appreciation and Depreciation
The identified cost of investments in securities owned by each Fund for both
financial statement and federal income tax purposes, and their respective gross
unrealized appreciation and depreciation at October 31, 1998, were as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Identified Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
<S> <C> <C> <C> <C>
Strategic Natural Resources Fund.......... $ 3,912,272 $ 93,428 $201,234 $(107,806)
Info-Tech & Communications Fund........... 11,708,410 1,141,775 685,587 456,188
Growth Fund............................... 886,119 63,004 4,148 58,855
Asian High Yield Fund..................... 903,000 -- -- --
</TABLE>
5. Investment Transactions
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government obligations and short-term securities, for the period ended
October 31, 1998, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
<S> <C> <C>
Strategic Natural Resources Fund................... $13,861,434 $14,640,738
Info-Tech & Communications Fund.................... 19,002,988 11,846,926
Growth Fund........................................ 3,452,883 3,372,833
Asian High Yield Fund.............................. 1,383,092 4,452,581
</TABLE>
Purchases and sales of U.S. Government obligations aggregated $1,159,297 and
$1,272,031, respectively, for the Asian High Yield Fund.
6. Shareholder's Transactions
Following is a summary of shareholder transactions for each Fund:
<TABLE>
<CAPTION>
Six Months Ended
October 31, 1998 Year Ended
(unaudited) April 30, 1998*
Shares Dollars Shares Dollars
<S> <C> <C>
Strategic Natural Resources
Class A Shares
Shares sold..................... 74,864 $1,061,126 709,678 $10,833,321
Shares issued to shareholders
in reinvestment.............. -- -- 713 12,051
Shares redeemed................. (133,182) (2,077,755) (367,260) (5,380,919)
--------- ----------- --------- -----------
Net increase (decrease)......... $(58,318) $(1,016,631) $343,131 $5,464,453
========= ============ ======== ==========
</TABLE>
C-59
<PAGE>
<TABLE>
<CAPTION>
For the Period
September 21, 1998
to October 31, 1998
(unaudited)
--------------------------
Shares Dollars
<S> <C> <C>
Strategic Natural Resources
Class B Shares
Shares sold............................. 25 $300
Shares issued to shareholders
in reinvestment....................... -- --
Shares redeemed....................... -- --
-- --
Net increase........................ 25 $300
== ====
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
October 31, 1998 Year Ended
(unaudited) April 30, 1998*
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Info-Tech and Communications
Class A Shares
Shares sold............................. 618,931 $11,321,737 124,204 $2,171,752
Shares issued to shareholders
in reinvestment......................... -- -- -- --
Shares redeemed......................... (124,520) (1,709,182) (1,148) (22,019)
--------- ----------- ------- --------
Net increase............................ 494,411 9,612,555 123,056 $ 2,149,733
======== ========= ======= ============
</TABLE>
<TABLE>
<CAPTION>
For the Period
September 16, 1998
to October 31, 1998
(unaudited)
Shares Dollars
<S> <C> <C>
Info-Tech and Communications
Class B Shares
Shares sold............................. 43,709 $ 771,682
Shares issued to shareholders
in reinvestment......................... -- --
Shares redeemed......................... (267) (4,285)
----- -------
Net increase............................ 43,441 $ 767,397
======== ==========
</TABLE>
C-60
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
October 31, 1998 Year Ended
(unaudited) April 30, 1998*
------------- ---------------
Shares Dollars Shares Dollars
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Growth
Class A Shares
Shares sold............................. 29,624 $477,802 48,341 $756,356
Shares issued to shareholders
in reinvestment......................... -- -- -- --
Shares redeemed......................... (15,986) (270,815) -- --
------ ------- --------------- --------------
Net increase............................ 13,638 $206,987 48,341 $756,356
============ ============= ============== ==============
</TABLE>
For the Period
September 16, 1998
to October 31, 1998
(unaudited)
Shares Dollars
Growth
Class B Shares
Shares sold............................. 937 $15,300
Shares issued to shareholders
in reinvestment......................... -- --
Shares redeemed......................... -- --
-- --
Net increase............................ 937 $15,300
=== =======
<TABLE>
<CAPTION>
Six Months Ended
October 31, 1998 Year Ended
(unaudited) April 30, 1998*
Shares Dollars Shares Dollars
<S> <C> <C> <C> <C>
Asian High Yield
Class A Shares
Shares sold............................. 12,879 $128,772 528,380 $5,998,122
Shares issued to shareholders
in reinvestment......................... 10,566 98,148 2,010 21,381
Shares redeemed.........................(245,560) (2,113,540) (187,417) (2,107,829)
------- --------- ------- ---------
Net increase (decrease)............ (222,115) $(1,886,620) 342,973 $3,911,674
======= ========== ======= ==========
</TABLE>
C-61
<PAGE>
For the Period
September 16, 1998
to October 31, 1998
(unaudited)
Shares Dollars
Asian High Yield
Class B Shares
Shares sold............................. 37 $308
Shares issued to shareholders
in reinvestment......................... -- --
Shares redeemed......................... -- --
-- --
Net increase.......................... 37 $308
== ====
*The commencement of investment operations was October 23, 1997 for Strategic
Natural Resources Fund, October 22, 1997 for Info-Tech & Communications Fund,
October 22, 1997 for Growth Fund and October 20, 1997 for Asian High Yield Fund.
