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ORBITEX Group of Funds, ORBITEX Management, Inc., Xxxxxx Xxxxxx
Xxxxxx Investment Firm, Inc. and ORBITEX Funds Distributor, Inc.
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CODE OF ETHICS PURSUANT TO RULE 17J-1 OF THE INVESTMENT COMPANY ACT
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I. INTRODUCTION
Orbitex Group of Funds (the "Trust"), a registered open-end
investment company currently consisting of multiple separate series (each, a
"Fund"), Orbitex Management, Inc. and Xxxxxx Xxxxxx Xxxxxx Investment Firm, Inc.
(collectively, the "Advisers") and Orbitex Funds Distributor, Inc. (the
"Distributor") recognize the importance of high ethical standards in the conduct
of their business and require that this Code of Ethics ("Code") be observed by
each Access Person (defined below in Section III (d)). All recipients of this
Code are hereby directed to read it carefully, retain it for future reference
and abide by the rules and policies set forth herein.
While compliance with the provisions of the Code is anticipated,
Access Persons should be aware that in response to any violations, the Trust and
the Advisers will take whatever action is deemed appropriate under the
circumstances including, but not necessarily limited to, dismissal of such
Access Person. Technical compliance with the Code's procedures will not
automatically insulate from scrutiny trades that show a pattern of abuse of an
individual's fiduciary duties(1) to the Trust.
II. PURPOSE
This Code has been adopted by the Trust, the Advisers and the
Distributor, respectively, pursuant to Rule 17j-1 under the Investment Company
Act of 1940, as amended (the "1940 Act"). Rule 17j-1 generally prohibits
fraudulent or manipulative practices with respect to purchases or sales of
securities held or to be acquired by investment companies, if affected by
persons associated with such companies. The purpose of this Code is to provide
regulations and procedures consistent with the 1940 Act and Rule 17j-1.
The basic tenets of Rule 17j-1 are as follows:
It is unlawful for any Access Person, in connection with the purchase
or sale, directly or indirectly, by such person of a Security Held or to be
Acquired by a Fund:
a. to employ any device, scheme or artifice to defraud the Trust,
b. to make to the Trust any untrue statement of a material fact or
to omit to state to the Trust a material fact necessary in order
to make the statements made, in light of the circumstances under
which they are made, not misleading, or
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(1) A fiduciary duty is a duty to act for someone else's (i.e., our Fund
shareholders) benefit, while subordinating one's personal interests to that
of the other person. It is the highest standard of duty imposed by law.
c. to engage in any act, practice, or course of business that
operates or would operate as a fraud or deceit upon the Trust, or
to engage in any manipulative practice with respect to the Trust.
III. DEFINITIONS
(a) "Trust" means the Orbitex Group of Funds. Any reference herein to the Trust
will also be deemed a reference to any Fund, unless there is a
specification to the contrary.
(b) "Fund" means each of the series of the Trust, and all the series which will
become a part of the Trust's complex. Any reference herein to the Fund will
be deemed a reference to the Trust, unless there is a specification to the
contrary.
(c) "Advisers" means Orbitex Management, Inc. and Xxxxxx Xxxxxx Xxxxxx
Investment Firm, Inc.
(d) "Access Person," means (1) any director, trustee, officer, general partner
or Advisory Person of the Trust or the Advisers and (2) any director or
officer of the Distributor who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or sale of
Securities by a Fund, or whose functions or duties in the ordinary course
of business relate to the making of any recommendation to a Fund regarding
the purchase or sale of Securities.
(e) "Advisory Person" means (1) any employee of the Trust or the Advisers, or
of any company in a control relationship to the Trust or the Advisers, who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale of a
Security by the Trust, or whose functions relate to the making of any
recommendations with respect to such purchases or sales and (2) any natural
person in a control relationship to the Trust or the Advisers who obtains
information concerning recommendations made to the Trust or the Advisers
with regard to the purchase or sale of a Security.
(f) "Distributor" means Orbitex Funds Distributor, Inc., an affiliate of the
Advisers.
