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EXHIBIT 99(b)(q)(i)
TRAINER WORTHAM FUNDS
AND
TRAINER WORTHAM & CO., INC.
CODE OF ETHICS
PREAMBLE
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This Code of Ethics (the "Code") is being adopted in compliance with
the requirements of Rule 17j-1 (the "Rule") adopted by the United States
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "Act") to effectuate the purposes and objectives of that Rule. The
Rule makes it unlawful for certain persons, including any officer or trustee of
Trainer Wortham Funds (the "Trust") and its investment adviser in connection
with purchase or sale by such person of a Security Held or to be Acquired by the
Trust:
(1) To employ a device, scheme or artifice to defraud the Trust;
(2) To make to the Trust any untrue statement of a material fact or
omit to state to the Trust a material fact necessary in order
to make the statements made, in light of the circumstances in
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 Trust;
or
(4) To engage in a manipulative practice with respect to the Trust.
The Rule also requires that the Trust and its investment adviser, Trainer
Wortham & Co., Inc., shall adopt a written code of ethics containing provisions
reasonably necessary to prevent persons from engaging in acts in violation of
the above standard and shall use reasonable diligence and institute procedures
reasonably necessary, to prevent violations of the Code.
Set forth below is the Code adopted by the Board of Trustees of the
Trust in compliance with the Rule. This Code is based upon the principle that
the trustees and officers of the Trust, and certain affiliated persons of the
Trust and its investment adviser, owe a fiduciary duty to, among others, the
shareholders of the Trust to conduct their affairs, including their personal
securities transactions, in such manner to avoid (i) serving their own personal
interests ahead of shareholders; (ii) taking inappropriate advantage of their
position with the Trust; and (iii) any actual or potential conflicts of interest
or any abuse of their position of trust and responsibility.
1. DEFINITIONS
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(a) "Access Person" means any trustee, officer, general partner or
Advisory Person of the Trust.
(b) "Advisory Person" means (i) any employee of the Trust or its
investment adviser who, in connection with his regular functions or duties,
makes, participates in, or obtains information regarding the purchase or sale of
Covered Securities by the Trust, or whose
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functions relate to the making of any recommendations with respect to such
purchases or sales; and (ii) any natural person in a control relationship to the
Trust or its investment adviser who obtains information concerning
recommendations made to the Trust with regard to the purchase or sale of Covered
Securities by the Trust.
(c) A security is "being considered for purchase or sale" or is
"being purchased or sold" when a recommendation to purchase or sell the security
has been made and communicated to the Trading Desk, which includes when the
Trust has a pending "buy" or "sell" order with respect to a security, and, with
respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
(d) "Beneficial Ownership" shall be as defined in, and 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 which, generally speaking, encompasses those
situations where the beneficial owner has the right to enjoy some economic
benefit from the ownership of the security. A person is normally regarded as the
beneficial owner of securities held in the name of his or her spouse or minor
children living in his or her household.
(e) "Compliance Officer" means the Compliance Officer of Trainer
Wortham & Co., Inc.
(f) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act.
(g) "Covered Security" means any security as defined in Section
2(a)(36) of the Act except (i) direct obligations of the Government of the
United States; (ii) bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments, including
repurchase agreements; and (iii) shares issued by open-end registered investment
companies (mutual funds).
(h) "Disinterested Trustee" means a Trustee of the Trust who is not
an "interested person" of the Trust within the meaning of Section 2(a)(19) of
the Act.
(i) "Investment Personnel" means (i) any portfolio manager (as
defined below) of the Trust and any employee of the Trust or its investment
adviser (or of any company in a control relationship to the Trust or its
investment adviser) who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding the purchase
or sale of securities by the Trust; and (ii) any natural person who controls the
Trust or its investment adviser and who obtains information concerning
recommendations made to the Trust regarding the purchase or sale of securities
by the Trust.
(j) "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) or
Section 4(6) or pursuant to Rule 504, Rule 505 or Rule 506 under the Securities
Act.
(k) "Portfolio Manager" means an employee of the investment adviser
of the Trust entrusted with the direct responsibility and authority to make
investment decisions affecting an investment company.
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(l) "Purchase or Sale of a Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered Security.
(m) "Security Held or to be Acquired by the Trust" means (i) any
Covered Security which, within the most recent 15 days: (1) is or has been held
by the Trust; or (2) is being or has been considered by the Trust or its
investment adviser for purchase by the Trust; and (ii) any option to purchase or
sell, and any security which is convertible into or exchangeable for, a Covered
Security described above.
