DESSAUER & McINTYRE ASSET MANAGEMENT
CODE OF ETHICS
WHEREAS, DESSAUER & McINTYRE ASSET MANAGEMENT (the "Adviser")
is a registered investment adviser under the Investment Advisers Act of 1940, as
amended, and serves as Adviser to the Dessauer Global Equity Fund (the "Trust"),
a registered investment company under the Investment Company Act of 1940, as
amended (the "ICA"); and
WHEREAS, Rule 17j-1 under the ICA requires the Adviser and
principal underwriter of the Trust, to adopt a Code of Ethics.
NOW, THEREFORE, the Adviser hereby adopts this Code of Ethics
as of [this ____ day of _________, 2000], replacing and revising the Code of
Ethics adopted by the Adviser as of the 19th day of September, 1997.
I. DEFINITIONS
For purposes of this Code of Ethics the following terms shall
have the meanings set forth below:
A. "Access Person" means any director, officer, general partner
or Advisory Person of the Adviser who, with respect to any
Trust or investment company registered under the ICA makes any
recommendation, participates in the determination of which
recommendation will be made, or whose principal function or
duties relate to the determination of which recommendation
will be made, or who, in connection with his or her duties,
obtains any information concerning recommendations on Covered
Securities being made by the Adviser to the Trust or any
investment company registered under the ICA.
B. "Advisory Person" means
1. any employee of the Adviser, the Trust or its
administrator (or of any entity in a control
relationship with the Adviser, the Trust or its
administrator, as defined in Section I.E hereof) who,
in connection with his or her regular functions or
duties, makes, participates in, or obtains information
(other than publicly available information) regarding
the purchase or sale of Covered Securities 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 directly or indirectly owning,
controlling, or holding with power to vote, 25% or
more of the outstanding voting securities of the
Adviser or Trust who obtains information (other than
publicly available information) concerning
recommendations made by the Adviser or the Trust with
regard to the purchase or sale of a security.
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C. "Affiliated Persons" or "Affiliates" means
1. any employee or Access Person of the Adviser or the
Trust, and any member of the immediate family (defined
as spouse, child, mother, father, brother, sister,
in-law or any other relative) of any such person who
lives in the same household as such person or who is
financially dependent upon such person;
2. any account for which any of the persons described in
C.1. hereof is a custodian, trustee or otherwise
acting in a fiduciary capacity, or with respect to
which any such person either has the authority to make
investment decisions or from time to time gives
investment advice; and
3. any partnership, corporation, joint venture, trust or
other entity in which any employee of the Adviser or
the Trust or Access Person of the Trust directly or
indirectly, in the aggregate, has a 10% or more
beneficial interest or for which any such person is a
general partner or an executive officer.
D. "Adviser's Client Accounts" means accounts of any persons who
receive from the Adviser investment advice, recommendations,
research or analyses concerning securities and from whom the
Adviser receives compensation. This definition is intended to
include the Trust.
E. "Beneficial ownership of a security" by any person includes
securities held by:
1. a spouse, minor children or relatives who share the
same home with such person;
2. an estate for such person's benefit;
3. a trust, of which
(a) such person is a trustee or such person or members
of such person's immediate family have a vested
interest in the income or corpus of the trust, or
(b) such person owns a vested beneficial interest, or
(c) such person is the settlor and such person has the
power to revoke the trust without the consent of
all the beneficiaries;
4. a partnership in which such person is a partner;
5. a corporation (other than with respect to treasury
shares of the corporation) of which such person is an
officer, director or 10% stockholder;
6. any other person if, by reason of contract,
understanding, relationship, agreement or other
arrangement, such person obtains therefrom benefits
substantially equivalent to those of ownership; or
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7. such person's spouse or minor children or any other
person, if, even though such person does not obtain
therefrom the above-mentioned benefits of ownership,
such person can vest or revest title in himself at
once or at some future time.
A beneficial owner of a security also includes any person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting
power and/or investment power with respect to such security.
Voting power includes the power to vote, or to direct the
voting of such security, and investment power includes the
power to dispose, or to direct the disposition of such
security. A person is the beneficial owner of a security if he
has the right to acquire beneficial ownership of such security
at any time within sixty (60) days.
F. "Control" means the power to exercise a controlling influence
over the management or policies of a corporation. Any person
who owns beneficially, either directly or through one or more
controlled corporations, more than 25% of the voting
securities of a corporation shall be presumed to control such
corporation.
