Exhibit (p)(2): Code of Ethics for de Leon Capital Management, L.L.C.
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DE LEON CAPITAL MANAGEMENT, LLC
ADVISOR'S CODE OF ETHICS
Dated August 16, 2000
Pursuant to Rule 17j-1 under the Investment Company Act of 1940 ("Act"), the
following Code of Ethics is adopted by de Leon Capital Management, LLC, a
registered investment adviser and a Virginia limited liability corporation. De
Leon Capital Management, LLC provides investment advisory services for the de
Leon Internet 100 Fund (the "Fund"), a series of de Leon Funds Trust.
This Code of Ethics is intended to ensure that all acts, practices and courses
of business engaged in by access persons (as defined) of de Leon Capital
Management, LLC reflect high standards and comply with the requirements of
Section 17(j) of the Act and Rule 17j-1 thereunder.
I. Definitions
A. "Access Person" means any director, trustee, officer, general partner,
managing member, or advisory person (as defined) of de Leon Capital
Management, LLC.
B. "Advisory Person" means (1) any employee of de Leon Capital
Management, LLC (or of any company in a control relationship to de
Leon Capital Management, LLC) 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 (as defined
in this Code of Ethics) 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 de Leon
Capital Management, LLC who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale
of a security by the Fund.
C. "Beneficial Ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) in determining whether a person
subject to the provisions of Section 16 of the Securities Exchange Act
of 1934 and the rules and regulations thereunder.
D. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act. Section 2(a)(9) provides that "control" generally
means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
result of an official position with such company.
E. A "security held or to be acquired" means: (1) any security which,
within the most recent 7 days: (a) is or has been held by the Fund; or
(b) is being considered by de Leon Capital Management, LLC or the Fund
for purchase by the Fund; and (2) any option to purchase or sell, and
any security convertible into or exchangeable for, a security
described in clause (1) above.
F. An "initial public offering" means an offering of securities
registered under the Securities Act of 1933, 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.
G. "Investment personnel" means: (1) any employee of de Leon Capital
Management, LLC (or any company in a control relationship to de Leon
Capital Management, LLC) 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 de Leon Capital Management, LLC or the
Fund and who obtains information concerning recommendations made to
the Fund regarding the purchase or sale of securities by the Fund.
H. A "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) or pursuant to Rule 504, Rule 505, or Rule 506 under
the Securities Act of 1933.
I. "Portfolio manager" means an employee of de Leon Capital Management,
LLC who is authorized to make investment decisions on behalf of the
Fund.
J. "Purchase or sale" for purposes of this Code of Ethics and each
Appendix thereto includes, among other things, the writing of an
option to purchase or sell a security.
K. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include direct obligations of the
Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-term
debt instruments, including repurchase agreements, and shares of
registered open-end investment companies, or such other securities as
may be excepted under the provisions of Rule 17j-1.
II. Legal Requirement
Rule 17j-l under the Investment Company Act of 1940 makes it unlawful for de
Leon Capital Management, LLC, as investment adviser of the Fund, or any
affiliated person of de Leon Capital Management, LLC in connection with the
purchase and sale by such person of a security held or to be acquired by the
Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make to the Fund any untrue statement of a material fact or 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;
(3) To engage in any act, practice, or course of business which operates
or would operate as a fraud or deceit upon the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
To assure compliance with these restrictions, de Leon Capital Management, LLC
adopts and agrees to be governed by the provisions contained in this Code of
Ethics.
III. General Principles
De Leon Capital Management, LLC and each of its Access Persons shall be governed
by the following principles:
A. No Access Person shall engage in any act, practice or course of
conduct that would violate the provisions of Rule 17j-l set forth
above;
B. The interests of the Fund and its shareholders are paramount and come
before the interests of any Access Person or employee;
C. Personal investing activities of all Access Persons shall be conducted
in a manner that shall avoid actual or potential conflicts of interest
with the Fund and its shareholders; and
D. Access Persons shall not use such positions, or any investment
opportunities presented by virtue of such positions, to the detriment
of the Fund and its shareholders.
