EXHIBIT (p)(2)
CODE OF ETHICS
FOR
DREYFUS FOUNDERS FUNDS, INC. AND
FOUNDERS ASSET MANAGEMENT LLC
(AS AMENDED DECEMBER 10, 1999,
TO BE EFFECTIVE JANUARY 1, 2000)
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TABLE OF CONTENTS
PAGE
INTRODUCTION...................................................................1
ENTITIES SUBJECT TO THIS CODE OF ETHICS...................................1
STATEMENT OF GENERAL PRINCIPLES...........................................1
SECTION 1: DEFINITIONS........................................................2
ACCESS PERSON.............................................................3
AFFILIATE.................................................................3
AFFILIATED PRINCIPAL UNDERWRITER..........................................3
APPROVAL OFFICER..........................................................3
BENEFICIAL OWNERSHIP......................................................4
CLIENT....................................................................4
CONTROL...................................................................4
DE MINIMIS TRANSACTION....................................................4
FOUNDERS EMPLOYEE.........................................................4
INDEPENDENT DIRECTOR......................................................4
FUND AFFILIATED OFFICER...................................................4
LEGAL DEPARTMENT..........................................................4
PREMIER CODE OF ETHICS....................................................5
PURCHASE OR SALE OF A SECURITY............................................5
RESTRICTED SECURITIES.....................................................5
SECURITY..................................................................5
A SECURITY IS BEING CONSIDERED FOR PURCHASE OR SALE.......................5
A SECURITY IS BEING PURCHASED OR SOLD.....................................5
SECTION 2: GENERAL POLICY.....................................................5
SECTION 3: PROHIBITED PURCHASES AND SALES.....................................6
GENERAL PROHIBITION.......................................................6
INITIAL PUBLIC OFFERING...................................................7
SECTION 4: PRE-TRANSACTION APPROVAL...........................................7
SECTION 5: SHORT-TERM TRADING PROFITS.........................................8
SECTION 6: POTENTIAL CONFLICTS OF INTEREST....................................8
GIFTS.....................................................................8
TRIPS.....................................................................9
PREFERENTIAL TREATMENT....................................................9
INVESTMENT ADVICE TO OTHERS...............................................9
OUTSIDE AFFILIATIONS......................................................9
SECTION 7: INVESTMENT CLUBS...................................................9
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES................10
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS..........................10
SECTION 10: REPORTING REQUIREMENTS...........................................11
A. INITIAL REPORT BY NEW ACCESS PERSON..................................11
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES............11
C. ANNUAL REPORTS BY ACCESS PERSONS.....................................13
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT........13
E. WRITTEN CERTIFICATION................................................13
F. LEGAL DEPARTMENT REPORT..............................................14
SECTION 11: EXEMPTIONS.......................................................15
A. EXEMPT TRANSACTIONS..................................................15
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS..........15
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY................................16
SECTION 13: PERSONAL RECORD RETENTION........................................17
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION.........................17
SECTION 15: VIOLATIONS.......................................................17
SECTION 16: REVIEW...........................................................19
APPENDIX 1: LIST OF ACCESS PERSONS AND APPROVAL OFFICERS.....................21
APPENDIX 2: PORTION OF RULE 16A-1 OF SECURITIES EXCHANGE ACT OF 1934
AND PORTIONS OF SECTION 2.(A) OF THE INVESTMENT
COMPANY ACT OF 1940............................................22
APPENDIX 3: POLICY STATEMENT ON INSIDER TRADING..............................27
ADDENDUM......................................................................32
EXHIBIT A: Request for Approval of Security Transaction in Personal Account
EXHIBIT B: Notification of Intention to Engage in De Minimis Transaction
EXHIBIT C: Approval Form for Trips Where a Portion of the Cost is Paid by a
Third Party
EXHIBIT D: Approval Form for Outside Employment or Business Activity
EXHIBIT E: Notification of Possible Security Transaction by Investment Club
or Similar Entity
EXHIBIT F: Initial Report Form
EXHIBIT G: Report of Occurrence of Securities Transactions and Initiation of
Brokerage Accounts Within Last Calendar Quarter
EXHIBIT H: Report of Securities Ownership/Report of Establishment of
Brokerage Accounts
EXHIBIT I: Compliance Certification
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INTRODUCTION
ENTITIES SUBJECT TO THIS CODE OF ETHICS.
Dreyfus Founders Funds, Inc. (which, collectively with each of its
series portfolios, is hereinafter referred to as the "Fund") is an open-end,
diversified, externally managed investment company registered under the
Investment Company Act of 1940 (the "Act").
Founders Asset Management LLC ("Founders") serves as the external
investment manager of the Fund pursuant to an investment advisory agreement with
each series portfolio ("Portfolio" or collectively, "Portfolios") of the Fund.
Founders is an investment adviser registered under the Investment Advisers Act
of 1940 (the "Advisers Act").
Premier Mutual Fund Services, Inc. currently serves as the principal
underwriter of the Fund ("Premier"). For the purposes of this Code of Ethics,
Premier is an affiliated principal underwriter since officers of Premier also
serve as officers of the Fund. Premier, which has adopted its own code of
ethics, is subject only to certain reporting and certification provisions of
this Code of Ethics.
STATEMENT OF GENERAL PRINCIPLES.
The directors ("directors"), officers, employees, and other access
persons of the Fund ("Access Persons," as defined in Section 1 of this Code of
Ethics) and the directors, officers, and employees of Founders ("Founders
Employees," as hereinafter more specifically defined) are cognizant of and
committed to the performance of their fiduciary duties under general corporate
law and as more specifically articulated in the Act and the Advisers Act,
including, without limitation, proscriptions against overreaching, self-dealing,
insider trading, and conflicts of interests. Moreover, with respect to certain
legal matters and ethical questions arising in the course of their deliberations
and actions, directors, other Access Persons, and Founders Employees regularly
seek the advice of counsel.
This Code of Ethics is directed to the particular objective of
compliance with the provisions of Rule 17j-1 under the Act as such provisions
are applicable to Access Persons, of compliance with various provisions of the
Advisers Act as such provisions are applicable to Founders Employees, and to the
prevention of engagement in any personal securities transactions by Access
Persons and Founders Employees which might conflict with or adversely affect the
interests and welfare of the Fund and its shareholders and, with respect to
Founders Employees, of other clients of Founders ("Clients," as defined in
Section 1 of this Code of Ethics).
The general principles and procedures which guide the activities of
all Access Persons and Founders Employees are augmented by this Code of Ethics,
which is based upon the fundamental recognition that Access Persons have a
fiduciary relationship with the Fund and its shareholders and Founders Employees
may have such a relationship with other Clients, which requires the maintenance
by all such individuals of the highest standards of integrity and conduct.
Access Persons must at all times recognize, respect, and act in the
best interests of the shareholders of the Fund, and Founders Employees must so
act with respect to the Fund and other Clients. In furtherance of their
fiduciary responsibilities, Access Persons and Founders Employees must ensure
that they do not take any inappropriate advantage of their positions as
directors, officers, employees, or agents of the Fund and of Founders. Access
Persons and Founders Employees must avoid any situations which might compromise
their exercise of fully independent judgment in the interests of or on behalf of
the Fund and its shareholders and other Clients, as applicable.
Professional and legal responsibilities to the Fund and its
shareholders and to other Clients dictate that not only conflicts of interests,
but the appearance of conflicts of interests, be avoided. Although compliance by
Access Persons and Founders Employees with the provisions of this Code of Ethics
is mandatory, codes of ethics cannot define all conflict and potential conflict
situations. Therefore, in addition to assuring that one's conduct comports with
this Code of Ethics, Access Persons and Founders Employees must avoid engaging
in any conduct that may create a conflict of interest or the potential for a
conflict of interest. Access Persons and Founders Employees must adhere not only
to the letter but also to the spirit of the Code of Ethics and the principles
articulated herein.
All activities of an Access Person and a Founders Employee must be
governed by the high fiduciary standard of scrupulous avoidance of serving one's
own personal interests ahead of the interests of the Fund and other Clients, as
applicable. In one's business activities, one must act in all respects in the
best interests of the Fund and its shareholders and of other Clients.