G. "Covered Security" means any note, stock, treasury stock,
bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting
trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral
rights, any put, call, straddle, option or privilege on any
security (including a certificate of deposit) or on any group
or index of securities (including any interest therein or
based on the value thereof), or any put, call straddle, option
or privilege entered into on a national securities exchange
relating to foreign currency, or in general, any interest or
instrument commonly known as a "security", or any certificate
of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or
right to subscribe to or purchase, any of the foregoing;
provided, however, that "security" shall not mean securities
issued or guaranteed by the Government of the United States,
its agencies or instrumentalities, bankers' acceptances, bank
certificates of deposit, commercial paper and high quality
short-term debt instruments, including repurchase agreements,
or shares of registered open-end investment companies.
H. "Covered Security held or to be acquired" by the Trust means:
1. any security which, within the most recent fifteen (15)
days,
(a) is or has been held by the Trust, or
(b) is being or has been considered by the Adviser or the
Trust for purchase by the Trust; or
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2. any option to purchase or sell, and any security convertible
into or exchangeable for, a security described in G.1.
hereof.
I. "Employee" means any employee of the Adviser.
J. "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933 [15 U.S.C. 77a et
seq.], the issuer of which, immediately before the
registration, was not subject to the reporting requirements of
sections 13 or 15(d) of the Securities Exchange Act of 1934
[15 U.S.C. 78m or 78o(d)].
K. "Investment Adviser" means
1. Dessauer & McIntyre Asset Management Inc. and any successor
entity;
2. any person (other than a bona fide officer, director,
trustee, member of an advisory board, or employee of the
Trust, as such) who pursuant to a contract with the Trust
regularly furnishes advice to the Trust with respect to the
desirability of investing in, purchase or selling securities
or other property, or is empowered to determine what
securities or other property shall be purchased or sold by
the Trust; and
3. any other person who pursuant to a contract with a person
described in clause (2) regularly performs substantially all
of the duties undertaken by such person described in clause
(2); but does not include (i) a person whose advice is
furnished solely through uniform publications distributed to
subscribers thereto, (ii) a person who furnishes only
statistical and other factual information, advice regarding
economic factors and trends, or advice as to occasional
transactions in specific securities, but without generally
furnishing advice or making recommendations regarding the
purchase or sale of securities, (iii) a company furnishing
such services at cost to one or more investment companies,
insurance companies, or other financial institutions, (iv)
any person the character and amount of whose compensation
for such services must be approved by a court, or (v) such
other persons as the Securities and Exchange Commission may
by rules and regulations or order determine not to be an
investment adviser within the intent of Section 2(a)(2) of
the ICA.
L. "Investment Personnel" of the Adviser or the Trust means:
1. Any employee of the Adviser or the Trust (or of any company
in a control relationship to the Adviser or the Trust) 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 Trust; and
2. Any natural person who controls the Adviser or the Trust and
who obtains information concerning recommendations made to
the Trust regarding the purchase or sale of securities by
the Trust.
M. "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to
section 4(2) or section 4(6) [15 U.S.C. 77d(2) or 77d(6)] or
pursuant to rule 504, rule 505, or rule 506 [17 CFR 230.504,
230.505, or 230.506] under the Securities Act of 1933.
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N. "Principal underwriter" of or for the Trust (unless the Trust
becomes a closed-end company), or of any security issued by
the Trust, means any underwriter who as principal purchases
from the Trust, or pursuant to contract has the right (whether
absolute or conditional) from time to time to purchase from
the Trust, any security issued by the Trust for distribution,
or who as agent for the Trust sells or has the right to sell
any security issued by the Trust to a dealer or to the public
or both, but does not include a dealer who purchases from the
Trust through a principal underwriter acting as agent for such
company. "Principal underwriter" of or for a closed-end
company or any issuer which is not an investment company, or
of any security issued by such a company or issuer, means any
underwriter who, in connection with a primary distribution of
securities, (A) is in privity of contract with the issuer or
an affiliated person of the issuer; (B) acting alone or in
concert with one or more other persons, initiates or directs
the formation of an underwriting syndicate; or (C) is allowed
a rate of gross commission, spread, or other profit greater
than the rate allowed another underwriter participating in the
distribution.
O. "Purchase or sale of a Covered Security" includes the writing
of an option to purchase or sell a security.
