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CITIZENS FUNDS
CITIZENS ADVISERS, INC.
CITIZENS SECURITIES, INC.
CODE OF ETHICS
Revised FEBRUARY 2000
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This Code of Ethics is adopted by Citizens Funds, Citizens Advisers, Inc. (the
"Adviser") and Citizens Securities, Inc. (the "Distributor") pursuant to the
requirements of SEC Rule 17j-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Purpose of this Code is to establish standards and
procedures deemed necessary to prevent illegal or unethical conduct by "Access
Persons" (defined below) of Citizens Funds, the Adviser and the Distributor.
Specifically, this Code is intended to prevent "Access Persons" from engaging in
any fraudulent, deceptive, or manipulative activities in connection with the
purchase or sale of a covered security.
This Code of Ethics acknowledges the general principles that Access
Persons: (A) owe a fiduciary obligation to Citizens Funds; (B) have the duty at
all times to place the interests of Citizens Funds' shareholders first; (C) must
conduct all personal securities transactions in such a manner as to avoid any
actual or potential conflict of interest or abuse of an individual's position of
trust and responsibility; and (D) should not take inappropriate advantage of
their positions in relation to Citizens Funds.
1. DEFINITIONS
Access Person means any officer, trustee, general partner, or employee
of the Fund, the Adviser or the Distributor (or of any company in a control
relationship to the Fund or Adviser) and any natural person in a control
relationship to the Fund or Adviser, who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale of Covered
Securities by the Fund.
Beneficial Ownership of a security shall be determined in the same
manner as it is for purposes of Section 16 of the Securities Exchange Act of
1934. This means that a person should generally consider himself or herself the
beneficial owner of any securities in which he or she has a direct or indirect
pecuniary interest. In addition, a person should consider himself or herself the
beneficial owner of securities held by his or her spouse, his or her minor
children or a relative who shares his or her home, or held by other persons who
through any contract, arrangement, understanding or relationship provide him or
her with sole or shared voting or investment power over such securities.
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A security is being "considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and communicated
and, with respect to the person making the recommendation, when such person
seriously considers making such a recommendation. A security is being
"considered for purchase or sale" under this definition if the security is being
considered for addition to or deletion from the Citizens Index, the Citizens
Small Cap Index or any fund within Citizens Funds but not if the security is
already a holding within the Citizens Index or the Citizens Small Cap Index and
is not being considered for deletion from either Index or any of said funds.
Compliance Personnel means the persons designated by the Fund, the
Adviser and the Distributor to monitor the overall compliance with this Code, to
receive and review reports, and to provide preclearance of any personal security
transaction as required by this Code.
Control shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act. Section 2(a)(9) provides that "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.
Covered Security means any security as defined in Section 2(a)(36) of
the 1940 Act other than direct obligations of the Government of the United
States, bankers' acceptances, bank certificates of deposit, commercial paper or
high quality short-term debt instruments, including repurchase agreements, and
shares of registered open-end investment companies.
Fund means Citizens Funds, and each series of Citizens Funds.
Initial Public Offering means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act of 1934.
Investment Personnel means:
A. Any employee of the Fund or Adviser (or of any company in a
control relationship to the Fund or 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 Fund or any research (including financial,
social or environmental research) in connection with the same.
B. Any natural person who controls the Fund or Adviser and who
obtains information concerning recommendations made to the Fund
regarding the purchase or sale of securities by the Fund.
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Limited Offering means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or
pursuant to Rule 504,Rule 505,or Rule 506 under the Securities Act of 1933.
Purchase or Sale of a Covered Security means any purchase or sale of a
Covered Security, including, among other things, the writing of an option to
purchase or sell a Covered Security.
Security Held or to be Acquired by the Fund means:
A. Any Covered Security which, within the most recent 15 days:
(i) Is or has been held by the Fund; or
(ii) Is being or has been considered by the Fund, the Adviser
or any Sub-Adviser for purchase or sale by the Fund; and
B. Any option to purchase or sell, and any security convertible into
or exchangeable for, a Covered Security described in clauses (i)
and (ii) above.
Sub-Adviser means each of Seneca Capital Management LLC, and Clemente
Capital, Inc.