(g) "Independent Trustee" is anyone who sits on the Board of Trustees of the
Trust and who has no relationship with the Trust other than that of
Trustee, and who is not otherwise classifiable as an Access Person or an
Advisory Person; and who is not an "interested person" of the Trust within
the meaning of Section 2(a)(19) of the 1940 Act.
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(h) "Investment Personnel" means (1) any employee of the Trust or the Advisers
(or of any company in a control relationship to the Trust or the Advisers)
who, in connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or sale of
securities by a Fund and (2) any natural person who controls the Trust or
the Advisers and who obtains information concerning recommendations made to
a Fund regarding the purchase or sale of securities by the Fund.
(i) A Security is "being considered for purchase or sale" when a recommendation
to purchase or sell a Security has been made and communicated or, with
respect to the person making the recommendation, when such person considers
making such a recommendation or when there is any outstanding order to
purchase or sell that security.
(j) "Control" means the power to exercise a controlling influence over the
management or policies of the Trust, the Advisers or the Distributor. See
Section 2(a)(9) of the 1940 Act.
(k) "Beneficial Ownership" means ownership of securities or securities accounts
by or for the benefit of a person, or such person's "family member,"
including any account in which the person or family member of that person
holds a direct or indirect beneficial interest, retains discretionary
investment authority or exercises a power of attorney. The term "family
member" means any person's spouse, child or other relative, whether related
by blood, marriage, or otherwise, who either resides with, is financially
dependent upon, or whose investments are controlled by that person. The
term also includes any unrelated individual whose investments are
controlled and whose financial support is materially contributed to by that
person, such as a "significant other."
(l) "Security" shall have the meaning set forth in Section 2(a)(36) of the 1940
Act, except that it shall not include shares of registered open-end
investment companies, securities issued by the Government of the United
States, short term debt securities which are "government securities" within
the meaning of Section 2(a)(16) of the 1940 Act, bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements.
(m) "Initial Public Offering" means an offering of securities registered under
the Securities Act of 1933, as amended, the issuer of which, immediately
before the registration, was not subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
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(n) "Limited Offering" means an offering that is exempt from registration under
the Securities Act of 1933, as amended, pursuant to Section 4(2) or Section
4(6) or pursuant to Rule 504, 505 or 506 under the Securities Act of 1933,
as amended.
(o) "Purchase or Sale of a Security" includes, among other things, the writing
of an option to purchase or sell a Security.
(p) "Security Held or to be Acquired" by a Fund means any Security which,
within the most recent 15 days, (1) is being or has been held by the Fund,
or (2) is being or has been considered by the Fund or the Advisers for
purchase by the Fund.
(q) "Compliance Officer" shall mean, with respect to the Trust, the Advisers or
the Distributor, the person appointed by the Trustees of the Trust, the
board of the Advisers or the board of the Distributor, as the case may be,
to administer the Code and shall include other person(s) designated by the
Compliance Officer to administer the Code.
IV. EXEMPTED TRANSACTIONS
The prohibitions of Section V of this Code shall not apply to:
(a) Purchases or sales affected in any account over which the Access Person has
no direct or indirect influence or control.
(b) Open-end mutual funds, including money market funds purchased or sold
directly through the fund or its transfer agent.
(c) Purchases which are made by reinvesting cash dividends pursuant to an
automatic dividend or distribution reinvestment program or employee stock
option plan (this exception does not apply to optional cash purchases).
(d) U.S. Government Securities purchased directly from the U.S. Government.
(e) Bank certificates of deposits purchased directly from a bank.
(f) Purchases effected upon the exercise of rights issued by an issuer PRO RATA
to all holders of a class of its securities, to the extent such rights were
acquired from such issuer, and sales of such rights so acquired.
(g) Purchases or sales, which are non-volitional on the part of EITHER the
Access Person or the Trust or the Advisers.