IV. Substantive Restrictions
A. Blackout Periods. The price paid or received by the Fund for any
investment should not be affected by a buying or selling interest on
the part of an Access Person, or otherwise result in an inappropriate
advantage to the Access Person. To that end:
(1) No Access Person shall enter an order for the purchase or sale of
an investment which the Fund is, or is considering, purchasing or
selling until the day after the Fund's transactions in that
investment have been completed, unless the Compliance Officer
determines that it is clear that, in view of the nature of the
investment and the market for such investment, the order of the
Access Person will not affect the price paid or received by the
Fund; and
(2) A portfolio manager of de Leon Capital Management, LLC may not
buy or sell a security within seven days before or after the Fund
trades in the security.
B. Initial Public Offerings and Limited Offerings.
(1) No investment personnel may acquire any direct or indirect
Beneficial Ownership in any securities in an initial public
offering or in a limited offering unless the Compliance Officer
of de Leon Capital Management, LLC has authorized the transaction
in advance.
(2) Investment personnel who have been authorized to acquire
securities in a limited offering must disclose his or her
interest if he or she is involved in the Fund's consideration of
an investment in such issuer. Any decision to acquire such
issuer's securities on behalf of the Fund shall be subject to
review by investment personnel with no personal interest in the
issuer.
C. Acceptance of Gifts. Investment personnel must not accept gifts in
excess of limits contained in the Conduct Rules of the National
Association of Securities Dealers, Inc. from any entity doing business
with or on behalf of de Leon Capital Management, LLC or the Fund.
D. Service on Boards. Investment personnel shall not serve on the boards
of directors of publicly traded companies, or in any similar capacity,
absent the prior approval of such service by the Compliance Officer
following the receipt of a written request for such approval. In the
event such a request is approved, procedures shall be developed to
avoid potential conflicts of interest.
E. Disgorgement. Any profits derived from securities transactions in
violation of paragraphs IV.A-IV.B, above, shall be forfeited and paid
to the Fund for the benefit of its or their shareholders. Gifts
accepted in violation of paragraph IV.C shall be forfeited, if
practicable, and/or dealt with in any manner determined appropriate
and in the best interests of the Fund and its shareholders.
F. Exemptions. The restrictions of this Section IV shall not apply to the
following transactions unless the Compliance Officer determines that
such transactions violate the provisions of Section III of this Code
of Ethics:
(1) Reinvestments of dividends pursuant to a plan;
(2) Transactions in instruments which are excepted from the
definition of security in this Code of Ethics.
(3) Transactions in which direct or indirect Beneficial Ownership is
not acquired or disposed of;
(4) Transactions in accounts as to which an Access Person has no
investment control;
(5) Transactions that are non-volitional on the part of the Access
Person.
V. Procedures
A. Reporting. In order to provide de Leon Capital Management, LLC with
information to enable it to determine with reasonable assurance
whether the provisions of Rule 17j-1 are being observed by its Access
Persons, each Access Person of de Leon Capital Management, LLC shall
submit the following reports in the forms attached hereto as Exhibits
A-D to de Leon Capital Management, LLC's Compliance Officer (or his or
her delegate) showing all transactions in securities in which the
person has, or by reason of such transaction acquires, any direct or
indirect Beneficial Ownership:
(1) Initial Holding Report. Exhibit A shall initially be filed no
later than 10 days after that person becomes an Access Person.
(2) Quarterly Reports. Exhibits B and C shall be filed no later than
10 days after the end of each calendar quarter, but transactions
over which such person had no direct or indirect influence or
control need not be reported. No such periodic report needs to be
made if the report would duplicate information required to be
recorded under Rule 204-2(a)(12) or Rule 204-2(a)(13) under the
Investment Advisers Act of 1940, or information contained in
broker trade confirmations or account statements received by de
Leon Capital Management, LLC no later than 10 days after the end
of each calendar quarter and/or information contained in de Leon
Capital Management, LLC's records.
(3) Annual Report. Exhibit D must be submitted by each Access Person
within 30 days after the end of each calendar year.