SECTION 1: DEFINITIONS
For the purpose of this Code of Ethics, the following general
definitions shall apply:
1. ACCESS PERSON shall mean:
a. Any director or officer of the Fund or of Founders; and
b. Any employee of the Fund or of Founders 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 a Client, or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and
c. Any natural person in a control relationship to the Fund or to
Founders who obtains information concerning recommendations made to
the Fund or a Client with regard to the purchase or sale of a
security.
Access Person shall not include an employee of the Fund or of Founders
who receives no information about current recommendations or trading or an
employee who obtains information in a single instance, infrequently or
inadvertently.
2. AFFILIATE. One is an "Affiliate" of another person or company if he
or she:
a. is a partner, director, officer, or employee of such other person
or company; or
b. directly or indirectly owns, controls or holds with power to vote
5% or more of the outstanding voting securities of such company;
or
(iii) directly or indirectly controls such company.
3. AFFILIATED PRINCIPAL UNDERWRITER is a principal underwriter which
is affiliated with the Fund or its investment adviser, or is a principal
underwriter, any officer, director, or general partner of which is an officer,
director, or general partner of the Fund or an investment adviser of the Fund.
At present, Premier serves as the principal underwriter of the Fund. Premier is
an affiliated principal underwriter, since officers of the principal underwriter
also serve as officers of the Fund.
4. APPROVAL OFFICER means the person(s) designated by the president of
Founders to provide certain written approvals required by this Code of Ethics.
The Approval Officer(s) is identified on Appendix 1.
5. BENEFICIAL OWNERSHIP shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person has or acquires.
A copy of the relevant portions of Rule 16a-1, which defines beneficial
ownership in accordance with Section 16, is included on Appendix 2.
6. CLIENT means an investment advisory client of Founders other than
the Fund.
7. CONTROL shall have the meaning set forth in Section 2(a)(9) of the
Act. A copy of Section 2(a)(9) of the Act is included on Appendix 2.
8. DE MINIMIS TRANSACTION means a securities transaction for which
pre-transaction approval is not required, as more fully described and defined in
Section 4.2 of this Code of Ethics.
9. FOUNDERS EMPLOYEE means an officer, director, and/or employee of
Founders.
10. INDEPENDENT DIRECTOR means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
Act and who, in connection with his or her normal and regular responsibilities,
does not make or participate in decisions with respect to the purchase or sale
of a security by the Fund or make any recommendations with respect to such
purchases or sales. An independent director is further defined as one who does
not normally obtain information regarding the purchase or sale of a security by
the Fund within fifteen days before or after the purchase or sale. A copy of
Section 2(a)(19) of the Act is included on Appendix 2.
11. FUND AFFILIATED OFFICER means an officer of the Fund who is not a
director, officer, or employee of Founders or any affiliate thereof (other than
the officer's being affiliated with Founders as an officer of the Fund) and who,
in connection with his or her normal and regular responsibilities, does not make
or participate in decisions with respect to the purchase or sale of a security
by the Fund or make any recommendations with respect to such purchases or sales.
A Fund Affiliated Officer is further defined as one who does not normally obtain
information regarding the purchase or sale of a security by the Fund within
fifteen days before or after the purchase or sale. A Fund Affiliated Officer may
be an "interested person" of the Fund within the meaning of Section 2(a)(19) of
the Act.
12. LEGAL DEPARTMENT means the Legal Department of Founders of which
the general counsel of Founders has supervision. The general counsel shall
designate in writing the individual responsible for reviewing Reports pursuant
to the provisions of Section 10.D. and shall maintain this written designation.
13. PREMIER CODE OF ETHICS means the code of ethics promulgated in
accordance with Rule 17j-1 of the Act or equivalent document of Premier.
14. PURCHASE OR SALE OF A SECURITY shall include the writing of an
option to purchase or sell the security.
15. RESTRICTED SECURITIES shall include securities which are not
readily marketable and securities which cannot be resold or distributed to the
public or to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"), without an effective
registration statement under the 1933 Act. A security which is not readily
marketable is one which, for whatever reason, cannot be disposed of within seven
days in the ordinary course of business at approximately the amount at which the
security is reasonably valued.
16. SECURITY shall have the meaning set forth in Section 2(a)(36) of
the Act, and shall also include related securities, such as rights and
convertible instruments, and financial instruments such as options, futures,
commodities, and derivative instruments which are related to, but are not the
same as, securities that may be held or acquired by the Fund or a Client, and
which may not be defined as securities in Section 2(a)(36) of the Act. The term
security shall include restricted securities as defined herein. Security shall
not include: government securities as defined in Section 2(a)(16) of the Act;
high quality short-term debt instruments including, but not limited to, bankers'
acceptances, bank certificates of deposit, commercial paper, and repurchase
agreements; and shares of registered open-end investment companies. Copies of
Sections 2(a)(36) and 2(a)(16) of the Act are included on Appendix 2.
17. 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 seriously
considers making such a recommendation.
18. A SECURITY IS BEING PURCHASED OR SOLD when, within the most recent
seven-day period, a transaction in such security has been effected for the Fund
or a Client, or when a transaction in such security is pending or in progress
for the Fund or a Client.
SECTION 2: GENERAL POLICY
Directors and other Access Persons are specifically reminded that it
is unlawful for any of them, in connection with the purchase or sale, directly
or indirectly, 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 any untrue statement of a material fact to the Fund 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.
For purposes of this Section 2, a security held or to be acquired by
the Fund means any security as defined herein which, within the most recent
15-day period, is or has been held by the Fund or is being or has been
considered by the Fund or by Founders for purchase by the Fund.
These proscriptions apply to Founders Employees not only with respect
to the Fund but also with respect to Clients.
The provisions of this Code of Ethics have been instituted, in part,
in an effort to ensure that directors, other Access Persons, and Founders
Employees do not, inadvertently or otherwise, violate the proscriptions outlined
above.
SECTION 3: PROHIBITED PURCHASES AND SALES
GENERAL PROHIBITION.
Except as provided in Section 11 of this Code of Ethics, no Access
Person or Founders Employee shall purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which to his or her actual knowledge
at the time of such purchase or sale:
1. Is being considered for purchase or sale by the Fund or, as to
Founders Employees, a Client; or
2. Is being purchased or sold by the Fund or, as to Founders
Employees, a Client.
INITIAL PUBLIC OFFERING.
Except as provided in Section 11 of this Code of Ethics, no Access
Person and no Founders Employee shall purchase, directly or indirectly, any
securities which are offered in an initial public offering.
SECTION 4: PRE-TRANSACTION APPROVAL
1. Every Access Person and Founders Employee shall obtain written
approval of an Approval Officer prior to effecting any transactions in
securities for his or her direct or indirect personal gain or in which he or she
may have any beneficial interest. Such prior written approval shall also be
required of any such transactions effected by, for, or on behalf of any member
of the Access Person's and Founders Employee's household. Written approval shall
be obtained by use of the form attached hereto as Exhibit A. Such approval shall
be effective for three trading days. The legal department of Founders (the
"Legal Department") shall retain the original copies of all completed approval
forms.
2. The pre-transaction approval requirements of this Section 4 shall
not apply to "de minimis" transactions, defined as any purchase or sale of a
security by an Access Person or Founders Employee who is not also buying or
selling the same security for the Fund or a Client, and which:
a. Is issued by a company with a market capitalization of at
least $1 billion and has an average daily trading volume of at least
100,000 shares; AND
b. Involves no more than 100 shares or units, regardless of the
dollar amount of the transaction, or any number of shares or units
having a value of no more than $5,000.
If, during any two consecutive calendar quarters, aggregate purchase
or sale transactions by the Access Person or Founders Employee in shares or
units of the same issuer exceed 300 shares or units or a cumulative value of
$15,000, whichever is the last to occur, subsequent transactions in the issuer's
securities shall no longer be regarded as "de minimis" transactions. Within
three business days of the transaction which causes a limit of 300 shares or
units or $15,000 to be exceeded, the Access Person or Founders Employee shall
notify the Legal Department of the occurrence of the transaction. Transactions
in the applicable issuer's securities during the next 12 months will be subject
to the pre-clearance provisions of this Section 4.