2. PROHIBITED TRANSACTIONS
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(a) No Access Person shall engage in any act, practice or course of
conduct, which would violate the provisions of the Rule as set forth above.
(b) No Access Person shall:
(i) purchase or sell, directly or indirectly, any security
in which he 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:
(A) is being considered for purchase or sale by the
Trust, or
(B) is being purchased or sold by the Trust;
(ii) disclose to other persons the securities activities
engaged in or contemplated for the various portfolios of
the Trust;
(iii) seek or accept anything of value, either directly or
indirectly, from broker-dealers or other persons
providing services to the Trust because of such person's
association with the Trust. For the purposes of this
provision, the following gifts from broker-dealers or
other persons providing services to the Trust will not
be considered to be in violation of this section:
(A) an occasional meal;
(B) an occasional ticket to a sporting event, the
theater or comparable entertainment, for which the
Access Person will reimburse the host;
(C) a holiday gift of fruit or other foods, provided,
however, that such gift is made available to all
members of the recipient's department.
(c) No Investment Personnel shall:
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(i) acquire any securities in an initial public offering, in
order to preclude any possibility of such person
profiting from his or her position with the Trust.
(ii) purchase any securities in a Limited Offering, without
prior approval of the Compliance Officer or other
officer designated by the Board of Trustees. Any person
authorized to purchase securities in a Limited Offering
shall disclose that investment when they play a part in
any Trust's subsequent consideration of an investment in
the issuer. In such circumstances, the Trust's decision
to purchase securities of the issuer shall be subject to
independent review by the Trust's officers with no
personal interest in the issuer.
(iii) profit in the purchase and sale, or sale and purchase,
of the same (or equivalent) securities within sixty (60)
calendar days. Any profits realized on such short-term
trades shall be subject to disgorgement.
(iv) serve on the board of directors of any publicly traded
company without prior authorization of the Chairman
and/or President of the Trust. Any such authorization
shall be based upon a determination that the board
service would be consistent with the interests of the
Trust and its shareholders.
(d) No Portfolio Manager shall:
(i) buy or sell a security within at least seven (7)
calendar days before and after any portfolio of the
Trust that he or she manages trades in that security.
Any profits realized on trades within the proscribed
period is required to be disgorged.
3. EXEMPTED TRANSACTIONS
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The prohibitions of Sections 2(b), 2(c) and 2(d) shall not apply
to:
(a) purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control;
(b) purchases or sales which are non-volitional on the part of
either the Access Person or the Trust;
(c) purchases which are part of an automatic dividend reinvestment
plan;
(d) 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; and
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(e) purchases or sales of shares of any series of the Trust.
Access Persons should consult the Compliance Officer if there are any
questions about whether one of the exemptions listed above applies to a given
Covered Securities transaction.
4. COMPLIANCE PROCEDURES
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(a) Pre-clearance
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All Access Persons shall receive prior approval from the
Compliance Officer or other officer designated by the Board of Trustees before
purchasing or selling Covered Securities.
(b) Disclosure of Personal Holdings (Initial Report)
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All Access Persons shall disclose to the Compliance Officer all
personal securities holdings upon commencement of employment and thereafter on
an annual basis as of December 31. This initial report shall be made on the form
attached as Exhibit A.
(c) Annual Certification of Compliance with the Code
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(i) All Access Persons shall certify annually that:
(A) they have read and understand the Code and recognize
that they are subject thereto;
(B) they have complied with the requirements of the
Code; and
(C) they have reported all personal securities
transactions required to be reported pursuant to the
requirements of the Code.
The certification report shall be made on the form attached as Exhibit
B.
(d) Reporting Requirements
----------------------
(i) All Access Person shall report to the Compliance
Officer the information described in, Sub-paragraph
(d)(ii) of this Section with respect to transactions in
any security in which such person has, or by reason of
such transaction acquires, any direct or indirect
beneficial ownership in the security; provided, however
that an Access Person shall not be required to make a
report with respect to transactions effected for any
account over which such person does not have any direct
or indirect influence.
(ii) Reports required to be made under this Paragraph (d)
shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which
the report relates was effected. Every Access Person
shall be required to submit a report for all
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periods, including those periods in which no securities
transactions were effected. A report shall be made on
the form attached hereto as Exhibit C or on any other
form containing the following information:
(A) the date of the transaction, the title, the interest
rate and maturity date (if applicable), the number
of shares and the principal amount of each Covered
Security involved;
(B) the nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(C) the price of the Covered Security at which the
transaction was effected; and the name of the
broker, dealer or bank with or through whom the
transaction was effected.
