McKINLEY CAPITAL MANAGEMENT, INC.
CODE OF ETHICS AND PERSONAL TRADING POLICY
1. Statement of General Principles:
This Code of Ethics and Personal Trading Policy (the "Code") has been adopted by
McKinley Capital Management, Inc. ("MCM") in accordance with the general
principle that it is the duty of Access Persons at all times to place the
interests of MCM's clients first.
This Code regulates the personal Securities trading of Access Persons, all of
whom have access to information concerning Securities transactions made on
behalf of MCM's clients and MCM's recommendations. This Code is intended to
minimize actual and potential conflicts and prevent improper behavior. It is
designed to ensure that personnel with access to information about MCM's
investment intentions on behalf of its clients conduct their personnel
transactions in a way that is not detrimental to clients and do not take
improper advantage of their inside position. All personal Securities
transactions shall be conducted consistent with this Code.
Rule 204-2 under the Investment Advisers Act of 1940 (the "Advisers Act"),
requires specific books and records to be maintained by every registered
investment adviser. Under paragraphs (12) and (13) of rule 204-2(a), an adviser
must maintain records of securities transactions for its own account and those
of its "advisory representatives". Each transaction must be recorded not later
than ten days after the end of the calendar quarter in which the transaction is
effected.
An "advisory representative" may be (i) a partner, officer or director of the
adviser, (ii) an employee of the adviser who participates in the recommendation
or investment process or has access to advance information about recommendations
or transactions, and (iii) a person in a "control relationship" with the
adviser, an affiliate of the controlling person, or an affiliate of that
affiliate, if such person has advance information about recommendations or
transactions. [(204-2(a) (12) (ii) (A)]
In addition, Rule 17j-1 under the Investment Company Act of 1940 (the "Company
Act") generally proscribes fraudulent or manipulative practices with respect to
a purchase or sale of a security held or to be acquired by an investment
company, if effected by an associated person of such company.
To comply with rule 204-2 under the Advisers Act and rule 17j-1 under the
Company Act, MCM has adopted and will enforce the following procedures regarding
personal trading:
2. Summary:
Each Access Person is required to comply with the procedures and
restrictions on his or her activities summarized below:
a. All Access Persons are required to receive written pre-clearance from MCM's
Compliance Officer or Portfolio Operations Manager (the "Compliance Officer" )
of all personal Securities, except that such pre-clearance is not required for
transactions in accounts managed by MCM. Access Persons are prohibited from
purchasing or selling Securities on a day during which MCM has a pending "buy"
or "sell" order in the same Security until MCM's order is executed or withdrawn.
b. Each Access Person is required to identify to the Compliance Officer within
ten days of becoming an Access Person and whenever such Access Person
establishes a new brokerage account, all brokerage accounts in which the Access
Person has a Beneficial Ownership interest. Access Persons are required to cause
their brokers to supply directly to the Compliance Officer duplicate copies of
confirmations of all personal Securities transactions and copies of statements
for all Securities accounts in which they have Beneficial Ownership. In
addition, each Access Person must report to the Compliance Officer any private
Securities transactions that are not carried out through brokerage accounts. c.
Upon becoming an Access Person and annually thereafter, each Access Person is
required to certify to MCM, among other things, that such Access Person
understands and has complied with MCM's policies regarding personal Securities
transactions and has reported all transactions in accounts in which such Access
Person has a Beneficial Ownership interest, whether or not any trading has
occurred.
d. All accounts managed by MCM in which an Access Person has a Beneficial
Ownership interest will be traded in MCM's normal batch trade process, or the
next trading day if the Securities are not "batch" traded. Accounts in which an
Access Person has a Beneficial Ownership interest shall not trade ahead of, or
"front run," client accounts under any circumstances. Transactions in accounts
in which an Access Person has a Beneficial Ownership interest made to reduce
margin balances or in index options are not considered to conflict with client
account objectives. Accounts in which an Access Person has a Beneficial
Ownership interest may not trade options on Securities held in, or to be
acquired by, any client account.
Personal trading will be monitored.