Any Access Person or Founders Employee who desires to engage in a de
minimis transaction (subject to the limits set forth in the preceding paragraph)
shall complete the form attached hereto as Exhibit B prior to each such
transaction, and return that form to the Legal Department.
3. Any Access Person or Founders Employee who has obtained written
approval to purchase a restricted security and who has purchased and continues
to maintain the security in reliance upon such approval must disclose the
investment to his or her Approval Officer in any instance in which the Access
Person or Founders Employee is involved in consideration by the Fund or a Client
of an investment in the issuer of the restricted security. In any such
circumstance, the decision of a Fund or a Client to purchase an investment in
the issuer of the restricted security must be reviewed independently by one or
more investment personnel of Founders, selected by the Approval Officer, who
have no personal interest in the issuer, who must execute written approval of
the investment in the issuer prior to the investment's being made.
SECTION 5: SHORT-TERM TRADING PROFITS
Every Access Person or Founders Employee who obtains a profit from a
purchase and sale, or a sale and purchase, of the same or equivalent securities
in which the individual has a beneficial ownership interest within sixty (60)
calendar days shall disgorge such profit, with the profit to be allocated in
whole or in part among Portfolios of the Fund as determined equitably by the
Fund's board of directors (any portion of the profit not so allocated shall be
allocated among Clients as determined by Founders' board of directors);
provided, however, that such disgorgement of short-term trading profits shall
not apply to "de minimis" transactions as defined in Section 4 of this Code of
Ethics or to securities transactions of Access Persons or of Founders Employees
under circumstances, determined in the sole discretion of the board of directors
of the Fund, in which disgorgement of profits would be inequitable.
SECTION 6: POTENTIAL CONFLICTS OF INTEREST
GIFTS.
No Access Person or Founders Employee shall give, seek or accept any
gift, favor, or other item of value in excess of $100 to or from any person or
entity having a direct or indirect business and/or professional relationship
with the Fund or Founders or any affiliated entities of the Fund or Founders. No
Access Person or Founders Employee shall participate individually or on behalf
of Founders, a Client or the Fund, directly or indirectly, in any transaction
involving the payment or receipt of any bribe or kickback, or the payment or
receipt of any other amount with an understanding that part or all of such
amount will be refunded or delivered to a third party in violation of any law
applicable to the transaction.
TRIPS.
Any trip to be taken by an Access Person or a Founders Employee must
be approved in advance, by use of the form attached hereto as Exhibit C, if any
portion of trip related expenses is to be paid by a broker, by a company whose
securities are publicly traded, or by any other person or entity with which
Founders may have a current or anticipated business relationship.
PREFERENTIAL TREATMENT.
No Access Person or Founders Employee shall give, seek or accept any
preferential treatment in dealings with any broker, dealer, portfolio company,
financial institution, supplier or any other organization with which Founders
transacts business or anticipates transacting business.
INVESTMENT ADVICE TO OTHERS.
Access Persons and Founders Employees are strictly prohibited from
acting jointly or individually in an investment advisory capacity for an account
other than a Fund or Client.
OUTSIDE AFFILIATIONS.
Access Persons and Founders Employees are prohibited from receiving
direct or indirect compensation of more than minimal value as a result of
services provided to any outside entity or from otherwise engaging in any
outside for-profit business activities without first receiving the written
approval of the Approval Officer on the form attached hereto as Exhibit D. The
Legal Department shall retain copies of all such approvals.
SECTION 7: INVESTMENT CLUBS
Notwithstanding any other provisions of this Code of Ethics to the
contrary, family members, such as husband, wife, and other dependent relatives
of an Access Person or a Founders Employee may participate in investment clubs
or similar investment groups if, and only if, all of the following conditions
are present and are adhered to:
a. The Access Person or Founders Employee does not provide
investment advice to the family member or to other club participants
with respect to any security which is being considered for purchase or
sale by the Fund or a Client or is being purchased or sold by the Fund
or a Client.
b. The family member immediately notifies the Access Person or
Founders Employee when he or she is aware that the investment club has
purchased or sold or is considering the purchase or sale of a
security.
c. Upon being notified by the family member in accordance with
item (b), the Access Person or Founders Employee completes and signs
Exhibit E and submits Exhibit E to the Approval Officer for
acknowledgment. The Legal Department shall retain copies of all such
forms.
SECTION 8: SERVICE AS A DIRECTOR OF PUBLICLY TRADED COMPANIES
No Access Person or Founders Employee shall be permitted to serve on
the board of directors of a publicly traded company unless prior written
authorization has first been obtained from the president of Founders. Approval
of such service by the president shall be based upon a determination that the
service is consistent with the interests of the Fund and its shareholders and
the Clients. In instances in which authorization to serve is granted, the Access
Person or Founders Employee serving as a director shall refrain from any direct
or indirect involvement in the consideration for purchase or sale and in the
purchase or sale by the Fund or a Client (i) of any securities of the company on
the board of directors of which the Access Person or the Founders Employee
serves as a director, or (ii) of any securities of an affiliate of such company.
SECTION 9: BROKER ACCOUNTS AND BROKER CONFIRMATIONS
1. Each Access Person and Founders Employee is required to provide the
Legal Department with the name, address, and telephone number of any brokerage
firm with which the Access Person or Founders Employee establishes or maintains
a brokerage account or in which such Access Person or Founders Employee or any
member of such Access Person's or Founders Employee's household has any direct
or indirect beneficial ownership, and the account number and registered owner
designation of any such account. Such information as to existing brokerage
accounts shall be provided upon filing of the initial written certification
required of an Access Person and Founders Employee by use of the form attached
hereto as Exhibit F. Such information with respect to the establishment of a new
brokerage account not previously reported to the Legal Department shall be
provided by the Access Person or Founders Employee to the Legal Department
within ten days of establishment of the account.
2. All Access Persons and Founders Employees are required to direct
any broker effecting a transaction in any security in which such Access Person
or Founders Employee or any member of such Access Person's or Founders
Employee's household has any direct or indirect beneficial ownership to provide
the Legal Department with duplicate copies of the applicable trade confirmations
and periodic account statements.
SECTION 10: REPORTING REQUIREMENTS
A. INITIAL REPORT BY NEW ACCESS PERSON.
Within ten (10) days of the date upon which an individual becomes an
Access Person, the new Access Person shall provide the Legal Department with an
initial report containing a list of all securities in which such Access Person
or any member of such Access Person's household has any direct or indirect
beneficial ownership. The list shall include the title and number of shares or
interests of each security owned, each security's ticker symbol, if any, the
date(s) of purchase of the security, and the price(s) paid for the security. The
initial report shall also include all other information required by Rule 17j-1
of the Act. The initial report shall be made by use of a form similar to that
attached hereto as Exhibit F.
B. PERIODIC REPORTS BY ACCESS PERSONS AND FOUNDERS EMPLOYEES.
1. Except as is otherwise provided in Section 10.B.2., every Access
Person and Founders Employee shall report to the Legal Department the
information described in paragraph 3 of this Section 10B with respect to
transactions in any security in which such Access Person or Founders Employee or
any member of such Access Person's or Founders Employee's household has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in the security. Such report shall be made by use of a form similar to that
attached hereto as Exhibit G not later than ten days after the end of the
calendar quarter in which the transaction occurred.
2. An Independent Director shall be exempt from the reporting
requirements imposed by Section 10.B.1. and need only report a transaction in a
security if such Director, at the time of that transaction knew or, in the
ordinary course of fulfilling his official duties as a director of the Fund
should have known, that during the 15-day period immediately preceding or after
the date of the transaction by the Director, such security was purchased or sold
by the Fund or was being considered by the Fund or Founders for purchase or sale
by the Fund. Any such transaction should be reported to the Fund's counsel not
later than ten (10) days after the end of the calendar quarter in which the
transaction occurred.