(iii) 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.
(iv) Every Access Person shall direct their brokers to supply
to the Compliance Officer, on a timely basis, duplicate
copies of the confirmation of all personal securities
transactions and copies of all periodic statements for
all securities accounts.
(v) The Compliance Officer shall notify each Access Person
that he or she is subject to these reporting
requirements, and shall deliver a copy of this Code to
each such person upon request.
(e) Conflict of Interest
Every Access Person shall notify the Compliance Officer of any
personal conflict of interest relationship which may involve the Trust, such as
the existence of any economic relationship between their transactions and
securities held or to be acquired by any series of the Trust. Such notification
shall occur in the pre-clearance process.
5. REPORTING REQUIREMENTS FOR "DISINTERESTED TRUSTEES"
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The provisions of Section 4(a) and (d) above, shall not apply to a
Disinterested Trustee. However, Disinterested Trustees shall submit a report in
the form attached as Exhibit C to the Compliance Officer not later than ten (10)
days after the end of each calendar quarter with respect to any Covered
Securities transaction occurring in such quarter only if the Disinterested
Trustee knew at the time of the transaction or, in the ordinary course of
fulfilling his or her official duties as a trustee, should have known that,
during the 15-day period immediately before or after the date of the Covered
Securities transaction, the Trust purchased or sold the Covered Security, or the
Trust or its investment adviser considered purchasing or selling the Covered
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Security. If such Disinterested Trustee is not required to submit a report in
the form attached as Exhibit C, such Disinterested Trustee shall submit a
certification in the form attached as Exhibit D.
6. REPORTING OF VIOLATIONS TO THE BOARD OF TRUSTEES
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(a) The Compliance Officer shall promptly report to the Board of
Trustees:
(i) all apparent violations of this Code and the reporting
requirements thereunder; and
(ii) any reported transaction in a security which was
purchased or sold by the Trust within fifteen (15) days
before or after the date of the reported transactions.
(b) When the Compliance Officer finds that a transaction otherwise
reportable to the Board of Trustees under Paragraph (a) of this Section could
not reasonably be found to have resulted in a fraud, deceit or manipulative
practice in violation of the Rule, it may, in its discretion, lodge a written
memorandum of such finding and the reasons therefor with the reports made
pursuant to this Code, in lieu of reporting the transaction to the Board of
Trustees.
(c) The Board of Trustees, or a Committee of Trustees created by
the Board of Trustees for that purpose, shall consider reports made to the Board
of Trustees hereunder and shall determine whether or not this Code has been
violated and what sanctions, if any, should be imposed.
7. ANNUAL REPORTING TO THE BOARD OF TRUSTEES
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(a) The Compliance Officer shall prepare an annual report relating
to this Code to the Board of Trustees. Such annual report shall:
(i) summarize existing procedures concerning personal
investing and any changes in the procedures made during
the past year;
(ii) identify any violations requiring significant remedial
action during the past year;
(iii) identify any recommended changes in the existing
restrictions or procedures based upon the Trust's
experience under its Code, evolving industry practices
or developments in applicable laws or regulations; and
(vi) certify that the Trust and its investment adviser have
adopted procedures reasonably necessary to prevent
Access Persons from violating the Code.
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8. SANCTIONS
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Upon discovering a violation of this Code, the Board of Trustees
may impose such sanctions as they deem appropriate, including, among other
things, a letter of censure or suspension or termination of the employment of
the violator.
9. RETENTION OF RECORDS
---------------------
This Code, a list of all persons required to make reports hereunder
from time to time, a copy of each report made by an Access Person hereunder,
each memorandum made by the Compliance Officer hereunder and a record of any
violation hereof and any action taken as a result of such violation, shall be
maintained by the Trust as required under the Rule.
Originally Adopted: April 1995
Last Reviewed: October 24, 2000
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Exhibit A
TRAINER WORTHAM FUNDS
TRAINER WORTHAM & CO., INC.
INITIAL / ANNUAL SECURITIES HOLDINGS REPORT
(NOTE: THIS FORM MUST BE COMPLETED BY EACH ACCESS PERSON WITHIN 10 DAYS OF
BECOMING AN ACCESS PERSON AND WITHIN 10 DAYS AFTER THE END OF EACH CALENDAR
YEAR THEREAFTER.)
