Exhibit 1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 1st day of June 1, 1997 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 initially to offer shares in five series,
designated as the Orbitex Global Natural Resources Fund, Orbitex Communications
& Info-Tech Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund and Orbitex
Asian Select Advisers Fund ("Initial Series"), 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; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to each Initial
Series as indicated on the signature page 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 Trust 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 Trust in a manner consistent with its investment
objectives, policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by the Trust, 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 and dealers who provide the Adviser with research, analysis, advice
and similar services and pay such brokers and dealers in return a higher
commission or spread than may be charged by other brokers or dealers.
The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by Adviser pursuant to Section 7 of this
Agreement, which is a member of a 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 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).
The Adviser shall carry out its duties with respect to the Trust's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in the Trust'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 Trust
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, independent auditors and legal counsel.
1.2.4 TRUSTEES 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 service 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
1.3 ADDITIONAL SERIES. In the event that the Trust from time to time
designates one or more series in addition to the Initial Series ("Additional
Series"), it shall notify the Adviser in writing. If the Adviser is willing to
perform services hereunder to the Additional Series, it shall so notify the
Trust in writing. Thereupon, the Trust and the Adviser shall enter into an
Addendum to this Agreement for the Additional Series and the Additional Series
shall be subject to this Agreement. The Initial Series, together with all
Additional Series, shall hereinafter be referred to collectively as the
"Series".
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.
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 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.
3
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services and expenses
of the Trust's legal counsel and independent auditors.
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 (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-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.
4
3. ADVISORY FEE.
3.1 FEE. As compensation for all services rendered, facilities
provided and expenses paid or assumed by the Adviser under this Agreement, the
Trust shall pay the Adviser on the last day of each month, or as promptly as
possible thereafter, a fee calculated at the annual rate of the average daily
net assets during such month of each series of the Trust as set forth below:
3.1.1 ORBITEX GLOBAL NATURAL RESOURCES FUND.
3.1.2 ORBITEX COMMUNICATIONS & INFO-TECH FUND.
3.1.3 ORBITEX GROWTH FUND.
3.1.4 ORBITEX ASIAN HIGH YIELD FUND.
3.1.5 ORBITEX ASIAN SELECT ADVISERS FUND.
4. RECORDS.
4.1 TAX TREATMENT. The Adviser shall maintain the books and records
of the Trust in such a manner that treats each series 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.
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. RETENTION OF SUB-ADVISER.
Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain one or more
sub-advisers, at the Adviser's own cost and expense, for the purpose of managing
the investments of the assets of one or more Series of the Trust. Retention of
one or more sub-advisers shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall be
responsible to the Trust
5
for all acts or omissions of any sub-adviser in connection with the performance
of the Adviser's duties hereunder.
8. 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.
9. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL.
Neither the Adviser nor any director, officer of 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;
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.
10. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require to 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.
11. 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 Trust from year to
year, subject to the termination provisions and all other terms and conditions
hereof; PROVIDED, such continuance with respect to the Trust is approved at
least annually by vote of the holders of a majority of the outstanding voting
securities of the Trust 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.
6
12. 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 on
behalf of the Trust (i) by resolution of the Trust's Trustees, including the
vote or written consent of a majority of the Trust's Trustees 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 Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment.
13. 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 Trust, 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 Trust.
14. USE OF NAME.
The Trust is named the Orbitex Group of Funds and each Series 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 each Series of the Trust 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 is shall not challenge the validity or Adviser's
ownership thereof.
15. DECLARATION OF TRUST.
The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and agrees
that the obligations assumed by the Trust or a Fund, as the case may be,
pursuant to this Agreement shall be limited in all cases to the Trust or a 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.
7
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 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 all of which together shall constitute
one and the same instrument.
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 for its Orbitex Global
Natural Resources Fund, Orbitex Communications &
Info-Tech Fund, Orbitex Growth Fund, Orbitex Asian
High Yield, Fund and Orbitex Asian Select
Advisers Fund
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Xxxxx X. Xxxxxx
President
ORBITEX MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Xxxxx X. Xxxxxx
President
8