3. At the end of each calendar quarter, the Legal Department will
provide each Access Person and Founders Employee who effected securities
transactions during the quarter with a form similar to that attached as Exhibit
G containing (i) the name of any broker, dealer, or other institution with which
an account was established by the individual during the quarter and the date the
account was established, and (ii) a list of all securities transactions for
which the individual has submitted reports on Exhibits A and B during the
quarter and/or for which broker trade confirmations of the individual's
securities transactions have been received by the Legal Department during the
quarter. The Access Person or Founders Employee is responsible for verifying the
accuracy and completeness of the information on the report provided by the Legal
Department and for adding (i) the identity of any broker, dealer, or other
institution with which an account was established by the individual during the
proceeding quarter which is not included on the report, and (ii) any transaction
which was effected during the preceding quarter which is not included on the
report. All reports shall contain the following information:
a. The title of each security involved in the transaction, each
security's ticker symbol, if any, the amount of each security
purchased or sold, the date of the transaction, and the price at which
the transaction was executed;
b. The nature of the transaction (i.e., purchase, sale, or any
other type of acquisition or disposition);
c. If the transaction was effected through a brokerage firm, a
broker's confirmation of such transaction (unless the Legal Department
already has received a copy of the confirmation);
d. If no brokerage firm was involved in the transaction, an
explanation of the circumstances surrounding the transaction and the
manner in which the transaction was executed; and
e. The name of the broker, dealer, or other institution with
which an account was established and the date the account was
established.
4. Such reports and, if applicable, accompanying confirmations shall
be retained by the Fund's counsel or the Legal Department for a period of at
least six years.
5. 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 or she has
any direct or indirect beneficial ownership in the security to which the report
relates.
C. ANNUAL REPORTS BY ACCESS PERSONS.
On or before February 1 of each calendar year, each Access Person
shall provide to the Legal Department a report ("Report") which shall include a
list of all securities in which, as of the preceding December 31, the Access
Person had any direct or indirect beneficial ownership interest. The list shall
contain the title and number of shares or interests of each security owned, the
date(s) of purchase of the security, and the price(s) paid for the security. The
Report shall also include all additional information required by Rule 17j-1 of
the Act. The Report shall be provided by use of a form similar to that attached
hereto as Exhibit H.
D. MONITORING OF PERIODIC AND ANNUAL REPORTS BY LEGAL DEPARTMENT.
1. Upon receipt by the Legal Department of each periodic report
provided pursuant to Sections 10.A. and 10.B., the Legal Department will review
the report to determine whether the Access Person or Founders Employee may have
engaged in possible violations of this Code of Ethics, paying particular
attention to trading patterns and activities of the Access Person or Founders
Employee which may identify potential infractions of this Code of Ethics.
2. Upon receipt by the Legal Department of each annual report provided
pursuant to Section 10.C., the Legal Department shall prepare a list of all
securities shown on the reports and shall compare the list with records of
securities purchased or sold by the Fund and by Clients during the prior twelve
months. The Legal Department shall determine, based upon such comparison and
upon any further review of any Access Person's securities transactions deemed
necessary, whether any violations of this Code of Ethics may have occurred.
E. WRITTEN CERTIFICATION.
On a basis no less frequently than annually, each Independent Director
of the Fund shall report to the Fund's counsel, and each other Access Person or
Founders Employee shall be required to provide to the Legal Department, a
written certification that the Access Person or Founders Employee has read and
understands this Code of Ethics and recognizes that he or she is subject to
certain terms and provisions thereof. Each Access Person and Founders Employee
shall further be required annually to certify in writing that he or she has
complied with the requirements of this Code of Ethics and has disclosed or
reported all personal securities transactions required to be disclosed or
reported pursuant to the requirements of this Code of Ethics. Attached hereto as
Exhibit I is the form to be used by Access Persons, other than Independent
Directors, and by Founders Employees to comply with this certification.
F. LEGAL DEPARTMENT REPORT.
On a basis no less frequently than annually, the Legal Department
shall prepare and, as to Premier, arrange to receive from an appropriate
representative of Premier, a written report ("Report") to the board of directors
of the Fund or to a standing committee of the board designated by the
Independent Directors to receive such Reports, which shall provide the following
information:
a. A summary of existing procedures concerning investments in
securities by all Access Persons and Founders Employees who are
required to report their securities transactions to the Legal
Department and any changes in such procedures which were implemented
in the past six (6) months;
b. Any issues arising under this Code of Ethics, the Premier Code
of Ethics, or under the code of ethics of any investment adviser or
affiliated principal underwriter of the Fund, including, but not
limited to, material or recurring violations of this Code of Ethics,
the Premier Code of Ethics, or any other code of ethics of any
investment adviser or affiliated principal underwriter of the Fund
committed by any access person or Founders Employee during the period
from the most recent prior Report;
c. Any recommended changes in existing restrictions or procedures
to this Code of Ethics or to the Premier Code of Ethics based upon (i)
the experience of the Fund, Founders, or Premier under their
respective Codes of Ethics, (ii) the experience of any other
investment adviser or affiliated principal underwriter of the Fund
which may have a separate code of ethics, (iii) evolving industry
practices, or (iv) developments in applicable laws or regulations; and
d. A certification that the Fund, Founders, and Premier, and any
other investment adviser or affiliated principal underwriter of the
Fund, have adopted such procedures as are reasonably necessary to
prevent any access person or Founders' Employee from violating any
codes of ethics applicable to the entity.
SECTION 11: EXEMPTIONS
A. EXEMPT TRANSACTIONS.
The prohibitions of Section 3 of this Code of Ethics and the
pre-transaction, short-term trading, and reporting requirements of Sections 4,
5, and 10B of this Code of Ethics shall not apply to:
1. Purchases or sales of securities effected in any account over which
an Access Person or Founders Employee has no direct or indirect influence or
control;
2. Purchases or sales which are non-volitional on the part of an
Access Person or a Founders Employee, including transactions in accounts in
which complete investment discretion has been delegated to a person or entity
not an Access Person or a Founders Employee or a member of such Access Person's
or Founders Employee's household;
3. Purchases which are part of an automatic dividend reinvestment
plan;
4. 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;
5. Purchases or sales of securities other than restricted securities
which receive the prior approval of the president of Founders or such other
senior officer as any such president may designate to grant such approval in his
absence, because they are only remotely potentially harmful to the Fund or a
Client since they would be very unlikely to affect a highly institutional
market, or because they clearly are not related economically to the securities
to be purchased, sold, or held by the Fund or a Client.
B. INDEPENDENT DIRECTOR AND FUND AFFILIATED OFFICER EXEMPTIONS.
Notwithstanding any language in this Code of Ethics to the contrary,
the initial public offering prohibition of Section 3, the provisions of Section
4.1, the provisions of Section 5, the provisions of Section 6, the provisions of
Section 7, the provisions of Section 8, and the provisions of Section 9 of this
Code of Ethics shall not apply to Independent Directors or to Fund Affiliated
Officers. The provisions of Section 10.A. and the provisions of Section 10.C. of
this Code of Ethics shall not apply to Independent Directors.
--------------------------------------------------------------------------------
Code of Ethics 15
<PAGE>
SECTION 12: DISSEMINATION, CORPORATE RECORD RETENTION,
DISCLOSURE, AND CONFIDENTIALITY
1. Founders shall provide a copy of this Code of Ethics to all Access
Persons and to all Founders Employees and shall inform such individuals of their
duties and responsibilities imposed by this Code of Ethics, including their
reporting responsibilities. Founders shall obtain a written certification from
each Founders Employee stating that he/she has read, understands, and will
comply with this Code of Ethics by use of the form attached hereto as Exhibit F.
2. The Fund and Founders shall maintain for a six-year period in an
easily accessible place the following records:
a. A copy of this Code of Ethics;
b. A record of any violation of this Code of Ethics and of any
action taken as a result of such violation;
c. A copy of each report made by an Access Person or Founders
Employee pursuant to this Code of Ethics;
d. A list of all persons who are, or within the past six years
have been, required to make reports pursuant to this Code of Ethics.
Founders shall arrange for a list of all current Access Persons to be
attached to this Code of Ethics as Appendix 1 and to be amended when
necessary to add or delete Access Persons; and
e. A list of Approval Officers. Founders shall arrange for a list
of all current Approval Officers to be included on Appendix 1 and to
be amended when necessary to add or delete Approval Officers.