Sub-Adviser Access Person means (i) any director, officer or general
partner of a Sub-Adviser; (ii) any employee of a Sub-Adviser (or of any company
in a control relationship to a Sub-Adviser) who, in connection with his or her
regular functions or duties makes, participates in, or obtains information
regarding the purchase or sale of Covered Securities by the Fund, or whose
functions relate to the making of any recommendations with respect to the
purchases or sales; and (iii) any natural person in a control relationship to a
Sub-Adviser who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of Covered Securities by the Fund.
2. CODE PROVISIONS APPLICABLE TO ALL ACCESS PERSONS
A. General Prohibitions.
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No Access Person shall in connection with the purchase or
sale, directly or indirectly, by such Access Person of a
Security Held or to be Acquired by the Fund:
(i) Employ any device, scheme or artifice to defraud the
Fund;
(ii) Make any untrue statement of a material fact to the
Fund or omit to state a material fact necessary in
order to make the
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statements made to the Fund, in light of the
circumstances under which they are made, not
misleading;
(iii) Engage in any act, practice or course of business
that operates or would operate as a fraud or deceit
on the Fund; or
(iv) Engage in any manipulative practice with respect to
the Fund.
(v) The above-prohibited activities shall at all times
include, but shall not be limited to, the following:
a. Purchasing or selling securities on the basis of
material non-public information;
b. Knowingly purchasing or selling, directly or
indirectly, securities in such a way as to
compete personally in the market with the Fund,
or acting personally in such a way as to
compromise or potentially compromise the Fund's
transactions; and
c. Using knowledge of securities transactions by the
Fund, including securities being considered for
purchase or sale, to profit personally, directly
or indirectly, by the market effect of such
transactions.
B. Prohibited Purchases and Sales. Without limiting the
generality of the foregoing, no Access Person shall purchase
or sell, directly or indirectly, any Covered Security in which
such access person would have a beneficial ownership and that
he /she knows, or reasonably should know, is or has been
considered for purchase or sale by the Fund, the Adviser or
any Sub-Adviser within the most recent 15 days.
C. Exempted Transactions. The prohibition of Section 2B of this
Code shall not apply to the following situations:
(i) Purchases or sales made in any account over which the
Access Person has no direct or indirect influence or
control;
(ii) Purchases or sales which are part of an automatic
dividend reinvestment plan;
(iii) Purchases or other acquisitions or dispositions
resulting from the exercise of rights acquired from
an issuer as part of a pro rata distribution to all
holders of a class of securities of such issuer or
the sale of such rights;
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(iv) Sales of securities held in a margin account to the
extent necessary in order to meet margin
requirements; and
(v) Any other purchases or sales that are non-volitional
on the part of the Access Person.
D. Other Prohibited Activity. No Access Person shall:
(i) Accept any gift or other thing of more than de
minimis value from any person or entity that does
business with or on behalf of the Fund, the Adviser,
or the Distributor; or
(ii) Engage in any transaction whether or not specified in
this Code of Ethics in which he/she has a financial
interest adverse to the Fund or which has the
appearance of creating a conflict of interest with
the Fund.
3. CODE PROVISIONS APPLICABLE ONLY TO INVESTMENT PERSONNEL
A. Preclearance. Investment Personnel of the Fund or Adviser must
obtain approval from Compliance Personnel of the Fund or
Adviser, as applicable, before directly or indirectly
acquiring Beneficial Ownership in any securities in an Initial
Public Offering or in a Limited Offering.
B. Procedures for Preclearance.
(i) From Whom Obtained - Advance clearance of a personal
securities transaction required to be approved under
paragraph A above must be obtained from the
appropriate Compliance Personnel.
(ii) Time of Clearance - Transaction clearances must be
obtained no more than three (3) days prior to the
transaction. If the trade is not made within three
(3) days of the date of clearance, a new clearance
must be obtained.
(iii) Form - Clearance must be obtained in writing by
completing and signing a form provided for that
purpose by the Fund or Adviser, as applicable, which
form shall set forth the details of the proposed
transaction, and obtaining the signature of any one
of the applicable Compliance Personnel.
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(iv) Filing - A copy of all completed clearance forms,
with all required signatures, shall be retained by
the Compliance Personnel of the Fund and the Adviser.