3. Definitions:
a. "Access Persons" means:
(i) all officers, directors and employees of MCM; (ii) all registered
representatives who are associated persons of MCM; and (iii) members of their
immediate families.
b. "Beneficial Owner" means any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares a
direct or indirect pecuniary interest in Securities, subject to the following:
(i) The term "pecuniary interest" in any class of equity Securities means the
opportunity, directly or indirectly, to profit or share in any profit derived
from a transaction in the Securities. (ii) The term "indirect pecuniary
interest" in any class of equity Securities includes, but is not limited to:
(1) Securities held by members of a person's immediate
family sharing the same household;
(2) The right to dividends that is separated or separable
from the underlying Securities (a right to dividends alone does not otherwise
represent a pecuniary interest in the Securities); (3) An interest in Securities
held by a trust; or (4) The right to acquire equity Securities through the
exercise or conversion of any derivative Security, whether or not presently
exercisable.
(iii) Indirect pecuniary interest can also include a general partner's
proportionate interest in a limited partnership. An Access Person who is or is
affiliated with a general partner in a limited partnership should contact the
Compliance Officer to determine whether Securities transactions by the
partnership should be reported.
(iv) A shareholder is not 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.
c. "Security" has the meaning set forth in section 2(a)(36) of the Company Act,
except that it does not include shares of registered open-end investment
companies, direct obligations of the Government of the United States, short-term
debt securities which are "government securities" within the meaning of section
2(a)(16) of the Company Act, bankers acceptances and bank certificates of
deposit.
4. Personal Trading Policy:
a. All Access Persons are required to receive written pre-clearance from the
Compliance Officer or Portfolio Operations Manager for all personal Securities
transactions whether foreign or domestic, including, but not limited to,
Securities purchased in initial public offerings and private placements,
derivative instruments or options. Such pre-clearance is not required however,
for transactions in accounts in which an Access Person has beneficial ownership
if such account is managed by MCM. Any trades made by the Compliance Officer
must be pre-cleared by the Chief Investment Officer or the Portfolio Operations
Manager. Trades made by the Chief Investment Officer or the Portfolio Operations
Manager must be pre-cleared by the Compliance Officer. Access Persons are
prohibited from purchasing or selling Securities on a day during which MCM has a
pending buy or sell order in the same Security until MCM's order is executed or
withdrawn.
b. Each Access Person is required to identify to the Compliance Officer within
ten days of becoming an Access Person all brokerage accounts in which the Access
Person has a Beneficial Ownership interest. Each Access Person must instruct
every brokerage firm where he or she has an account to supply to the Compliance
Officer duplicate copies of confirmations of all personal Securities
transactions and copies of periodic statements for all Securities accounts in
which he or she has Beneficial Ownership. Duplicate copies of confirmations may
be provided by download of transactions through DTC as long as such download
complies with this section 4. Such instructions also must be given whenever an
Access Person establishes a new brokerage account. Such instructions must be in
writing and a copy must be submitted to the Compliance Officer. The instructions
must include the broker, dealer or bank with which the account is established
and the date the account is established. In addition, each Access Person must
report to the Compliance Officer any private Securities transactions that are
not effected through brokerage accounts. For each Securities trade by an Access
Person for which a confirmation is not available, the Access Person must
promptly provide to the Compliance Officer the date, the Security, the nature of
the transaction, the price, the parties and the brokers involved.
c. Compliance with this section 4 will be deemed to satisfy the reporting
requirements imposed on Access Persons under rule 17j- l(d), if such
confirmations and statements are received by MCM not later than ten days after
the end of the calendar quarter in which the transaction to which the report
relates is effected, and contain the following information:
(i) The date of the transaction, the title and the number of shares, and the
principal amount of each Security involved; (ii) The nature of the transaction
(that is, purchase, sale or any other type of acquisition or disposition); (iii)
The price at which the transaction is effected; (iv) The name of the broker,
dealer or bank with or through whom the transaction is effected; and (v) The
date that the report is submitted. 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.
d. All accounts managed by MCM in which an Access Person has a Beneficial
Ownership interest will be traded in MCM's normal batch trade process, or the
next trading day if the Securities are not batch traded. Accounts in which an
Access Person has a Beneficial Ownership interest shall not trade ahead of, or
"front run," client accounts under any circumstances. Transactions in accounts
in which an Access Person has a Beneficial Ownership interest made to reduce
margin balances or in index options are not considered to conflict with client
account objectives. Accounts in which an Access Person has a Beneficial
Ownership interest may not trade options on Securities held in, or to be
acquired by, any client account.
e. Post-trade monitoring of personal Securities transactions may include
monitoring Access Persons' accounts on Advent, verification of trade
pre-approvals to determine if any potential conflict exists and review of
monthly brokerage statements. f. Annually, each Access Person is required to
certify to MCM, among other things, that such Access Person understands and has
complied with MCM's policies regarding personal Securities transactions and has
reported all transactions in accounts in which such Access Person has a
Beneficial Ownership interest, whether or not any trading has occurred.
g. Any employee who violates any of the above policies may be subject
to termination or other disciplinary action.
h. Personal trading will be monitored. Any access person who
violates any of the foregoing policies will be subject to
termination or other disciplinary action, including, but not
limited to one or more of the following actions:
(i) Written reprimand.