3. The prospectuses and/or the statements of additional information of
the Fund shall provide disclosure with respect to the general policies and
procedures applicable to Access Persons by this Code of Ethics, including
specific disclosure with regard to the extent to which Access Persons are
permitted to engage in personal securities transactions. Such disclosure shall
further include a brief description of the procedures initiated by the Fund to
address conflicts of interests occurring as a result of violations of this Code
of Ethics, and shall include the manner in which a Fund investor may obtain a
copy of the Code of Ethics, including the availability of the Code of Ethics
from the public files of the Securities and Exchange Commission. Legal counsel
for Founders and for the Fund are to review the disclosure for adequacy and are
further directed to attach a copy of the Code of Ethics, the Premier Code of
Ethics, and any other codes of ethics of the Fund's investment advisers and
affiliated principal underwriters as exhibits to the Fund's registration
statement.
4. The Legal Department, Approval Officers, and other individuals who
may receive (i) reports of securities transactions and/or securities holdings of
Access Persons and (ii) other information with respect to Access Persons' and
other Founders Employees' compliance with or violation of any provisions of this
Code of Ethics shall receive and maintain the information in confidence. Such
information shall only be disclosed to those persons or entities who have either
a need or a legal obligation to receive such information or have the legal
authority to be provided with the information. Persons and entities to whom such
information may appropriately be disclosed include, but are not necessarily
limited to, the directors of the Fund, the president of Founders, compliance,
accounting, and legal personnel of the Fund and of Founders, Approval Officers,
state and federal regulatory agencies, and appropriate representatives of the
National Association of Securities Dealers, Inc.
SECTION 13: PERSONAL RECORD RETENTION
Each Access Person and Founders Employee is encouraged to retain in
his or her personal files for a period of at least six years broker's
confirmations, monthly statements, or other appropriate information covering all
personal securities transactions, and all transactions in securities effected
by, for, or on behalf of any member of the Access Person's and Founders
Employee's household, showing the amount of each security purchased or sold, the
date of the transaction, the price at which it was executed, and the name and
address of the executing broker or dealer, if any.
SECTION 14: MATERIAL INSIDE (NON-PUBLIC) INFORMATION
It is unlawful under the Securities Exchange Act of 1934 and SEC Rule
10b-5 thereunder for any person to trade or recommend trading in securities on
the basis of material, inside (non-public) information. Founders has adopted a
Policy Statement On Insider Trading, a copy of which is included as Appendix 3
and is incorporated herein by this reference. By acknowledging that they have
read, understand and will comply with this Code of Ethics, Access Persons and
Founders Employees are also acknowledging that they have read, understand and
will comply with the attached Policy Statement on Insider Trading.
SECTION 15: VIOLATIONS
1. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
or employee of the Fund shall advise the president of Founders or the Fund's
legal counsel of the matter. The person to whom the violation or apparent
violation is made known shall thereupon report the matter to the Fund's board of
directors. The board shall determine whether a violation has occurred and, if
so, will impose or, where applicable, recommend such sanctions, if any, as it
deems appropriate, including verbal or written warnings, a letter of censure,
suspension, termination of employment, or other sanctions. Prior to the final
determination by the board of directors, Founders shall provide such
investigation of a reported violation and shall make such recommendations to the
board with respect thereto as Founders and/or the board shall deem advisable.
2. Any Access Person or Founders Employee who becomes aware of a
violation or apparent violation of this Code of Ethics by an officer, director,
employee, or other access person of Founders who is not also an officer,
director, or employee of the Fund shall advise the president, the Legal
Department or Founders' legal counsel of the matter. The person to whom the
violation or apparent violation is made known shall thereupon report the matter
to Founders' president or, if the violation or apparent violation involves
Founders' president, Founders' chairman of the board of directors. Founders'
president or chairman of the board, as appropriate, in consultation with the
Legal Department (if not involved with the violation or apparent violation),
shall determine whether a violation has occurred and, if so, will impose such
sanctions, if any, as he or she may deem appropriate, including verbal or
written warnings, a letter of censure, suspension, termination of employment, or
other sanctions.
3. In addition to any other sanctions which may be imposed upon an
Access Person or a Founders Employee who has violated this Code of Ethics, and
particularly in circumstances in which the violation involves the sale or
purchase of a security, the Access Person or Founders Employee having engaged in
the violation may be required either to unwind the purchase or sale transaction
or, if that is impractical, disgorge all profits from the transaction. Any such
profits are to be allocated in whole or in part among Portfolios of the Fund and
Clients as determined equitably by the Fund's board of directors, if the
sanction is imposed by the Fund's board, and by Founders' president or chairman
of its board of directors, as appropriate, if the sanction is imposed by
Founders.
4. The Legal Department shall notify the Fund's board of directors, or
a standing committee of the board designated by the Independent Directors, of
violations of this Code of Ethics committed by an officer, director, employee,
or other access person of Founders who is not also an officer or director of the
Fund and of the sanctions, if any, which have been imposed by Founders upon the
person having committed the violation. Such a report will be provided at the
next regularly scheduled meeting of the Fund's board of directors following the
determination of the occurrence of the violation.
The Fund's board of directors will review the report and other
presentations concerning the violation and the sanctions imposed with respect
thereto, and may either:
a. Take no further action; or
b. Recommend reconsideration of the determination that a
violation has occurred, the sanctions imposed with respect thereto,
and/or of the allocation of any disgorgement, accompanied by specific
suggestions for change in the actions taken by the chairman of the
board or the president of Founders as the board of directors may deem
appropriate.
5. Upon receipt of a recommendation for reconsideration from the
Fund's board of directors in accordance with item 4.b. above, the chairman of
the board or the president of Founders, as applicable, will consider the
directors' recommendations and will take such final action as he or she deems
appropriate under the circumstances. A report of the action taken will be
provided at the next regularly scheduled meeting of the Fund's board of
directors.
SECTION 16: REVIEW
1. The board of directors of the Fund, including a majority of the
Fund's independent directors, shall approve this Code of Ethics, the Premier
Code of Ethics, and the code of ethics of any other investment adviser and
affiliated principal underwriter of the Fund, and any material changes to such
codes of ethics.
2. Approval of codes of ethics and any material changes thereto shall
be based upon a determination that the codes contain provisions reasonably
necessary to prevent access persons from engaging in conduct prohibited by Rule
17j-1 under the Act.
3. Prior to approving a code of ethics, the directors of the Fund must
receive a certification from the Fund and each Fund's investment adviser and
affiliated principal underwriter that each entity has adopted procedures
reasonably necessary to prevent access persons of the respective entity from
violating the entity's code of ethics.
4. Approval by the Fund's directors of the code of ethics of a Fund's
investment adviser or affiliated principal underwriter must occur prior to the
initial retention of services of the investment adviser or affiliated principal
underwriter.1 Approval of material changes to a code of ethics must occur no
later than six months after adoption of the material change.
5. The general counsel of Founders is directed to advise the Fund's
board of directors at their next regularly scheduled meeting of any material
amendments to the code of ethics of any investment adviser or affiliated
principal underwriter of the Fund.
APPROVED AND AMENDED to be effective as of January 1, 2000, by vote of
a majority of the directors of the Fund, including a majority of the Independent
Directors, and by vote of the board of managers of Founders.
--------
1 Since the Fund has heretofore retained the services of its investment adviser
and affiliated principal underwriter, this requirement will be satisfied by the
approval by the Fund's directors of the codes of ethics of Founders and Premier
by September 1, 2000.
<PAGE>
APPENDIX 1
TO
CODE OF ETHICS
LIST OF ACCESS PERSONS AND APPROVAL OFFICERS
[Please contact Founders' Legal Department to obtain the current list of
Access Persons and Approval Officers. This list can also be found on the
Legal Department section of FNet, Founders' intranet site.]
<PAGE>
APPENDIX 2
TO
CODE OF ETHICS
Reg. ss. 240.16a-1.
(a) The term "beneficial owner" shall have the following applications:
(2) ... the term "beneficial owner" shall mean any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect pecuniary interest
in the equity securities, subject to the following:
(i) The term "pecuniary interest" in any class of equity
securities shall mean the opportunity, directly or indirectly, to
profit or share in any profit derived from a transaction in the
subject securities.
(ii) The term "indirect pecuniary interest" in any class of
equity securities shall include, but not be limited to:
(A) securities held by members of a person's immediate
family sharing the same household; provided, however, that the
presumption of such beneficial ownership may be rebutted; see
also ss. 240.16a-1(a)(4); [Amended in Release No. 34-29131 (P.
