EXHIBIT 99(p)(10)
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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 which show a pattern of abuse of an individual's fiduciary
duties1 to the Trust.
The following general fiduciary principles shall govern personal investment
activities and the interpretation and administration of this Code:
1. The interests of all Fund shareholders must be placed first at all
times;
2. All personal securities transactions must be conducted consistent with
this Code and in such a manner as to avoid any actual or potential
conflict of interest or any abuse of an individual's position of trust
and responsibility; and
3. Investment personnel should not take inappropriate advantage of their
positions.
This Code does not attempt to identify all possible conflicts of interest,
and literal compliance with each of its specific provisions will not shield
investment personnel from liability for personal trading or other conduct that
violates a fiduciary duty to Fund shareholders.
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 effected 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
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.
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(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.
(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
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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
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 effected 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.
E. Initial Public Offerings:
Investment Personnel must obtain prior approval from the Compliance Officer
before
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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 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:
(A) The title, number of shares and principal amount of each Security
in which the
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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:
1. All new employees must read the Code, complete all relevant forms
(attached hereto) and schedule a meeting with the Compliance Officer to
discuss the provisions herein within two calendar weeks of employment.
Before completing the forms, multiple copies of the following forms must
be made so that you will have the copies you need to insure continuing
compliance:
1. Form A,
2. Form B,
3. Form C,
4. Form D,
5. Form E.
2. Existing employees who did not receive this Code upon hire, for whatever
reason, must read the Code, complete all relevant forms (attached hereto)
and schedule a meeting with the Compliance Officer to discuss the
provisions herein at the earliest possible time; but not later than the
end of the relevant quarter as delineated on Form A.
Before completing the forms, multiple copies of the following forms must
be made so that you will have the copies you need to insure continuing
compliance:
1. Form A,
2. Form B,
3. Form C,
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4. Form D,
5. Form E.
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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.
* Independent Trustees may be required to file a Quarterly Transaction Report
- see Section VII C. below.
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