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V. COMPLIANCE PROCEDURES
A. General Prohibition:
No Access Person shall purchase or sell directly or indirectly, any
Security in which he or she has, or by reason of such transaction acquires, any
Beneficial Ownership and which he or she knows or should have known at the time
of such purchase or sale;
(1) is being considered for purchase or sale by a Fund, or
(2) is being purchased or sold by a Fund.
B. Conflicts of Interest:
Each Access Person has the duty to disclose to the Trust, the
Advisers and the Distributor, as the case may be, any interest whatsoever that
he or she may have in any firm, corporation or business unit with which he or
she is called upon to deal as part of his or her assigned duties with the Trust,
the Advisers or the Distributor, or any other activity that the Access Person
reasonably believes presents a potential conflict of interest. This disclosure
should be timely so that the Trust, the Advisers or the Distributor may take
such action concerning the conflict as deemed appropriate by the Compliance
Officer or the General Counsel of the Advisers or the General Counsel of the
Distributor. Use Form E attached hereto for disclosure falling within this
subsection.
C. Gifts:
Access Persons may not accept any fee, commission, gift, or services,
other than DE MINIMIS gifts, from any persons or entities doing business with or
on behalf of the Trust.
D. Service as a Board Member:
No Investment Personnel may serve on the board of a publicly traded
company unless prior authorization is obtained from the Compliance Officer based
on a determination that (1) the business of such company does not conflict with
the interests of the Trust, (2) service would be consistent with the best
interests of the Trust and its shareholders, and (3) service is not prohibited
by law. If such service is authorized, procedures will then be put in place to
isolate such Investment Personnel serving as directors of outside entities from
those making investment decisions on behalf of the Trust.
Advanced notice should be given so that the Trust or the Advisers may
take such action concerning the conflict as deemed appropriate by the Compliance
Officer. Form E can be used to disclose any intent to serve as a board member of
a publicly traded company.
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E. Initial Public Offerings:
Investment Personnel must obtain prior approval from the Compliance
Officer before directly or indirectly acquiring Beneficial Ownership in any
securities in an Initial Public Offering or in a Limited Offering. Those
Investment Personnel who have obtained prior approval and made an investment in
an Initial Public Offering or a Limited Offering must disclose (on Form E) that
investment to the Compliance Officer when they such Investment Personnel play a
part in any subsequent consideration of an investment in the issuer by a Fund.
Under such circumstances, the Fund's decision to purchase securities of the
issuer of the Initial Public Offering or the Limited Offering must be subject to
independent review by the Compliance Officer or Investment Personnel with no
personal interest in the issuer.
Use Form E attached hereto for disclosure of activities falling
within this subsection.
F. Purchases or Sales by Investment Personnel:
No Investment Personnel may execute a personal Securities transaction
within 7 calendar days before and after a Fund for which he or she is
responsible trades in that Security.
G. Short-Term Trading Profits:
Investment Personnel may not profit from the purchase and sale, or
sale and purchase, of the same or equivalent Securities within 60 calendar days.
VI. SANCTIONS
If the Compliance Officer discovers that an Access Person has
violated any provision of the Code, the Compliance Officer may impose such
sanctions as he or she deems appropriate, including, but not limited to, a
letter of censure, suspension with or without pay, or termination of employment.
Any such violation shall be reported to the Trustees of the Trust at the next
meeting of the Trustees occurring after the Compliance Officer becomes aware of
the violation.
Any profits realized on personal transactions in violation of the
Code must be disgorged in a manner directed by the Advisers.
VII. REPORTING AND MONITORING
A. The Compliance Officer shall monitor the personal trading activity of
all Access Persons pursuant to the procedures established under this
Code. The forms (Form A-E) attached hereto are designed to achieve
this purpose.
B. Each Access Person, except the Independent Trustees*, shall submit to
the Compliance Officer:
(i) Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information:
* Independent Trustees may be required to file a Quarterly Transaction Report
- see Section VII C. below.
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(A) The title, number of shares and principal amount of each
Security in which the Access Person had any Beneficial
Ownership when the person became an Access Person;
(B) The name of any broker, dealer or bank with whom the
Access Person maintained an account in which any
securities were held for the direct or indirect benefit
of the Access Person as of the date the person became an
Access Person; and
(C) The date that the report is submitted by the Access
Person.