26,086A), effective May 1, 1991, 56 F.R. 19925.]
(B) a general partner's proportionate interest in the
portfolio securities held by a general or limited partnership.
The general partner's proportionate interest, as evidenced by the
partnership agreement in effect at the time of the transaction
and the partnership's most recent financial statements, shall be
the greater of:
(1) the general partner's share of the
partnership's profits, including profits attributed to any
limited partnership interests held by the general partner and any
other interests in profits that arise from the purchase and sale
of the partnership's portfolio securities; or
(2) the general partner's share of the partnership
capital account, including the share attributable to any limited
partnership interest held by the general partner.
(C) a performance-related fee, other than an
asset-based fee, received by any broker, dealer, bank, insurance
company, investment company, investment adviser, investment
manager, trustee or person or entity performing a similar
function; provided, however, that no pecuniary interest shall be
present where:
(1) the performance-related fee, regardless of
when payable, is calculated based upon net capital gains and/or
net capital appreciation generated from the portfolio or from the
fiduciary's overall performance over a period of one year or
more; and
(2) equity securities of the issuer do not account
for more than ten percent of the market value of the portfolio. A
right to a nonperformance-related fee alone shall not represent a
pecuniary interest in the securities;
(D) A person's right to dividends that is separated or
separable from the underlying securities. Otherwise, a right to
dividends alone shall not represent a pecuniary interest in the
securities;
(E) A person's interest in securities held by a trust,
as specified in ss. 240.16a-8(b); and
(F) A person's right to acquire equity securities
through the exercise or conversion of any derivative security,
whether or not presently exercisable.
(iii) A shareholder shall not be deemed to have a pecuniary
interest in the portfolio securities held by a corporation or
similar entity in which the person owns securities if the
shareholder is not a controlling shareholder of the entity and
does not have or share investment control over the entity's
portfolio.
(e) The term "immediate family" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
and shall include adoptive relationships.
<PAGE>
GENERAL DEFINITIONS
Sec. 2.(a) When used in this title, unless the context other requires --
[Control]
(9) "Control" 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.
[Government Security]
(16) "Government security" means any security issued or guaranteed as
to principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.
[Interested Person]
(19) "Interested person" of another person means --
(A) when used with respect to an investment company --
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural person who
is an affiliated person of such company,
(iii) any interested person of any investment adviser of or
principal underwriter for such company,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of
such company has acted as legal counsel for such company,
(v) any broker or dealer registered under the Securities Exchange
Act of 1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had, at any
time since the beginning of the last two completed fiscal years of
such company, a material business or professional relationship with
such company or with the principal executive officer of such company
or with any other investment company having the same investment
adviser or principal underwriter or with the principal executive
officer of such other investment company:
Provided, That no person shall be deemed to be an interested person of an
investment company solely by reason of (aa) his being a member of its board of
directors or advisory board or an owner of its securities, or (bb) his
membership in the immediate family of any person specified in clause (aa) of
this proviso; and
(B) when used with respect to an investment adviser of or principal
underwriter for any investment company --
(i) any affiliated person of such investment adviser or principal
underwriter,
(ii) any member of the immediate family of any natural person who
is an affiliated person of such investment adviser or principal
underwriter,
(iii) any person who knowingly has any direct or indirect
beneficial interest in, or who is designated as trustee, executor, or
guardian of any legal interest in, any security issued either by such
investment adviser or principal underwriter or by a controlling person
of such investment adviser or principal underwriter,
(iv) any person or partner or employee of any person who at any
time since the beginning of the last two completed fiscal years of
such investment company has acted as legal counsel for such investment
adviser or principal underwriter,
(v) any broker or dealer registered under the Securities Exchange
Act of 1934 or any affiliated person of such a broker or dealer, and
(vi) any natural person whom the Commission by order shall have
determined to be an interested person by reason of having had at any
time since the beginning of the last two completed fiscal years of
such investment company a material business or professional
relationship with such investment adviser or principal underwriter or
with the principal executive officer or any controlling person of such
investment adviser or principal underwriter.
For the purposes of this paragraph (19), "member of the immediate family" means
any parent, spouse of a parent, child, spouse of a child, spouse, brother or
sister, and includes step and adoptive relationships. The Commission may modify
or revoke any order issued under clause (vi) of subparagraph (A) or (B) of this
paragraph whenever it finds that such order is no longer consistent with the
facts. No order issued pursuant to clause (vi) of subparagraph (A) or (B) of
this paragraph shall become effective until at least sixty days after the entry
thereof, and no such order shall affect the status of any person for the
purposes of this title or for any purpose for any period prior to the effective
date of such order.
[Security]
(36) "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.
<PAGE>
APPENDIX 3
TO
CODE OF ETHICS
FOUNDERS ASSET MANAGEMENT LLC
POLICY STATEMENT ON INSIDER TRADING
INTRODUCTION
Founders Asset Management LLC ("Founders") forbids any officer,
director or employee from trading, either personally or on behalf of others
(such as mutual funds or private accounts managed by Founders), on material
nonpublic information or communicating material nonpublic information to others
in violation of the law. This conduct is frequently referred to as "insider
trading." Any questions regarding this policy should be referred to Founders'
General Counsel (the "Reviewing Officer").
A. WHAT IS "INSIDER TRADING"?
"Insider trading" refers generally to buying or selling a security, in
breach of a fiduciary duty or other relationship of trust and confidence, while
in possession of material, nonpublic information about the security. Insider
trading violations may also include "tipping" such information, securities
trading by the person "tipped" and securities trading by those who
misappropriate such information. Examples of insider trading cases that have
been brought by the SEC are cases against: corporate officers, directors, and
employees who traded the corporation's securities after learning of significant,
confidential corporate developments; friends, business associates, family
members, and other "tippees" of such officers, directors, and employees, who
traded the securities after receiving such information; employees of law,
banking, brokerage and printing firms who were given such information in order
to provide services to the corporation whose securities they traded; government
employees who learned of such information because of their employment by the
government; and other persons who misappropriated, and took advantage of,
confidential information from their employers.
Because insider trading undermines investor confidence in the fairness
and integrity of the securities markets, it is imperative that all employees and
officers understand and comply with this legal requirement. The penalties for
insider trading are severe and the SEC considers insider trading violations as
one of its enforcement priorities.
B. WHAT IS "MATERIAL INFORMATION"?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant expansion or curtailment of operations, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
major litigation, liquidation problems, and extraordinary management
development. Individuals should exercise caution when questioning the
materiality of the information provided and should contact the Reviewing Officer
for clarification of its materiality.
C. WHAT IS NONPUBLIC INFORMATION?
Nonpublic information, often referred to as "insider information," is
information that has not been communicated to the marketplace. One must be able
to point to some fact to show that the information is generally public. For
example, information found in a report filed with the SEC, or appearing in DOW
JONES, REUTERS ECONOMIC SERVICE, THE WALL STREET JOURNAL, or other publications
of general circulation would be considered public.
D. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material nonpublic
information are severe, both for individuals involved in such unlawful conduct
and their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
o civil injunction
o treble (i.e., triple) damages
o disgorgement of profits
o jail sentence
o fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
Any violation of this policy statement can be expected to result in
serious sanctions by Founders, including termination of employment.
E. RELEVANT TOPICS
CONTACT WITH PUBLIC COMPANIES
For Founders, contact with public companies represents an important
part of its research efforts. Investment decisions may be made by Founders on
the basis of conclusions formed through such contact and analysis of publicly
available information. Difficult legal issues arise, however, when directors,
officers or employees of Founders become aware of material nonpublic
information. This could happen, for example, if a company's chief financial
officer prematurely discloses quarterly results to an analyst or an investor
relations representative makes a selective disclosure of adverse news to a
handful of investors. In order to protect Founders and yourself, you must
contact the Reviewing Officer if you believe you have received material,
nonpublic information.
TENDER OFFERS
Tender offers represent a particular concern in the law of insider
trading. Tender offer activity often produces extraordinary gyrations in the
price of the target company's securities. Trading during this time period is
also more likely to attract regulatory attention (and produces a
disproportionate percentage of insider trading cases). Officers, directors, and
employees of Founders should exercise extreme caution any time they become aware
of nonpublic information relating to a tender offer.