7. Forward Currency Contracts
At October 31, 1998, The Strategic Natural Resources Fund had outstanding
forward currency contracts, which contractually obligate the Fund to deliver
currency at a specified date, as follows:
<TABLE>
<CAPTION>
U.S. Cost October 31, 1998 Unrealized
on Origination U.S. $ Appreciation
Foreign Currency Purchase Contracts Date Value (Depreciation)
- ----------------------------------- ------ ------- --------------
<S> <C> <C> <C>
AUD, expiring 11/4/98, (1 contract) $ 15,438 $ 15,637 $ 199
CAD, expiring 11/5/98-11/12/98,
(2 contracts) 454,464 453,659 (805)
--------------
$(606)
</TABLE>
<TABLE>
<CAPTION>
U.S. Cost October 31, 1998 Unrealized
on Origination U.S. $ Appreciation
Foreign Currency Purchase Contracts Date Value (Depreciation)
- ----------------------------------- ------ ------- ------------
<S> <C> <C> <C>
AUD, expiring 11/4/98, (1 contract) $ 15,738 $ 15,637 $ 101
CAD, expiring 11/5/98-11/12/98,
(4 contracts) 452,002 453,657 (1,655)
-------------
(1,554)
Net Unrealized Depreciation $ (2,160)
==============
</TABLE>
8. Beneficial Interest
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders:
<TABLE>
<CAPTION>
5% or Greater Shareholders
Number of Shareholders % of Fund Held
Class A Class B Class A Class B
<S> <C> <C> <C> <C>
Strategic Natural Resources Fund 1 1 24% 100%
Info-Tech & Communications Fund 1 5 17% 53%
Growth Fund 5 1 73% 98%
Asian High Yield Fund 5 3 34% 100%
There were no of affiliated shareholders as of October 31, 1998.
</TABLE>
C-62
<PAGE>
9. Capital Loss Carryforward
At April 30, 1998, the Info-Tech Communications Fund had available for federal
income tax purposes unused capital losses of $30,284, expiring in the Year 2006.
Under current tax law, capital losses realized after October 31, may be deferred
and treated as occurring on the first day of the following fiscal year. For the
fiscal year ended April 30, 1998, the following Funds have elected to defer
losses occurring between November 1, 1997 and April 30, 1998 under these rules,
as follows:
Capital Currency
Losses Losses
Name of Fund Deferred Deferred
------------ -------- --------
Strategic Natural Resources Fund....... $269,461 $706
Asian High Yield Fund.................. 177,282 --
Asian Select Advisors Fund............. 1,212 --
Such deferred losses will be treated as arising on the first day of the fiscal
year ending April 30, 1999.
10. Initial Capitalization and Offering of Shares
During the period from May 29, 1997 to the commencement of investment operations
for each of the Funds, each Fund had no operations other than those related to
organizational matters, including the initial capital contribution of $20,000
for each Fund and the issuance of 1,333 shares for each of the Funds, with the
exception of the Asian High Yield Fund which issued 1,667 shares. There were no
additional transactions until commencement of investment operations for each of
the Funds.
11. Line of Credit
The Trust participated in a $10 million line of credit provided by Deutsche Bank
AG, New York Branch (the "Bank") under a Credit Agreement (the "Agreement")
dated February 17, 1998 . Under the Agreement, each Fund as a separate and
distinct borrower may borrow up to a designated base commitment allocation
specified in the Agreement, plus its pro rata portion of any unused commitment
allocation of the other borrowers under the agreement. Interest is payable in
respect to the unpaid principal amount depending on the type of loan designated
by the borrower. The Funds are charged an annualized commitment fee computed at
a rate equal to 0.10 of 1% on a annual basis of the daily average unutilized
credit balance. The Agreement requires, among other provisions, that the
aggregate outstanding principal amount of the loans made to each borrower under
the Agreement shall not exceed the lesser of (i) 33 1/3% of the value of the
total assets of the borrower less all liabilities and indebtedness not
represented by senior securities; and (ii) any borrower limitations described
for such borrowers in the Trust's prospectus.