II. COMPLIANCE WITH GOVERNING LAWS,
REGULATIONS AND PROCEDURES
A. All Employees shall have and maintain knowledge of and shall
comply strictly with all applicable federal and state laws and
all rules and regulations of any governmental agency or
self-regulatory organization governing his or her activities.
B. The Adviser will identify all Access Persons employed directly
by the Adviser by March 1, 2000. Employees beginning
employment with the Adviser after March 1, 2000 will be
notified at the time of hire if they are Access Persons.
Employees who are not Access Persons at the time of hire or on
March 1, 2000, may become Access Persons and such employees
are obligated to comply with the reporting obligations set
forth in this Code of Ethics and procedures adopted hereunder.
Persons required to report under this Code of Ethics shall be
listed on Exhibit A.
C. Each Employee will be given a copy of the Code of Ethics at
the time of his or her employment and each Access Person is
required to submit a statement at least annually that he or
she has reviewed the Code of Ethics. Each Employee shall have
and maintain knowledge of and shall comply with the provisions
of this Code of Ethics and any procedures adopted hereunder.
D. All Employees shall comply with all laws and regulations
concerning insider trading and with the Adviser's prohibition
against insider trading contained in the "Insider Trading
Procedures," Exhibit B to this Code of Ethics. Trading on or
communicating material non-public information, or "inside
information," of any sort, whether obtained in the course of
research activities, through a client relationship or
otherwise, is strictly prohibited.
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E. All Employees shall comply strictly with procedures
established by the Adviser to ensure compliance with
applicable federal and state laws and regulations of
governmental agencies and self-regulatory organizations.
Employees shall not knowingly participate in, assist, or
condone (i) any act in violation of any statute or regulation
governing securities matters or the Adviser, nor (ii) any act
which would violate any provision of this Code of Ethics or
any procedures adopted hereunder.
F. Each Employee having supervisory responsibility shall exercise
reasonable supervision over Employees subject to his or her
control, with a view to preventing any violation by such
persons of applicable statutes or regulations, the Trust's
Code of Ethics or procedures, or the provisions of this Code
of Ethics or procedures adopted hereunder.
G. Any Employee encountering evidence that acts in violation of
applicable statutes or regulations or provisions of this Code
of Ethics or procedures adopted hereunder have occurred shall
report such evidence to the President of the Adviser or such
other person as appointed in procedures adopted hereunder.
Such action by the Employee shall remain confidential, unless
the Employee waives confidentiality or federal or state
authorities compel disclosure. Failure to report such evidence
may result in disciplinary proceedings and may include
sanctions as set forth in procedures adopted hereunder.
III. CONFIDENTIALITY OF TRANSACTIONS
A. Information relating to the portfolio, research and studies
activities of the Adviser for the benefit of the Adviser's
Client Accounts, including the Trust, is confidential until
publicly available. Whenever statistical information or
research is supplied to or requested by the Trust, such
information must not be disclosed to any persons other than
persons designated by the President or the Board of Trustees
of the Trust. If the Trust is considering a particular
purchase or sale of a security, this must not be disclosed
except to such duly authorized persons.
B. Any Employee authorized to place orders for the purchase or
sale of securities on behalf of the Trust shall take all steps
reasonably necessary to provide that all brokerage orders for
the purchase and sale of securities for the account of the
Trust will be so executed as to ensure that the nature of the
transactions shall be kept confidential until the information
is reported to the Securities and Exchange Commission or the
Trust's shareholders in the normal course of business.
C. No Employee shall disclose any non-public information relating
to the portfolio or transactions of the Adviser or an
Adviser's Client Account, nor shall any Employee disclose any
non-public information relating to the operation of the
Adviser unless properly authorized to do so.
D. If any Employee of the Adviser or the Trust or Access Person
should obtain information concerning the Trust's portfolio
(including, the consideration by the Trust of acquiring any
security, or recommending any security for the Trust's
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portfolio), whether in the course of such person's duties or
otherwise, such person shall respect the confidential nature
of this information and shall not divulge it to anyone unless
it is properly part of such person's services to the Trust to
do so or such person is specifically authorized to do so by
the President of the Trust.
IV. ETHICAL STANDARDS
A. The Employees of the Adviser, the Trust and Access Persons and
their respective affiliates, shall conduct themselves in a
manner consistent with the highest ethical standards. They
shall avoid any action, whether for personal profit or
otherwise, that results in an actual or potential conflict of
interest with the Adviser or the Adviser's Client Accounts, or
the appearance of a conflict of interest, which may be
otherwise detrimental to the interests of the Adviser or the
Adviser's Client Accounts, including the Trust.