(ii) A requirement that any and all trading accounts be
transferred to National Securities Corporation or such other broker/dealer as
determined by McKinley Capital Management, Inc.
(iii) Prohibition from participating in any trading for a
period of at least one (1) year.
(iv) Termination.
5. Code of Conduct:
a. No Access Person may cause any client accounts managed by MCM to purchase,
sell or retain any Securities with the purpose or effect of personally
benefiting any Access Person.
b. No Access Person may own, operate, manage or otherwise engage in or be
employed by any outside business without the prior written approval of the
Compliance Officer. No outside activity may be conducted by an Access Person
without the prior approval of he Compliance Officer, if the activity would
involve a material time commitment, provide for compensation to the Access
Person or involve employment, teaching assignments, lectures, publication of
articles, or radio or television appearances. The Compliance Officer may require
full details concerning the outside activity including the number of hours
involved and the compensation to be received. Before accepting a position as an
officer or director in any business, charitable organization or non-profit
organization, an Access Person must also obtain approval from the Compliance
Officer.
c. No Access Person may accept any gift with a total value in excess of $100
from any broker, broker/dealer or other person or entity that transacts business
with MCM or any of its affiliates. The receipt of or offer to pay for any such
benefits must be reported to the Compliance Officer. In addition to the
foregoing, it is a violation of an Access Person's duty of loyalty to MCM for
such Access Person, without the prior written consent of the Compliance Officer,
to:
(i) rebate, directly or indirectly, to any person, firm, corporation or
association any part of the compensation received from MCM as an Access Person;
(ii) accept, directly or indirectly, from any person, firm, corporation or
association, other than MCM, compensation of any nature as a bonus, commission,
fee, gratuity or other consideration in connection with any transaction on
behalf of MCM or a Client Account; or (iii) own any Security issued by or have,
directly or indirectly, any financial interest in any other organization engaged
in any securities, financial or related business, except for a stock ownership
or other financial interest of less than five percent in a business that is
publicly owned. d. The transmission of information concerning Securities
transactions for, or advice furnished to, MCM's clients is strictly confidential
and must be limited to other associated persons of MCM and broker/dealers in the
ordinary course of business. No names, addresses or information about clients of
MCM, no information regarding advice furnished by MCM to its clients, no
non-public information furnished to MCM by any client and no analyses and other
proprietary data or information of MCM may be transmitted, distributed or
communicated to anyone who is not associated with MCM.
e. In accordance with, and as set forth in, MCM's Policy Statement on Insider
Trading, no Access Person may transmit any nonpublic information about a company
or use any such information to purchase or sell Securities for such Access
Persons' own account or the account of clients until such information is made
public. f. An Access Person should advise the Compliance Officer immediately if
he or she becomes involved in or threatened with litigation or an administrative
investigation or proceeding of any kind, is served with a subpoena, becomes
subject to any judgment, order or arrest, or is contacted by any regulatory
authority. g. All Access Persons must file with the Compliance Officer a written
acknowledgment of receipt of this Code and agree to abide by its provisions.
h. Compliance with this Code is mandatory and any violation may be
cause for termination of employment.
I certify that:
1. I have read and understand MCM's Code of Conduct and Ethics and
Personal Trading Policy (the "Code") and that I am subject to the Code.
2. Since the date on which I received a copy of the Code, or the date of
my most recent Certificate of Compliance, whichever is later, I have complied in
all respects with the Code and the Policy, and I have disclosed or reported to
MCM all personal Securities transactions required to be disclosed or reported
pursuant to the requirements of the Code.
3. Attached is a complete and accurate list of all accounts with any
brokerage firm or financial institution through which I effected any transaction
in, or hold, any Securities in which I have a Beneficial Ownership interest. I
have instructed each such broker or financial institution to provide to the MCM
Compliance Officer duplicate confirmations and monthly statements for all of my
personal transactions in Securities.
Signature Date Printed Name