F. PROCEDURES TO PREVENT INSIDER TRADING
The following procedures have been established to aid the officers,
directors, and employees of Founders to avoid insider trading, and to aid
Founders in preventing, detecting, and imposing sanctions against insider
trading. Every officer, director, and employee of Founders must follow these
procedures or risk serious sanctions including dismissal, substantial personal
liability, and criminal penalties. If you have any questions about these
procedures you should consult the Reviewing Officer.
IDENTIFYING INSIDE INFORMATION
Before trading for yourself or others, including mutual funds and
privately managed accounts managed by Founders, in the securities of a company
about which you have potential inside information, ask yourself the following
questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decision? Is
this information that would substantially affect the market price of
the security if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in REUTERS, THE WALL STREET Journal, or
other publications of general circulation?
If, after consideration of the above, you believe that the information
may be material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you MUST take the following steps:
i. Do NOT purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
Founders.
ii. Report the matter immediately to the Reviewing Officer. If the
Reviewing Officer is not available and an immediate determination is
necessary, such judgment may be made by the President of Founders or
its outside legal counsel.
iii. Do not communicate the information inside or outside Founders,
other than to the designated Reviewing Officer, the President of
Founders, or Founders' outside legal counsel.
iv. After the Reviewing Officer has reviewed the issue, you will be
instructed to continue the prohibitions against trading or
communicating the information received, or you will be allowed to
trade and communicate the information.
G. RESTRICTING ACCESS TO MATERIAL NONPUBLIC INFORMATION
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within Founders,
with the exception of Founders' Reviewing Officer, the President of Founders, or
Founders' outside legal counsel. In addition, care should be taken so that such
information is handled in a manner which Founders employees and others cannot
access. For example, physical documents containing such information should be
placed in a locked file cabinet and computer files should be password protected
and restricted from access.
H. PERSONAL SECURITIES TRANSACTIONS
All Founders employees are required to obtain pre-clearance for
securities transactions in which they have a beneficial interest. Please refer
to the Code of Ethics or contact Founders' Legal Department for details
regarding how to obtain prior approval. By requesting approval to engage in a
personal securities transaction, an individual is also certifying that they are
not acting on inside information.
<PAGE>
MEMORANDUM
[LOGO]Founders (r)
TO: All Employees
FROM: Ken Christoffersen
DATE: June 2, 1998
RE: Addendum to the Code of Ethics
--------------------------------------------------------------------------------
At its May 28 meeting, the Board of Managers of Founders Asset Management LLC
adopted the attached "Restrictions on Transactions in Mellon Securities" as an
addendum to the Founders Code of Ethics. Please read this addendum and keep it
with your copy of the Code of Ethics.
The addendum contains a number of provisions relating to trading in the
securities of Mellon Bank Corporation that are required because Mellon is a
public company. These restrictions apply to all employees of Mellon and its
subsidiaries (referred to as "associates" in the document), other than outside
consultants or temporary employees. These restrictions apply to all Founders
employees effective immediately.
If you have any questions concerning the attached addendum, please feel free to
contact Allen French or me.
<PAGE>
ADDENDUM TO THE CODE OF ETHICS
MAY 28, 1998
RESTRICTIONS ON TRANSACTIONS IN MELLON SECURITIES
Associates who engage in transactions involving Mellon securities should be
aware of their unique responsibilities with respect to such transactions arising
from the employment relationship and should be sensitive to even the appearance
of impropriety.
The following restrictions apply to all transactions in Mellon's publicly traded
securities occurring in the associate's own account and in all other accounts
over which the associate could be expected to exercise influence or control (see
provisions under "Beneficial Ownership" below for a more complete discussion of
the accounts to which these restrictions apply). These restrictions are to be
followed in addition to any restrictions that apply to particular officers or
directors (such as restrictions under Section 16 of the Securities Exchange Act
of 1934).
o Short Sales--Short sales of Mellon securities by associates are prohibited.
o Sales Within 60 Days of Purchase--Sales of Mellon securities within 60 days
of acquisition arE prohibited. For purposes of the 60-day holding period,
securities will be deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the other, or if the value
of one is expressly dependent on the value of the other (e.g., derivative
securities).
In cases of extreme hardship, associates (other than senior management) may
obtain permission to dispose of Mellon securities acquired within 60 days of the
proposed transaction, provided the transaction is precleared with the Manager of
Corporate Compliance and any profits earned are disgorged in accordance with
procedures established by senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period restriction in the event
of severe market disruption.
o Margin Transactions--Purchases on margin of Mellon's publicly traded
securities by associates iS prohibited. Margining Mellon securities in
connection with a cashless exercise of an employee stock option through the
Human Resources Department is exempt from this restriction. Further, Mellon
securities may be used to collateralize loans or the acquisition of
securities other than those issued by Mellon.
o Option Transactions--Option transactions involving Mellon's publicly traded
securities are prohibited. Transactions under Mellon's Long-Term Incentive
Plan or other associate option plans are exempt from this restriction.
o Major Mellon Events--Associates who have knowledge of major Mellon events
that have not yet beeN announced are prohibited from buying and selling
Mellon's publicly traded securities before such public announcements, even
if the associate believes the event does not constitute material nonpublic
information.
o Mellon Blackout Period--Associates are prohibited from buying or selling
Mellon's publicly tradeD securities during a blackout period, which begins
the 16th day of the last month of each calendar quarter and ends three
business days after Mellon publicly announces the financial results for
that quarter. In cases of extreme hardship, associates (other than senior
management) may request permission from the Manager of Corporate Compliance
to dispose of Mellon securities during the blackout period.
BENEFICIAL OWNERSHIP--The provisions discussed above apply to transactions in
the associate's own name and to all other accounts over which the associate
could be expected to exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom substantial
support is contributed;
o accounts of any other member of the associate's household (e.g., a relative
living in the same home);
o trust accounts for which the associate acts as trustee or otherwise
exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by the associate;
o arrangements similar to trust accounts that are established for bona fide
financial purposes and benefit the associate; and
o any other account for which the associate is the beneficial owner.
<PAGE>
EXHIBIT A
REQUEST FOR APPROVAL OF SECURITY TRANSACTION
IN PERSONAL ACCOUNT
NAME: __________________________________________________________________________
DATE: ___________________________________
BUY: ___________________ SELL: ___________________
AMOUNT OR SHARES: ____________________________ PRICE: _________________________
NAME OF SECURITY: ______________________________________________________________
BROKER: _______________________________________
*Address: _____________________________________
_____________________________________
*Telephone: ___________________________________
*Account No.: ___________________ *Registered Owner: __________________________
THIS IS A NEW ISSUE: _______ YES ________ NO
THIS IS A SECONDARY: _______ YES ________ NO
I have not acted on inside information.
I have verified that the security described above is not being considered for
purchase or sale by a Client or Fund and is not being purchased or sold by a
Client or Fund. I have further verified that the security has not been purchased
or sold by a Client or Fund at any time during the SEVEN days prior to the date
set forth above.
EMPLOYEE SIGNATURE: ___________________________________________________________
CONFIRMATION THAT SECURITY HAS NOT BEEN PURCHASED OR SOLD WITHIN PRIOR SEVEN
DAYS:
_____________________________________
_____________________________________ Date: ________________________________
Trading Department
APPROVED BY: ________________________** Date: ________________________________
Approval Officer
* Complete if not previously provided.
** The Approval Officer Line must be signed by Tom Arrington, Rob Ammann, Scott
Chapman, or Doug Loeffler. Transactions must be approved by an Approval Officer
other than the employee effecting the transaction. No other Founders personnel
are authorized to approve this transaction.
<PAGE>
EXHIBIT B
NOTIFICATION OF INTENTION TO ENGAGE IN
DE MINIMIS TRANSACTION
NAME: __________________________________________________________________________
DATE: __________________________________________________________________________
BUY: __________ SELL: __________
AMOUNT OR SHARES: ________________________________ (cannot exceed the greater of
100 shares or $5,000 per transaction)
NAME OF SECURITY: ______________________________________________________________
BROKER: _____________________________________________
*Address: ___________________________________________
___________________________________________
*Telephone: _________________________________________
*Account No.: _________________ *Registered Owner: _________________________
I have not acted on inside information.
