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The AdvisorOne Funds, Xxxxxx Xxxxxx Xxxxxx Investment Firm, LLC 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
The AdvisorOne Funds (the "Trust"), a registered open-end investment
company currently consisting of multiple separate series (each, a "Fund"),
Xxxxxx Xxxxxx Xxxxxx Investment Firm, LLC (the "Adviser") 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, the
Adviser and the Distributor 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 Adviser 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
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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.
made, in light of the circumstances under which they are made, not misleading,
or
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 AdvisorOne 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 that
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) "Adviser" means Xxxxxx Xxxxxx Xxxxxx Investment Firm, LLC.
(d) "Access Person," means (1) any director, trustee, officer, general
partner or Advisory Person of the Trust or the Adviser 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 Adviser,
or of any company in a control relationship to the Trust or the Adviser, 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 Adviser who obtains information concerning
recommendations made to the Trust or the Adviser with regard to the purchase or
sale of a Security.
(f) "Distributor" means Orbitex Funds Distributor, Inc., a firm that is
not an affiliate of the Trust or the Adviser.
(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.
(h) "Investment Personnel" means (1) any employee of the Trust or the
Adviser (or of any company in a control relationship to the Trust or the
Adviser) 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
Adviser 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 Adviser 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.
(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 Adviser for purchase by
the Fund.
(q) "Compliance Officer" shall mean, with respect to the Trust, the
Adviser or the Distributor, the person appointed by the Trustees of the Trust,
the board of the Adviser 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 Adviser.
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 Adviser 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 Adviser
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 Adviser or the Distributor may take such action
concerning the conflict as deemed appropriate by counsel to the Trust or the
Compliance Officer or the General Counsel of the Adviser or the Compliance
Officer or 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 Adviser 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.
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 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 Adviser.
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:
(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.
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* Independent Trustees may be required to file a Quarterly Transaction
Report - see Section VII C. below.
(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;
(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 Adviser 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 Adviser 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 Adviser Act
of 1940, as amended.
VIII. Recordkeeping
The Trust, the Adviser 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;
(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 read the Code and complete
all relevant forms (attached hereto).