B. Every Employee, in making any investment recommendation or
taking any investment action, shall exercise diligence and
thoroughness, and shall have a reasonable and adequate basis
for any such recommendations or action.
C. No Employee shall undertake independent practice for
compensation in competition with the Adviser or the Trust.
D. No Employee shall improperly use for such person's benefit any
knowledge, whether obtained through such person's relationship
with the Adviser or the Trust or otherwise, of any investment
recommendation made or to be made, or of any investment action
taken or to be taken, by the Adviser for the Adviser's Client
Accounts.
E. Employees shall act in a manner consistent with their
fiduciary obligation to the Adviser's Client Accounts, and
shall not deprive any of the Adviser's Client Accounts of an
investment opportunity in order to personally benefit from
that opportunity.
F. An Employee having discretion as to the selection of
broker-dealers to execute securities transactions for an
Adviser's Client Account shall select broker-dealers solely on
the basis of the services provided directly or indirectly by
such broker-dealers to the Adviser's Client Account. An
Employee shall not, directly or indirectly, receive a fee or
commission from any source in connection with the sale or
purchase of any security for an Adviser's Client Account.
G. Employees shall not accept directly or indirectly from a
broker-dealer or other vendor who transacts business with the
Adviser or the Adviser's Client Accounts, any gifts,
gratuities or other things of more than de minimis value or
significance that their acceptance might reasonably be
expected to interfere with or influence the exercise of
independent and objective judgment in carrying out such
person's duties or otherwise gives the appearance of a
possibly impropriety. For this purpose, gifts, gratuities and
other things of value shall not include unsolicited
entertainment so long as such
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unsolicited entertainment is not so frequent or extensive as
to raise any question of impropriety.
H. The Adviser shall take all actions reasonably calculated to
ensure that the Adviser engages broker-dealers to transact
business with the Adviser or the Trust whose partners,
officers and employees, and their respective affiliates, will
conduct themselves in a manner consistent with the provisions
of this Section V.
I. Conflicts of interest generally result from a situation in
which an individual has personal interests in a matter that is
or may be competitive with his responsibilities to another
person or entity (such as the Adviser or the Trust) or where
an individual has or may have competing obligations or
responsibilities to two or more persons or entities. In the
case of the relationship between the Adviser or the Trust on
the one hand, and its employees and Access Persons and their
respective affiliates, on the other hand, such conflicts may
result from the purchase or sale of securities for the
Adviser's Client Accounts including the Trust and for the
account of any affiliated person or from the purchase or sale
for the Adviser's Client Accounts or the Trust of securities
in which an Access Person or employee of the Adviser or the
Trust, or his or her affiliates, has an interest. In these
cases, all potential or actual conflicts must be disclosed and
the first preference and priority must be to avoid such
conflicts of interest wherever possible and, where they
unavoidably occur, to resolve them in a manner not
disadvantageous to the client.
V. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
A. No Access Person shall recommend to, or cause or attempt to
cause, the Adviser's Client Accounts or the Trust to acquire,
dispose of, or hold any security (including, any option,
warrant or other right or interest relating to such security)
of which such Access Person or an affiliate of such Access
Person has direct or indirect beneficial ownership unless the
Access Person has first disclosed in writing to the President
of the Adviser all facts reasonably necessary to identify the
nature of the ownership of such Access Person or his or her
affiliate in such security.
B. Limited Offerings and Initial Public Offerings:
1. No Employee shall acquire direct or indirect
beneficial ownership of an unregistered security
issues in a Limited Offering or an Initial Public
Offering without obtaining the prior written approval
of the President of the Adviser.
2. Under normal circumstances, such approval will not be
withheld if the Employee demonstrates in writing that:
(a) the investment is not suitable for the Trust;
(b) the investment opportunity was unique to the
individual circumstances of the Employee; and
(c) no overreaching would or could occur.
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An Employee who has been authorized to acquire securities in
a Limited Offering must disclose such investment to the
President of the Adviser when such Employee plays a part in
any subsequent consideration of any investment in the issuer
by the Trust. The decision to purchase securities of the
issuer for the Trust shall be subject to an independent
review by the President of the Trust.