B. Duplicate Copies. Each Access Person, with respect to each brokerage
account in which such Access Person has any beneficial interest shall
arrange that the broker shall mail directly to the Compliance Officer
at the same time they are mailed or furnished to such Access Person
(a) duplicate copies of the broker's trade confirmation covering each
transaction in securities in such account and (b) copies of periodic
statements with respect to the account.
C. Notification; Annual Certification. The Compliance Officer (or his or
her delegate) shall notify each Access Person of de Leon Capital
Management, LLC who may be required to make reports pursuant to this
Code of Ethics, that such person is subject to reporting requirements
and shall deliver a copy of this Code of Ethics to each such person.
The Compliance Officer shall annually obtain written assurances in the
form attached hereto from each Access Person that he or she is aware
of his or her obligations under this Code of Ethics and has complied
with the Code of Ethics and with its reporting requirements.
VI. Review and Enforcement
A. Review.
(1) The Compliance Officer (or his or her delegate) shall from time
to time review the reported personal securities transactions of
Access Persons for compliance with the requirements of this Code
of Ethics.
(2) If the Compliance Officer (or his or her delegate) determines
that a violation of this Code of Ethics may have occurred, before
making a final determination that a material violation has been
committed by an individual, the Compliance Officer (or his or her
delegate) may give such person an opportunity to supply
additional information regarding the matter in question.
B. Enforcement.
(1) If the Compliance Officer (or his or her delegate) determines
that a material violation of this Code of Ethics has occurred, he
or she shall promptly report the violation to the Trustees of the
Fund. The Trustees, with the exception of any person whose
transaction is under consideration, shall take action as they
consider appropriate, including imposition of any sanctions they
consider appropriate.
(2) No person shall participate in a determination of whether he or
she has committed a violation of this Code of Ethics or in the
imposition of any sanction against himself or herself.
C. Reporting to Board. No less frequently than annually, de Leon Capital
Management, LLC shall furnish to the Fund's Board of Trustees, and the
Board must consider, a written report that:
(1) Describes any issues arising under the Code of Ethics or
procedures since the last report to the Board of Trustees,
including, but not limited to, information about material
violations of the Code of Ethics or procedures and sanctions
imposed in response to the material violations; and
(2) Certifies that de Leon Capital Management, LLC has adopted
procedures reasonably necessary to prevent Access Persons from
violating this Code of Ethics.
VII. Records
De Leon Capital Management, LLC shall maintain records in the manner and to the
extent set forth below, which records shall be available for appropriate
examination by representatives of the Securities and Exchange Commission.
o A copy of this Code of Ethics and any other code of ethics which is, or at
any time within the past five years has been, in effect shall be preserved
in an easily accessible place;
o A record of any violation of this Code of Ethics and of any action taken as
a result of such violation shall be preserved in an easily accessible place
for a period of not less than five years following the end of the fiscal
year in which the violation occurs;
o A copy of each report made pursuant to this Code of Ethics by an Access
Person, including any information provided in lieu of reports, shall be
preserved by de Leon Capital Management, LLC for a period of not less than
five years from the end of the fiscal year in which it is made, the first
two years in an easily accessible place;
o A list of all persons who are, or within the past five years have been,
required to make reports pursuant to this Code of Ethics, or who are or
were responsible for reviewing these reports, shall be maintained in an
easily accessible place;
o A copy of each report to the Board shall be preserved by de Leon Capital
Management, LLC for at least five years after the end of the fiscal year in
which it is made, the first two years in an easily accessible place; and
o De Leon Capital Management, LLC shall preserve a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of securities under Section IV.B of this Code of
Ethics for at least five years after the end of the fiscal year in which
the approval is granted, the first two years in an easily accessible place.
VIII. Confidentiality
All reports of securities transactions and any other information filed with de
Leon Capital Management, LLC pursuant to this Code of Ethics, shall be treated
as confidential, except as regards appropriate examinations by representatives
of the Securities and Exchange Commission.
<PAGE>
ADOPTION CERTIFICATION OF
de Leon Capital Management, LLC
The undersigned hereby certifies on behalf of de Leon Capital
Management, LLC to the Board of Trustees of de Leon Funds Trust pursuant to Rule
17j-1(c)(2)(B) under the Investment Company Act of 1940, and pursuant to Section
VI.C(2) of de Leon Capital Management, LLC's Code of Ethics, that de Leon
Capital Management, LLC has adopted procedures that are reasonably necessary to
prevent Access Persons from violating the Code of Ethics.