C. Factors Considered in Preclearance. The Compliance Personnel
may refuse to grant clearance of a personal transaction in
their sole discretion without being required to specify any
reason for the refusal. Generally, the Compliance Personnel
will consider the following factors in determining whether or
not to clear a proposed transaction:
(i) Whether the amount or nature of the transaction or
person making it is likely to affect the price or
market for the security;
(ii) Whether the individual making the proposed purchase
or sale is likely to benefit from purchases or sales
being made or being considered for the Fund; and
(iii) Whether the security proposed to be purchased or sold
is one that would qualify for purchase or sale by the
Fund.
4. CODE PROVISIONS APPLICABLE ONLY TO SUB-ADVISER ACCESS PERSONS
A. Code of Ethics. This Code of Ethics does not apply to any
Sub-Adviser Access Persons who are not otherwise Access
Persons as defined herein. Each Sub-Adviser shall (i) submit
to the Board of Trustees of the Fund a copy of its Code of
Ethics adopted pursuant to Rule 17j-1 under the 1940 Act and a
certification that it has adopted procedures reasonably
necessary to prevent Sub-Adviser Access Persons from violating
such Sub-Adviser's Code of Ethics, and (ii) promptly report to
the Fund in writing any material amendments to and violations
of its Code of Ethics. A violation of a Sub-Adviser's Code of
Ethics by any of its Sub-Adviser Access Persons shall also
constitute a violation of this Code of Ethics.
B. Reports. Sub-Adviser Access Persons shall file the reports
required by the appropriate Sub-Adviser's Code of Ethics. Such
filings shall be deemed to be filings with the Fund under this
Code of Ethics, and shall at all times be available to the
Fund.
5. REPORTING REQUIREMENTS OF ACCESS PERSONS
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Unless excepted by paragraph D. of this Section, every Access Person of
the Fund, the Adviser, and the Distributor must file the following
reports with the Compliance Personnel of their employer:
A. Initial Holdings Reports. No later than 10 days after the
person becomes an Access Person he/she must file a report
containing the following information:
(i) The title, number of shares and principal amount of
each Covered Security in which the Access Person had
any direct or indirect Beneficial Ownership when the
person became an Access Person;
(ii) The name of any broker, dealer or bank with whom the
Access Person maintained an account in which any
securities were held for the direct or indirect
benefit of the Access Person as of the date the
person became an Access Person; and
(iii) The date that the report is submitted by the Access
Person.
B. Quarterly Transaction Reports. No later than 10 days after the
end of each calendar quarter, the following information:
(i) With respect to any transaction during the quarter in
a Covered Security in which the Access Person had any
direct or indirect Beneficial Ownership:
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;
d. The name of the broker, dealer or bank with or
through which the transaction was effected; and
e. The date that the report is submitted by the
Access Person.
(ii) With respect to any account established by the Access
Person in which any securities were held during the
quarter for the direct or indirect benefit of the
Access Person:
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a. The name of the broker, dealer or bank with whom
the Access Person established the account;
b. The date the account was established; and
c. The date that the report is submitted by the
Access Person.
C. Annual Holdings Reports. Annually (no later than each January
31st), the following information (which information must be
current as of a date no more than 30 days before the report is
submitted):
(i) The title, number of shares and principal amount of
each Covered Security in which the Access Person had
any direct or indirect Beneficial Ownership;
(ii) The name of any broker, dealer or bank with whom the
Access Person maintains an account in which any
securities are held for the direct or indirect
benefit of the Access Person; and
(iii) The date that the report is submitted by the Access
Person.
D. Exceptions from Reporting Requirements.
(i) A person need not make a report under this Section 5
of the Code with respect to transactions effected
for, and Covered Securities held in, any account over
which the person has no direct or indirect influence
or control.
(ii) A Trustee of the Fund who is not an "interested
person" of the Fund within the meaning of Section
2(a)(19) of the 1940 Act, and who would be required
to make a report solely by reason of being a Fund
Trustee, need not make:
a. An initial holdings report under paragraph A of
this Section and an annual holdings report under
paragraph C of this section; and
b. A quarterly transaction report under paragraph B
of this Section, unless the Trustee knew or, in
the ordinary course of fulfilling his or her
official duties as a Fund Trustee, should have
known that during the 15-day period immediately
before or after the Trustee's transaction in a
Covered Security, the Fund purchased or sold the
Covered Security, or the Fund or its Adviser or a
Sub-Adviser considered purchasing or selling the
Covered Security.