I am not involved in buying or selling this security for any Founders mutual
fund or private account client.
I have attached information confirming that this security is issued by a company
with a market capitalization of at least $1 billion and has an average daily
trading volume of at least 100,000 shares.
EMPLOYEE SIGNATURE: ____________________________________________________________
ACKNOWLEDGED:
_________________________________ Date: ____________________________________
Legal Department
*Complete if not previously provided.
<PAGE>
EXHIBIT C
APPROVAL FORM FOR TRIPS
WHERE A PORTION OF THE COST IS PAID BY A THIRD PARTY
Name of Founders Employee: _____________________________________________________
Name of Person or Entity paying for any portion of the trip: ___________________
________________________________________________________________________________
Type of Entity:
[ ] broker
[ ] publicly traded company
[ ] person or entity with which Founders may have a current or anticipated
business relationship
[ ] other
Purpose for trip: ______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The foregoing trip is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: _________________________* By: _________________________*
Dated: ______________________ Dated: ______________________
* Must be signed by Department Manager and Founders Chief Executive Officer.
<PAGE>
EXHIBIT D
APPROVAL FORM FOR OUTSIDE EMPLOYMENT OR
BUSINESS ACTIVITY
Name of Founders Employee: _____________________________________________________
Name of Outside Employer: ______________________________________________________
(If self-employed, please so indicate.)
Type of Business: ______________________________________________________________
Brief Job Description: _________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Typical Weekly Work Schedule: __________________________________________________
________________________________________________________________________________
The foregoing employment/business activity is hereby:
[ ] Approved [ ] Disapproved
FOUNDERS ASSET MANAGEMENT LLC
By: ______________________________*
Dated: ___________________________
CC: Department Manager of Employee
Human Resources
* Must be signed by Founders Chief Executive Officer or Ken Christoffersen
following consultation with Department Manager.
<PAGE>
EXHIBIT E
NOTIFICATION OF POSSIBLE SECURITY TRANSACTION
BY
INVESTMENT CLUB OR SIMILAR ENTITY
Name of Investment Club: _______________________________________________________
Name of Employee: ______________________________________________________________
Name of Family Member: _________________________________________________________
Name of Security: ______________________________________________________________
[ ] Buy
[ ] Sell
Employee Signature: ____________________________________________________________
Date: __________________________________________________________________________
This form must be acknowledged by Tom Arrington, Rob Ammann, Scott Chapman, or
Doug Loeffler, and returned to the Legal Department.
ACKNOWLEDGED:
___________________________________
Approval Officer
<PAGE>
EXHIBIT F
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS
INITIAL REPORT
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, and that I
understand the provisions and requirements of the Code as they apply to me. In
addition, I certify that the information provided herein with respect to
brokerage accounts and securities holdings is accurate and complete. I agree to
comply with all of the terms and provisions of the Code which are applicable to
me, and to disclose or report all personal securities transactions and other
information required to be disclosed or reported pursuant to the requirements of
the Code.
BROKERAGE ACCOUNTS. [Applicable to all employees.] The information provided
below is for all brokerage accounts in which I or any member of my household has
any direct or indirect beneficial ownership. I agree to notify the Legal
Department within ten days of the establishment of a new brokerage account not
previously reported to the Legal Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts are maintained by me or a member of my
household (use additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ________________________________________ Telephone: __________________
Registered Owner Designation: ____________________ Account No.: ________________
SECURITIES. [Applicable to Access Persons only.] The information provided below
is for all securities in which I or any member of my household has any direct or
indirect beneficial ownership.
[ ] I have no securities to report at this time.
[ ] The following securities are ones in which I or a member of my household
have direct or indirect beneficial ownership (use additional copies of
this form if necessary):
Name of Ticker Number Date Transaction Price Principal Amount
Security Symbol of Shares Purchased (Equity Security) (Debt Security)
-------- ------ --------- --------- ----------------- ----------------
Employee Signature ____________________________________ Date: _________________
Print Name: __________________________________________
<PAGE>
<TABLE>
<CAPTION>
REPORT OF OCCURRENCE OF SECURITIES TRANSACTIONS EXHIBIT G
AND INITIATION OF BROKERAGE ACCOUNTS WITHIN LAST CALENDAR QUARTER
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
| | | | | INTEREST | | | |
| | | | | RATE/ | TRANSACTION | PRINCIPAL | |
| | | | DATE | MATURITY | PRICE | AMOUNT | |
| AMOUNT OR | | TICKER | | DATE (IF | (EQUITY | (DEBT | |
| SHARES | SECURITY NAME | SYMBOL | BOUGHT SOLD | APPLICABLE) | SECURITY) | SECURITY) | NAME OF DEALER OR BANK |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
| | | | | | | | | |
|-----------|---------------|--------|-------|-----|-------------|-------------|-----------|------------------------|
</TABLE>
The above is a record of one or more purchase or sale transactions in securities
in which I have acquired or disposed of a direct or indirect beneficial
ownership in the last calendar quarter, as more fully defined in the Fund's and
Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. In the past quarter, I established the brokerage account(s)
described below, which have not previously been reported to the Legal
Department.
[ ] I have no brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established in the last
calendar quarter and are maintained by me or a member of my household
(use additional copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. If the transaction is other than a sale or purchase, please explain
the transaction on a separate page.
Note 2. If no broker or bank was involved in the transaction, describe on a
separate page the circumstances surrounding the transaction and the
manner in which the transaction was executed.
Note 3. If a broker was involved in the transaction, a copy of the broker's
confirmation of the transaction is attached or has previously been
received by Founders' Legal Department.
Note 4. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
involved in the transactions reported, which have been marked by me with
an asterisk(*). Such transactions are reported solely to meet the
standards imposed by Rule 17j-1 under the Investment Company Act of
1940.
<PAGE>
<TABLE>
<CAPTION>
REPORT OF SECURITIES OWNERSHIP EXHIBIT H
REPORT OF ESTABLISHMENT OF BROKERAGE ACCOUNTS
FOR CALENDAR YEAR ENDING DECEMBER 31, _____
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
| | | | | | CHECK TYPE OF ACCOUNT |
| AMOUNT OR | | DATE | TRANSACTION | PRINCIPAL | |
| SHARES | SECURITY NAME | BOUGHT | PRICE (EQUITY | AMOUNT (DEBT | HOUSEHOLD FIDUCIARY OR OTHER |
| | | | SECURITY) | SECURITY) | PERSONAL MEMBER BENEFICIAL OWNERSHIP |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
| | | | | | | | |
|-----------|---------------|--------|---------------|--------------|----------|-----------|----------------------|
</TABLE>
The above is a listing of every security in which I have any direct or indirect
beneficial ownership as of the end of the above-described calendar year, as more
fully defined in the Fund's and Founders' Codes of Ethics.
BROKERAGE ACCOUNTS. I currently have the brokerage account(s) described below.
[ ] I have no new brokerage accounts to report at this time.
[ ] The following brokerage accounts have been established and are
maintained by me or a member of my household (use additional
copies of this form if necessary):
Name of brokerage firm: ________________________________________________________
Address: ____________________________________________ Telephone: ______________
Registered Owner Designation: _______________________ Account No.: ____________
Date of Establishment of Account: ___________________
DATE: ___________________________ SIGNATURE: _______________________________
Print Name: ______________________________
Note 1. This report shall not be construed as an admission by me that I have
acquired any direct or indirect beneficial ownership in the securities
listed above which have been marked by me with an asterisk(*). Such
transactions are reported solely to meet the standards imposed by Rule
17j-1 under the Investment Company Act of 1940.
<PAGE>
EXHIBIT I
FOUNDERS ASSET MANAGEMENT LLC
CODE OF ETHICS COMPLIANCE CERTIFICATION
By my signature below, I certify that I have received and read a copy of the
Code of Ethics for Founders Asset Management LLC (the "Code"), including,
without limitation, the Policy Statement on Insider Trading, that I understand
the requirements of the Code, and that I recognize that I am subject to the
provisions of the Code. I also certify that as of the date below, I have
complied with the requirements of the Code and have disclosed or reported all
personal securities transactions and other information required to be disclosed
or reported pursuant to the requirements of the Code.
Employee Signature ______________________________ Date ________________________
Print Name ______________________________________