C. No Access Person shall serve on the board of
directors/trustees of organizations (whether for profit or not
for profit) that will or intend to raise proceeds through
public solicitation or issuance of securities without prior
written approval of the President of the Adviser. In the
relatively small number of instances in which board service is
authorized, Access Persons serving as directors normally
should be isolated from those making investment decisions
through "Chinese Wall" or other procedures.
D. If, as a result of fiduciary obligations to other persons or
entities, an Access Person believes that such person or an
affiliate of such person is unable to comply with certain
provisions of the Code, such Access Person shall so advise the
President of the Adviser in writing, setting forth with
reasonable specificity the nature of such fiduciary
obligations and the reasons why such Access Person believes
such person is unable to comply with any such provisions. The
President of the Trust may, in his discretion, exempt such
Access Person or an affiliate of such person from any such
provisions, if the President of the Trust shall determine that
the services of such Access Person are valuable to the Trust
and the failure to grant such exemption is likely to cause
such Access Person to be unable to render services to the
Trust. Any Access Person granted an exemption (including, an
exception for an affiliate of such person), pursuant to this
Section VI.I shall, within three business days after engaging
in a purchase or sale of a security held or to be acquired by
a client, furnish the President of the Trust with a written
report concerning such transaction, setting forth the
information specified in Section VII.C hereof.
VI. REPORTING PROCEDURES
A. Except as provided by Section VII.E hereof, every Access
Person shall report to the President of the Adviser the
information described in Sections VII.B and VII.C hereof with
respect to transactions in any security in which such Access
Person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership in the security
(whether or not such security is a security held or to be
acquired by a client); provided, however, that any such report
may contain a statement that the report shall not be construed
as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the security to
which the report relates.
B. Initial Holdings Report. Each Access Person, within ten days
of becoming an Access Person, shall report to the Adviser, the
following information, in the form of Exhibit C hereto:
1. The title, number of shares and principal amount of
each Covered Security in which the Access Person had
any direct or indirect beneficial ownership when the
person became an Access Person;
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2. 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 and Access Person; and
3. The date that the report is submitted by the Access
Person.
C. Quarterly Transactions Report. Each Access Person, not later
than ten days after the end of the calendar quarter in which
the transaction to which the report relates was effected,
shall report the following information, in the form of Exhibit
D hereto:
1. With Respect to Transactions During the Quarter In
Covered Securities:
(a) The date of transaction, the title, the
interest rate and maturity date (if
applicable), the number of shares, and the
principal amount of each Covered Security
involved;
(b) The nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
(c) The price at which the transaction was
effected; and
(d) The name of the broker, dealer or bank with or
through which the transaction was effected.
(e) The date that the report is submitted by the
Access Person.
2. With Respect to New Accounts Established During the
Quarter In Which Any Securities Were Held:
(a) The name of the broker, dealer or bank with
whom the Access Person established the account;
(b) The date the account was established; and
(c) The date that the report is submitted by the
Access Person.
D. Annual Holdings Report. Each Access Persons, no later than 20
calendar days after December 31 of each year, shall report the
following information in the form of Exhibit __ hereto:
1. The title, number of shares and principal amount of
each Covered Security in which the Access Person had
any direct or indirect beneficial interest;
2. 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
3. The date that the report is submitted by the Access
Person.
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In the event that no securities are held as of December 31, the
report should specify that securities were not held as of such
date. This report should include all securities and other
financial property , including book entry shares held at
companies, broker/dealers, investment advisers or other
institutions and physically issued certificates held in a safe
deposit box, at one's home, or in the trust department of a bank
or trust company.
E. Notwithstanding the provisions of Sections VII.A and VII.C
hereof,
1. no person shall be required to make a report with
respect to transactions effected for any account over
which such person does not have any direct or indirect
influence or control;
2. no report is required from an Access Person of an
investment company registered under the ICA if such
investment company is a money market fund or an
investment company that does not invest in Covered
Securities; and
3. no Quarterly Transactions Report is required from an
Access Person of the Trust if the report would
duplicate information contained in broker trade
confirmations or account statements received by the
Adviser with respect to that Access Person, if all of
the information required to be contained in the
Quarterly Transactions Report is contained in such
broker trade confirmations or account statements that
are received within ten days after the end of the
calendar quarter.
VII. REVIEW PROCEDURES
A. The reports submitted by Access Persons pursuant to Section
VII.C hereof shall be reviewed at least quarterly by the
President of the Adviser, or such other persons or committees
as shall be designated by the President of the Adviser, in
order to monitor compliance with this Code of Ethics. The
President shall report all failures to comply with this Code
of Ethics to the Board of Trustees of the Trust.