The following list, which is current as of the date below, accurately
reflects my current personal securities holdings in which I have a direct or
indirect beneficial interest:
<TABLE>
<CAPTION>
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BROKER/
NO. OF PRINCIPAL DEALER OR BANK THROUGH
SECURITY SHARES AMOUNT WHOM ACCOUNT IS HELD
-------- ------ -------- ----------------------
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<S> <C> <C> <C>
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</TABLE>
The chart above (i) excludes personal securities holdings with respect to which
I had no direct or indirect influence or control, (ii) excludes personal
securities holdings of securities which are not Covered Securities, and (iii) is
not an admission that I have or had any direct or indirect beneficial ownership
in the Covered Securities listed above.
I have an account or accounts, over which I have direct or indirect influence or
control, in which securities (including securities which are not considered
Covered Securities) which are not listed above are held for my direct or
indirect benefit as of the date below with the following brokers, dealers or
banks:
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Dated: __________________________ Signature: ________________________
Print Name: _______________________
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Exhibit B
TRAINER WORTHAM FUNDS
AND
TRAINER WORTHAM & CO., INC.
CERTIFICATION REPORT
To the Trustees, Officers and Access Persons of Trainer Wortham Funds:
1. I hereby acknowledge receipt of a copy of the Code of Ethics
for Trainer Wortham Funds (the "Trust").
2. I have read and understood this Code. I will comply with the
requirements of this Code and I will disclosed or report all
information required to be disclosed or reported pursuant to
this Code.
3. Except as noted below, I hereby certify that I have no
knowledge of the existence of any personal conflict of
interest relationship which may involve the Trust, such as any
economic relationship between my transactions and securities
held or to be acquired by the Trust or any of its Series.
Date: Signature:
------------------------------- ------------------------
Print Name:
-----------------------
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Exhibit C
TRAINER WORTHAM FUNDS
AND
TRAINER WORTHAM & CO., INC.
QUARTERLY BROKERAGE ACCOUNT REPORT
FOR THE CALENDAR QUARTER ENDED __________________
THIS FORM MUST BE COMPLETED BY EACH ACCESS PERSON WITHIN 10 DAYS
OF THE END OF EACH CALENDAR QUARTER.
During the quarter referred to above, the following transactions were effected
in Covered Securities in which I had, or by reason of such transaction acquired,
direct or indirect beneficial ownership, and which are required to be reported
pursuant to the Trust's Code of Ethics:
<TABLE>
<CAPTION>
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NATURE OF BROKER/
NO. OF SHARES INTEREST RATE TRANSACTION DEALER OR BANK
DATE OF OR PRINCIPAL AND MATURITY (PURCHASE, THROUGH WHOM
SECURITY TRANSACTION AMOUNT DATE SALE, OTHER) PRICE EFFECTED
-------- ----------- ------------ ---------- ------------ ----- ------------
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<S> <C> <C> <C> <C> <C> <C>
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</TABLE>
This report (i) excludes personal securities holdings with respect to which I
had no direct or indirect influence or control, (ii) excludes personal
securities transactions in securities which are not Covered Securities, and
(iii) is not an admission that I have or had any direct or indirect beneficial
ownership in the Covered Securities listed above.
[ ] During the quarter referenced above, I did not establish any new
accounts in which securities (including securities which are not
considered Covered Securities) were held during such quarter for my
direct or indirect benefit.
OR
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[ ] During the quarter referenced above, I opened the following
account(s) over which I have direct or indirect influence or
control and in which securities (including securities which
are not considered Covered Securities) were held for my direct
or indirect benefit:
<TABLE>
<CAPTION>
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NAME OF BROKER, DEALER OR BANK DATE ACCOUNT ESTABLISHED
------------------------------ ------------------------
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<S> <C>
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</TABLE>
Dated: __________________________ Signature: ________________________
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Exhibit D
===============================================================================
SECURITIES REPORT
FOR TRUSTEES WHO ARE NOT
"INTERESTED PERSONS" OF THE TRUST
~ PURSUANT TO CODE OF ETHICS ~
===============================================================================
FOR THE CALENDAR QUARTER ENDED ________________
I certify that I had no knowledge, or, in the ordinary course of fulfilling my
official duties as a Trustee of the Trust, way of knowing:
(a) of securities that were bought or sold within 15
days before or after any transaction by any Series
of the Trust; or
(b) of securities considered by any Series of the Trust
or any of its Investment Advisers for purchase or
sale by such Series,
during the quarter identified above.
BY: _____________________
Date: __________________________
NOTE: PLEASE REQUEST A QUARTERLY BROKERAGE ACCOUNT REPORT IF YOU ARE
UNABLE TO SIGN THIS REPORT BECAUSE OF KNOWLEDGE YOU MAY HAVE HAD.
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