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E. Any report delivered pursuant to this Section 5 of the Code
may contain a statement that the report shall not be construed
as an admission by the person making such report that he/she
has any direct or indirect Beneficial Ownership in the Covered
Securities to which the report relates.
F. Any report concerning a purchase or sale prohibited under
Section 2 B hereof with respect to which the Access Person
relies upon one of the exemptions provided in Section 2 C
shall contain a brief statement of the exemption relied upon
and the circumstances of the transaction.
G. Each Access Person must certify annually (no later than each
January 31st) that he/she has read and understands this Code
of Ethics and has complied with its provisions. Such
certificates and reports are to be given to the appropriate
Compliance Personnel.
6. REVIEW AND SANCTIONS
A. Review of Personal Transactions not Subject to Pre-clearance.
The Compliance Personnel of the Fund, the Adviser and the
Distributor, as applicable, shall review or supervise the
review of the personal securities transactions reported
pursuant to Section 5 of this Code. As part of that review,
each such reported securities transaction shall be compared
against completed and contemplated portfolio transactions of
the Fund to determine whether a violation of this Code may
have occurred. If the Compliance Personnel determine that a
violation may have occurred, the Compliance Personnel shall
submit the pertinent information regarding the transaction to
the Trustees of the Fund. The Trustees shall evaluate whether
a violation of this Code has occurred, taking into account all
exempted transactions provided under Section 2 C of this Code.
Before making any determination that a violation has occurred,
the Trustees shall give the person involved an opportunity to
supply additional information regarding the transaction in
question and shall if requested, consult with counsel for the
person whose transaction is in question.
B. Sanctions. If the Trustees of the Fund determine that a
violation of this Code has occurred, the Trustees may take
such action and impose such sanctions as they deem
appropriate. Sanctions for violation of this Code by a Trustee
of the Fund will be determined by a majority vote of the
Fund's Trustees excluding the Trustee being sanctioned.
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7. REVIEW BY THE BOARD OF TRUSTEES
Each of the Fund, the Adviser, the Distributor and the Sub-Advisers
shall furnish to the Board of Trustees of the Fund, at least annually,
and the Board must consider a written report that:
A. Describes any issues arising under the Code of Ethics or
procedures of such entity since the last report to the Board
of Trustees, including, but not limited to, information about
material violations of its Code of Ethics or procedures and
sanctions imposed in response to the violations; and
B. Certifies that the Fund, Adviser, Distributor or Sub-Adviser,
as applicable, has adopted procedures reasonably necessary to
prevent its Access Persons from violating its Code of Ethics.
8. MISCELLANEOUS PROVISIONS
A. Records. Each of the Fund, the Adviser and the Distributor
shall maintain records at its respective principal place of
business in the manner and to the extent set forth below,
which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the 1940 Act,
and shall make these records available for examination by
representatives of the Securities and Exchange Commission:
(i) A copy of this Code and any other code which is, or
at any time within the past six years has been, in
effect shall be preserved in an easily accessible
place;
(ii) A record of any violation of this Code and of any
action taken as a result of such violation shall be
preserved in an easily accessible place for a period
of not less than six years following the end of the
fiscal year in which the violation occurs;
(iii) A copy of each report made pursuant to this Code
shall be preserved for a period of not less than six
years from the end of the fiscal year in which it is
made, the first two years in an easily accessible
place;
(iv) A list of persons who are, or within the past six
years have been, required to make reports pursuant to
this Code or who are or were responsible for
reviewing these reports shall be maintained in an
easily accessible place;
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(v) A copy of each report required under Section 7 of
this Code shall be preserved for a period of not less
than six years from the end of the fiscal year in
which it is made, the first two years in an early
accessible place; and
(vi) A record of any decision, and the reasons supporting
the decision, to approve the acquisition of
securities under Section 3 of this Code shall be
preserved for a period of not less than six years
from the end of the fiscal year in which the approval
is granted.
B. Confidentiality. All reports of securities transactions and
any other information filed with the Fund or furnished to any
person pursuant to this Code shall be treated as confidential,
except as otherwise required by law, but are subject to review
as provided herein; by the Trustees of the Fund and by
representatives of the Securities and Exchange Commission.