B. If it is determined by the Adviser or the Board of Trustees of
the Trust that a violation of this Code of Ethics has occurred
and that the person violating this Code of Ethics has
purchased or sold a security at a more advantageous price than
that obtained by the Trust, such person shall be required to
offer to sell to or purchase from the Trust, as the case may
be, such security at the more advantageous price. If this
cannot be consummated, then the Adviser or the Board of
Trustees of the Trust shall take such other course of action
as it may deem appropriate. With respect to any violation of
this Code of Ethics, the Adviser or the Board of Trustees of
the Trust may take any preventive, remedial or other action
which it may deem appropriate. In determining whether or not
there has been, or may be, a conflict of interest between the
Trust and any person subject to this Code of Ethics, the
Adviser or the Board of Trustees of the Trust shall consider
all of the relevant facts and circumstances.
C. At least annually, the Adviser shall furnish to the Board of
Trustees a written report that:
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1. Describes any issues arising under this Code of Ethics
or procedures adopted hereunder, including but not
limited to, any information about material violations
of this Code of Ethics, procedures adopted hereunder,
and sanctions impose in response to such material
violations; and
2. Certifies that the Adviser has adopted procedures
reasonably necessary to prevent Access Persons from
violating this Code of Ethics.
D. The records created and maintained under this Code of Ethics
shall be maintained as follows:
1. A copy of each Code of Ethics for the Adviser in
effect at any time in the last five years must be
maintained in an easily accessible place.
2. A copy of any records of violations of the Code of
Ethics or any action taken as a result of a violation
must be maintained in an easily accessible place for
five years after the end of the fiscal year in which
the violation occurs.
3. All Initial Holdings Reports, Quarterly Transactions
Reports and Annual Holdings Reports from Access
Persons, and all reports to the Trust shall be
maintained for at least five years after the end of
the fiscal year in which the report was made, the
first two years in an easily accessible place.
4. A record of all persons currently or within the past
five years who are or were required to make reports
and persons designated to review the reports required
under this Code of Ethics shall be maintained in an
easily accessible place for at least five years.
5. All approvals of the purchase of securities in an
Initial Public Offering or Limited Offering shall be
maintained for at least five years after the end of
the fiscal year in which the approval is granted.
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Exhibit A
LIST OF ACCESS PERSONS REQUIRED TO REPORT UNDER CODE OF ETHICS
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Exhibit B
INSIDER TRADING PROCEDURES
I. LIABILITY FOR INSIDER TRADING.
The unlawful use of inside information subjects the person engaged in
the unlawful trading and, among them, his/her employer ,to civil liability. The
SEC may impose, for the first offense, civil penalties of $ 1 million or three
times any profits obtained or losses avoided against controlling persons and
$2.5 million for corporations for failing to take proper steps to prevent
insider trading or tipping violations by those who are under their supervision.
The law requires broker-dealers and investment advisers to adopt, maintain and
enforce written insider trading policies and procedures designed to prevent the
misuse of material nonpublic information by its directors, officers and
employees.
Failing to do so can be a predicate for an SEC enforcement action and,
if violations occur, the SEC may seek to recover these new civil penalties from
controlling persons and violators. Violators are also subject to criminal
penalties.
SEC Rule 10b-5 is the principal statutory prohibition against trading
based upon material nonpublic information.
SEC Rule 14e-3 under the 1934 Act, establishes a "disclose or abstain
from trading" proscription that applies to any person possessing material
nonpublic information that relates to a tender offer by another person
(offeror), which information he/she knows or has reason to know originated,
directly or indirectly, from that offeror or the target company.
Racketeer Influenced and Corrupt Organizations Act ("civil RICO"),
permits persons injured by a racketeering activity, as defined by the Act, to
recover treble damages.
II. DEFINITIONS.
A. "Controlling Person(s)" - can be anyone with the power to
influence or control the direction or the management,
policies, or activities of another person, whether or not the
power is exercised.
B. "Employee and Employee-Related Accounts" - shall include the
employee, parents, mother-in-law or father-in-law, husband or
wife, brother and sister, brother-in-law or sister-in-law,
minor children and any other relative or person residing with
the employee or to whose support the employee contributes; it
shall also be considered a "related" account if the employee
has the ability to influence specific trading decisions and/or
has a direct beneficial interest.