Date: ______________________ ____________________________________
Compliance Officer
<PAGE>
ANNUAL CERTIFICATE OF COMPLIANCE
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Name (please print)
This is to certify that the attached Code of Ethics was distributed to
me on __________, 2000. I have read and understand the Code of Ethics, and I
understand my obligations thereunder. I certify that I have complied with the
Code of Ethics during the course of my association with de Leon Capital
Management, LLC, and that I will continue to do so in the future. Moreover, I
agree to promptly report to the Compliance Officer any violation or possible
violation of the Code of Ethics of which I become aware.
I understand that violation of the Code of Ethics will be grounds for
disciplinary action or dismissal and may also be a violation of federal and/or
state securities laws.
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Signature
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Date
<PAGE>
EXHIBIT A
de Leon Capital Management, LLC
Initial Holdings Report
To the Compliance Officer:
As of the below date, I held the following position in these securities
in which I may be deemed to have a direct or indirect Beneficial Ownership, and
which are required to be reported pursuant to de Leon Capital Management, LLC's
Code of Ethics:
<TABLE>
<S> <C> <C> <C>
Broker/Dealer or
No. of Principal Bank Where
Security Shares Amount Account is Held
------------------------------------ ------------ -------------- ------------------------------------------------
</TABLE>
This report (i) excludes holdings with respect to which I had no direct
or indirect influence or control, and (ii) is not an admission that I have or
had any direct or indirect Beneficial Ownership in the securities listed above.
Date: ____________________________ Signature: _________________________
<PAGE>
C-1
EXHIBIT B
de Leon Capital Management, LLC
Securities Transaction Report
For the Calendar Quarter Ended _________________
To the Compliance Officer:
During the quarter referred to above, the following transactions were
effected in securities in which I may be deemed to have had, or by reason of
such transaction acquired, direct or indirect Beneficial Ownership, and which
are required to be reported pursuant to de Leon Capital Management, LLC's Code
of Ethics:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------- ----------------- ------------ ------------------ ----------------- ------------ ----------------
Security Date of No. of Principal Nature of Price Broker/
Dealer or
Transaction Bank Through
(including interest and maturity Amount of (Purchase, Whom
date, if any) Transaction Shares Transaction Sale, Other) Effected
---------------------------------- ----------------- ------------ ------------------ ----------------- ------------ ----------------
---------------------------------- ----------------- ------------ ------------------ ----------------- ------------ ----------------
</TABLE>
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, and (ii) is not an admission that I
have or had any direct or indirect Beneficial Ownership in the securities listed
above.
Date: ____________________________ Signature: _________________________
<PAGE>
EXHIBIT C
de Leon Capital Management, LLC
Account Establishment Report
For the Calendar Quarter Ended _________________
To the Compliance Officer:
During the quarter referred to above, the following accounts were
established for securities in which I may be deemed to have a direct or indirect
Beneficial Ownership, and is required to be reported pursuant to de Leon Capital
Management, LLC's Code of Ethics:
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Broker/Dealer or Date
Bank Where
Account Was Account Was
Established Established
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Date: ____________________________ Signature: _________________________
<PAGE>
EXHIBIT D
de Leon Capital Management, LLC
Annual Holdings Report
To the Compliance Officer:
As of December 31, ___, I held the following positions in securities in
which I may be deemed to have a direct or indirect Beneficial Ownership, and
which are required to be reported pursuant to de Leon Capital Management, LLC's
Code of Ethics:
<TABLE>
<S> <C> <C> <C>
------------------------------------ ------------ -------------- ------------------------------------------------
Security No. of Principal Broker/Dealer or
Bank Where
Shares Amount Account is Held
------------------------------------ ------------ -------------- ------------------------------------------------
</TABLE>
This report is not an admission that I have or had any direct or indirect
Beneficial Ownership in the securities listed above.
Date: ____________________________ Signature: _________________________
