ORBITEX Life Sciences & Biotechnology Fund, Inc.
and
ORBITEX Management, Inc.
Code of Ethics Pursuant to Rule 17j-1 of the Investment Company Act
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I. Introduction
Orbitex Life Sciences and Biotechnology Fund, Inc. (the "Fund"), a
registered closed-end investment company, and Orbitex Management, Inc. (the
"Adviser") 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 (e)). 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 Fund and the
Adviser 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
duties(1) to the Fund.
II. Purpose
This Code has been adopted by the Fund and the Adviser, 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 the Fund:
a. to employ any device, scheme or artifice to defraud the Fund,
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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.
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b. to make to the Fund any untrue statement of a material fact or to
omit to state to the Fund 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 Fund, or
to engage in any manipulative practice with respect to the Fund.
III. Definitions
(a) "Fund" means Orbitex Life Sciences & Biotechnology Fund, Inc.
(b) "Adviser" means Orbitex Management, Inc.
(c) "Access Person," means any director, officer, trustee, general
partner, or Advisory Person of the Fund or the Adviser.
(d) "Advisory Person" means (1) any employee of the Fund or the Adviser,
or of any company in a control relationship to the Fund 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 Fund, 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 Fund
or the Adviser who obtains information concerning recommendations made
to the Fund or the Adviser with regard to the purchase or sale of a
Security.
(e) "Independent Director" is anyone who sits on the Board of Directors of
the Fund and who has no relationship with the Fund other than that of
Director, and who is not otherwise classifiable as an Access Person or
an Advisory Person; and who is not an "interested person" of the Fund
within the meaning of Section 2(a)(19) of the 1940 Act.
(f) "Investment Personnel" means (1) any employee of the Fund or the
Adviser (or of any company in a control relationship to the Fund 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 the Fund and (2) any natural person
who controls the Fund or the Adviser and who obtains information
concerning recommendations made to the Fund regarding the purchase or
sale of securities by the Fund.
(g) 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.
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(h) "Control" means the power to exercise a controlling influence over the
management or policies of the Fund or the Adviser. See Section 2(a)(9)
of the 1940 Act.
(i) "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."
(j) "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.
(k) "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.
(l) "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.
(m) "Purchase or Sale of a Security" includes, among other things, the
writing of an option to purchase or sell a Security.
(n) "Security Held or to be Acquired" by the 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.
(o) "Compliance Officer" shall mean, with respect to the Fund or the
Adviser, the person appointed by the Directors of the Fund or the
board of the Adviser, 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:
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(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 Fund 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 the Fund, or
(2) is being purchased or sold by the Fund.
B. Conflicts of Interest:
Each Access Person has the duty to disclose to the Fund and the Adviser, 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 Fund or the Adviser, or any other
activity that the Access Person reasonably believes presents a potential
conflict of interest. This disclosure should be timely so that the Fund or the
Adviser may take such action concerning the conflict as deemed appropriate by
the Compliance Officer or the General Counsel of the Adviser. 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 Fund.
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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 Fund, (2) service would be consistent with the best interests
of the Fund 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 Fund.
Advanced notice should be given so that the Fund 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 the 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 the Fund 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.
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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 Directors of the Fund at the next meeting of the
Directors 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 Directors*, 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);
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* Independent Directors may be required to file a Quarterly Transaction
Report - see Section VII C. below.
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(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;
(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 Director 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 Director, should
have known that during the 15 day period immediately preceding or
following the date of the transaction in a Security by the Independent
Director the Security was purchased or sold by the Fund or was
considered for purchase or sale by the 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 Directors which (1) describes any issues arising under the
Code since the last report to the Board of Directors, including, but
not limited to, information about material violations of the Code and
sanctions imposed in response thereto and (2) certifies that the Fund
and the Adviser 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.
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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 Fund or the
Adviser 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 Fund and the Adviser 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 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.
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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,
4. Form D,
5. Form E.
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