C. "Front-Running" - is the trading of securities by proprietary,
employee and employee-related accounts prior to the
dissemination of the firm's research report to the public. The
front-running concept is that the firm has an advantage of
trading on the information contained in the report before the
public has time to digest the information, and make an
informed investment decision.
B-1
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Exhibit B
D. "Insider" - includes directors, officers and employees of a
company, and may also include directors, officer or employees
of a company's subsidiary. A person may become a temporary
Insider if they enter into a special, confidential
relationship with a company in the conduct of its affairs by
virtue of which the person has access to non-public
information developed for the company. Temporary Insiders may
include attorneys, accountant, consultants, and employees of a
company's major customers or a company's material business
partners.
E. "Material Information" - Information is material if a
reasonable investor would consider the information important
in making an investment decision.
F. "Need to Know Rules" - Limit the passing of confidential
information only to those employees with a legitimate reason
for having the information.
G. "Non-public Information" - information shall be deemed
nonpublic if it has not been either effectively communicated
to the market and the market has had time to "absorb" the
information. Information is considered public after it is has
been filed in a report with the SEC, or widely disseminated
either by wire service (such as Dow Jones or Reuters), in one
or more newspapers of general circulation (such as the Wall
Street Journal), or otherwise communicated from the company
involved to its shareholders.
H. "Restricted List" - is a current list of securities in which
proprietary employee, employee-related, and solicited customer
transactions are prohibited or restricted. The restricted list
is usually distributed periodically throughout the
broker-dealer to make employees aware of those securities that
the firm is "restricted" or prohibited from recommending
and/or trading.
I. "Tippee" - A "tippee" is a person who receives a "tip". He/she
is considered an insider and subject to the
disclose-or-refrain prohibition.
III. INSIDER TRADING.
A. Insider Trading includes the following general concepts:
1. trading by an insider while in possession of material
non public information;
2. trading by non-insiders while in possession of material
non public information either improperly obtained by the
non-insider or disclosed to the non-insider by an
insider in violation of the insider's duty to keep such
information confidential; and
3. communicating material non-public information to others.
B. All employees of Dessauer & McIntyre Asset Management Inc.
("DAMCo"), including temporary employees, are prohibited from
engaging in Insider Trading in personal and client accounts.
B-2
<PAGE>
Exhibit B
C. All employees of DAMCo, including temporary employees, shall
notify the President of DAMCo if they learn of or have reason
to believe that any employee of DAMCo has caused or
participated in a transaction that may constitute Insider
Trading.
IV. EFFECTIVE COMPLIANCE MONITORING.
A. Annual Employee Attestation of Understanding Insider Trading
Rules. Annually, each employee will be required to read and
sign the Annual Employee Certification which will acknowledge
that the employee has read and understands the Insider Trading
Policy.
B. Periodic Employee Reminders. On a regular basis, the President
of DAMCo will distribute on periodic memos informing employees
of any changes or updates concerning Insider Trading.
C. Daily Trading Review.
1. On a regular basis, the President of DAMCo will receive
the Commission Run, Trading Ledger, managed accounts
order tickets and confirmations and the Schwab trade
listing. The President of DAMCo will conduct a review on
insider trading utilizing the above items.
2. If proprietary, customer or employee trades appear that
would indicate a possible "leak" of the inside
information, a shift to the Restricted List may be
appropriate while the firm investigates the matter.
3. All employee/related accounts are to be carefully
reviewed for excessive trading and/or large orders as an
indication of insider trading.
4. The President of DAMCo will maintain an exception
listing for those instances whereby follow-up is
necessary to obtain an explanation for an employee/
proprietary account trading a security on the restricted
list or unusual activity.
5. The report will contain the following: name of the
security, the date the investigation commenced, an
identification of the accounts involved and the summary
of the disposition.
D. Coding of Employee, Employee-Related and Proprietary Accounts.
All employee and employee-related accounts will be transferred
to the ____ series. This enables the President of DAMCo to
better monitor their trade activity.
E. Monthly Review of Employee Trade Activity. To reasonably
ensure employee trades do not violate the provisions of the
Securities Exchange Act of 1934 and the Insider Trading and
Securities Fraud Act of 1988, the following procedures for
review of employee accounts is established.
1. Duplicate confirms and statements of all accounts in
which any employee has a beneficial interest or
discretionary authority must be mailed to the Compliance
B-3
<PAGE>
Exhibit B
Department. Arrangements are made for the sending of
duplicates of all monthly statements and trade
confirmations to the Compliance Department.