During the six months ended October 31, 1998, only the Asian High Yield Fund had
borrowings under the Agreement. The Asian High Yield Fund entered into a NIBOR
based loan agreement on April 16, 1998 in the amount of $750,000, with an
interest rate of 6.15625% (NIBOR rate plus 50 basis points). The expiration date
of the loan was May 15, 1998. Effective July 24, 1998, the Trust terminated the
Agreement with the Bank.
12. Subsequent Events
The Trustees have approved by unanimous vote, the liquidation of the Asian High
Yield Fund effective November 30, 1998.
C-63
<PAGE>
APPENDIX D
ASM'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 such short-term credits
as may be necessary for the clearance of transactions.
2. Make short sales of securities or maintain a short position.
3. Issue senior securities, borrow money or pledge its assets,
except that the Fund may borrow on an unsecured basis from
banks for temporary or emergency purposes or for the clearance
of transactions in amounts not exceeding 10% of its total
assets (not including the amount borrowed) and will not make
investments while borrowings in excess of 5% of the value of
the Fund's total assets are outstanding.
4. Buy or sell commodities or commodity futures contracts, or buy
or sell real estate, real estate limited partnership interests
or other interests in real estate (although it may purchase
and sell securities which are secured by real estate and
securities of companies which invest or deal in real estate).
5. Make loans (except for purchases of publicly-traded debt
securities consistent with the Fund's investment policies).
6. Make investments for the purpose of exercising control or
management.
7. Act as underwriter (except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of
securities in the Fund's investment portfolio).
8. Invest 25% or more of its total assets (calculated at the time
of purchase and taken at market value) in any one industry.
9. As to 75% of the value of its total assets, invest more than
5% of the value of its total assets in the securities of any
one issuer (other than obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities), or
purchase more than 10% of all outstanding voting securities of
any one issuer.
THE NEW ORBITEX 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.
D-1
<PAGE>
The Fund may not:
1. Purchase securities on margin, except (a) the Fund may make
margin deposits in connection with permissible options and
futures transactions subject to restriction (4) below and (b)
on such short-term credits as may be necessary for the
clearance of transactions.
2. Make short sales of securities or maintain a short position.
3. Issue senior securities, borrow money or pledge its assets,
except that the Fund may borrow on an unsecured basis from
banks for temporary or emergency purposes or for the clearance
of transactions in amounts not exceeding 10% of its total
assets (not including the amount borrowed) and will not make
investments while borrowings in excess of 5% of the value of
the Fund's total assets are outstanding.
4. Buy or sell commodities or commodity futures contracts, or buy
or sell real estate, real estate limited partnership interests
or other interests in real estate, except the Fund may (a)
purchase and sell securities which are secured by real estate
and securities of companies which invest or deal in real
estate and (b) enter into financial futures and options
thereon.
5. Make loans (except for purchases of publicly-traded debt
securities consistent with the Fund's investment policies).
6. Make investments for the purpose of exercising control or
management.
7. Act as underwriter (except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of
securities in the Fund's investment portfolio).
8. Invest 25% or more of its total assets (calculated at the time
of purchase and taken at market value) in any one industry.
9. As to 75% of the value of its total assets, invest more than
5% of the value of its total assets in the securities of any
one issuer (other than obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities), or
purchase more than 10% of all outstanding voting securities of
any one issuer.
D-2
<PAGE>
PROXY
ASM INDEX 30 FUND, INC.
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 Richard E. Stierwalt 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 reverse side, all stock of the
above Company held of record by the undersigned on April 9, 1999 at the Special
Meeting of Stockholders to be held on June 4, 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
Proxy Statement dated May 10, 1999.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE>
[X] Please mark your votes as in this sample.
1. To approve the Reorganization and the Reorganization Agreement.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In the discretion of such proxies, upon any and all other business as may
properly come before the Special Meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF THE MATTERS SPECIFIED IN THE PROPOSAL.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT TENANTS,
EACH JOINT TENANT SHOULD SIGN.
SIGNATURES(S)___________________________________
DATE _______________, 1999
When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign full
corporate name by authorized officer and indicate the signer's office. If a
partnership, please sign in partnership name. PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
<PAGE>