(ii) Quarterly Transaction Reports. No later than 10
days after the end of a calendar quarter, the
following information:
(A) With respect to any transaction during the quarter in a
Security in which the Access Person had any Beneficial
Ownership:
(1) The date of the transaction, the title, the
interest rate and maturity date (if applicable),
the number of shares and the principal amount of
each Security involved;
(2) The nature of the transaction (I.E., purchase,
sale or any other type of acquisition or
disposition);
(3) The price of the Security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or
through which the transaction was effect; and
(5) The date that the report is submitted by the
Access Person.
(B) With respect to any account established by the Access
Person in which any securities were held during the
quarter for the direct or indirect benefit of the Access
Person:
(1) The name of the broker, dealer or bank with whom
the Access Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the
Access Person.
(iii) Annual Holdings Reports. Annually, the following information
(which information must be current as of a date no more than
30 days before the report is submitted):
(A) The title, number of shares and principal amount of each
Security in which the Access Person had any Beneficial
Ownership;
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(B) The name of any broker, dealer or bank with whom the
Access Person maintains an account in which any
securities are held for the direct or indirect benefit
of the Access Person; and
(C) The date that the report is submitted by the Access
Person.
C. An Independent Trustee need only file a Quarterly Transaction Report
if he or she, at the time of a transaction, knew, or in the ordinary
course of fulfilling his or her official duties as a Trustee, should
have known that during the 15 day period immediately preceding or
following the date of the transaction in a Security by the
Independent Trustee the Security was purchased or sold by a Fund or
was considered for purchase or sale by a Fund.
D. Each Access Person shall complete an annual certification on the form
attached as Form C (or as revised from time to time) that he or she
has received, read and understood the Code and that he or she is
subject to and has complied with each of the Code's provisions
applicable to such person.
E. The Compliance Officer shall prepare annually a written report for
the Board of Trustees which (1) describes any issues arising under
the Code since the last report to the Board of Trustees, including,
but not limited to, information about material violations of the Code
and sanctions imposed in response thereto and (2) certifies that the
Trust, the Advisers and the Distributor have adopted procedures
reasonably necessary to prevent Access Persons from violating the
Code.
F. All reports furnished pursuant to this Code will be maintained on a
confidential basis and will be reasonably secured to prevent access
to such records by unauthorized personnel.
G. An Access Person need not make a Quarterly Transaction Report under
Section VII B.(ii) if all of the information required in such report
would duplicate information (1) contained in broker trade
confirmations or account statements received by the Trust, the
Advisers or the Distributor with respect to the Access Person in the
time period required by Section VII B.(ii) or (2) required to be
recorded under Rule 204-2(a)(12) under the Investment Advisers Act of
1940, as amended.
VIII. RECORDKEEPING
The Trust, the Advisers and the Distributor will maintain the
following records at their principal place of business:
(A) A copy of this Code in an easily accessible place;
(B) A record of any violation of the Code, and any action
taken as a result of the violation, in an easily
accessible place for at least five years after the end
of the fiscal year in which the violation occurs;
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(C) A copy of each report made by an Access Person for at
least five years after the end of the fiscal year in
which the report is made, the first two years in an
easily accessible place;
(D) A record of all persons, currently or within the past
five years, who are or were required to make reports
as required by this Code, or who are or were
responsible for reviewing these reports, in an easily
accessible place;
(E) A copy of each report required by Section VII E. of
the Code for at least five years after the end of the
fiscal year in which the report is made, the first two
years in an easily accessible place; and
(F) A record of any decision, and the reasons supporting
the decision, to approve the acquisition by Investment
Personnel of securities under Section V E. of the Code
for at least five years after the end of the fiscal
year in which the approval is granted.
IX. CONCLUSION
Upon receipt of this Code, all personnel must do the following:
All employees must read the Code, complete all relevant forms (attached
hereto).
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