2. On a monthly basis, samples of employee trades are
selected and compared to institutional accounts of
customers, research reports and the Restricted Lists to
determine if trades warrant further investigation, i.e.
(a) time of employee order
(b) access to client information
(c) historical trading pattern of employee
(d) employee interview
3. After the confirms are reviewed, the date of review is
written on the confirm and then initialed by the
reviewer.
4. Each month, employee statements are selected for review.
The statements are compared to trade data of
institutional customers, research reports and Restricted
List. If further investigation is warranted, the
procedures used in weekly trade sampling are employed.
F. Monitoring Research Recommendations.
1. The President of DAMCo will periodically receive and
review external and internal research reports and
internal research memos for content and appropriateness
(recommendations.) Research department recommendations
should be examined for the appearance of any security on
the Restricted List.
2. The reports will be compared to the prior week's trade
activity to determine if an employee was a recipient of
a "tip."
3. The President of DAMCo will review all activity in the
security for the week prior to and after the
recommendation.
4. Any insider trades within the restricted period will be
immediately canceled and covered in the error account.
Notification will be made and appropriate disciplinary
action will be taken.
G. Enforcement of the foregoing procedures. The foregoing
procedures shall be maintained and enforced by the President.
All Employees are directed and encouraged to consult with the
President concerning the implementation and interpretation of
these procedures.
H. Record keeping Requirements. All records evidencing the
routine monitoring review for Insider Trading will be
maintained in accordance with SEC Rule 17a-4.
B-4
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Exhibit B
Furthermore, all documentation obtained in conducting
investigations of possible insider trading violations will
also be maintained in accordance with 17a-4.
I. Employee Training. The most comprehensive training effort
consists of extensive education about DAMCo policies and
procedures, securities laws during the initial orientation
period, followed by supplemental training, seminars,
memoranda, etc., reinforcement of the policies and procedures
and keeping employees abreast of significant judicial
regulatory and industry developments will provide the employee
with up to date information as well as ensuring employee
awareness.
V. EMPLOYEE CONDUCT.
DAMCo has an obligation to its clients to act in both a prudent and
lawful manner. Employees of DAMCo are prohibited from engaging in any Personal
Securities Transaction which:
A. would result in the buying or selling of securities in
competition with buy or sell orders of, or on behalf of,
clients or operate to the detriment of clients;
B. would be for the purpose of, or result in, the buying or
selling of securities to take advantage of recent or imminent
trades of clients;
C. would take place before a sufficient period of time has
elapsed after an open-market purchase or sale of securities
by, or on behalf of any client, for the effects of such
purchase or sale on the market price to dissipate; or
D. would result in the employee taking advantage of inside
information to the detriment of the public customer.
Employee Information
Please Print:
Name:___________________________
Date:___________________________
B-5
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Directions:
THE DOCUMENT ENTITLED "DAMCo'S INSIDER TRADING PROCEDURES" WILL BE PERIODICALLY
RE-DISTRIBUTED FOR YOUR REVIEW AND RE-AFFIRMATION. IF THIS IS YOUR INITIAL
ACKNOWLEDGMENT OF AND AGREEMENT TO COMPLY WITH THIS POLICY, DATED FEBRUARY 2000,
COMPLETE THE EMPLOYEE INFORMATION SECTION AND SECTION I. IF YOU HAVE PREVIOUSLY
SIGNED AN "ACKNOWLEDGMENT OF POLICIES AND AGREEMENT TO COMPLY" WITH THE POLICIES
AND PROCEDURES IN THESE DOCUMENTS, COMPLETE THE EMPLOYEE INFORMATION SECTION AND
SECTIONS I AND II. RETURN THE COMPLETED FORM TO THE COMPLIANCE OFFICER.
NAME:____________________________________________
(Please print)
Section I: Acknowledgment of policies and Agreement to Comply
I have read the policies and procedures set forth in the memorandum entitled
"Insider Trading Procedures" dated February 2000. I understand these policies
and procedures and I agree to comply with those policies and procedures during
the course of my employment with Dessauer & McIntyre Asset Management, or its
affiliates.
____________________________
Date
____________________________
Signature
Section II: Affirmation of prior Compliance
Since the time of my last affirmation, I have complied with all policy
provisions contained in the Insider Trading Procedures.
_____________________________
Date
_____________________________
Signature