C. Interpretation of Provisions. The Trustees of the Fund may
from time to time adopt such interpretations of this Code as
they deem appropriate.
D. Effect of Violation of this Code. In adopting this Code of
Ethics, it is not intended that a violation of this Code is or
should be considered to be a violation of Rule 17j-1 under the
1940 Act or of any other provision of Federal Securities law.
E. Notification. Each of the Fund, the Adviser and the
Distributor shall identify its respective Access Persons who
are required to make reports under this Code and shall inform
those Access Persons of their reporting obligation.
9. AGREEMENT TO CODE OF ETHICS
Please sign and date the following page that states that you have read
the Code of Ethics and agree to the terms stated.
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CITIZENS FUNDS
CITIZENS ADVISERS, INC.
CITIZENS SECURITIES, INC.
CODE OF ETHICS
February 2000
I hereby state that I have read the Code of Ethics, that I have had the
opportunity to discuss its provisions with applicable compliance personnel, that
I understand those provisions, and agree to comply with the same.
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Date Signature
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SENECA CAPITAL MANAGEMENT
CODE OF ETHICS
AMENDED AND RESTATED
DATED MARCH 31, 2000
As an investment adviser, Seneca Capital Management LLC ("Seneca") is a
fiduciary. It owes its clients the highest duty of loyalty and relies on each
employee to avoid conduct that is or may be inconsistent with that duty. It is
also important for employees to avoid actions that, while they may not actually
involve a conflict of interest or an abuse of a client's trust, may have the
appearance of impropriety.
Because Seneca serves as investment manager to registered investment companies
("Fund Clients"), Seneca is required to adopt a code of ethics setting forth
policies and procedures, including the imposition of restrictions on itself and
employees, to the extent reasonably necessary to prevent certain violations of
rules under the Investment Company Act of 1940. This Code of Ethics and Conduct
(the "Code") is intended to set forth those policies and procedures and to state
Seneca's broader policies regarding its duty of loyalty to clients.
1. Statement of Ethical Principles
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When Fund Access Persons covered by the terms of this Code of Ethics
engage in personal securities transactions, they must adhere to the following
general principles as well as to the Code's specific provisions:
A. At all times, the interests of Fund shareholders must
be paramount;
B. Personal transactions must be conducted consistent
with this Code of Ethics in a manner that avoids any actual or
potential conflict of interest; and
C. No inappropriate advantage should be taken of any
position of trust and responsibility.
2. Definitions
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A. "Fund" means each and every investment company, or
series thereof, or other institutional account managed by the
Adviser, individually and collectively.
B. "Access Person" means any Trustee (other than a
Disinterested Trustee who does not obtain information
concerning recommendations made to the Fund regarding the
purchase or sale of a security), officer, general partner,
Portfolio Manager or Advisory Person of the Fund or (i) any
temporary or permanent employee of the Fund or of any company
in a control relationship to the Fund, who, in connection with
his regular functions or duties, makes, participates in or
obtains information regarding the purchase or sale of a
security by the Fund, or whose 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 Fund who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security. For purposes of Section 4, "Access Person" shall not
include Advisory Persons nor Portfolio Managers. The
Compliance Officer of each Fund shall maintain a list of the
Fund's Access Persons.
C. "Advisory Person" means any Portfolio Manager or
other investment person, such as an analyst or trader, who
provides information and advice to a Portfolio Manager or
assists in the execution of the investment decisions. For
purposes of Section 4, "Advisory Person" shall not include
Portfolio Managers.
D. A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security has been
made and communicated and, with respect to the Advisory Person
making the recommendation, when such person seriously
considers making such a recommendation.
E. "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.
F. "Control" shall have the same meaning as that set
forth in Section 2(a)(9) of the Investment Company Act, as
amended.
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G. "Disinterested Trustee" means a Trustee of a Fund who
is not an "interested person" of the Fund within the meaning
of Section 2(a)(19) of the Investment Company Act, as amended.
H. "Initial Public Offering" means a public sale of an
issue not previously offered to the public.
I. "Managed Fund" shall mean those Funds, individually
and collectively, for which the Portfolio Manager makes buy
and sell decisions.
J. "Portfolio Manager" means the person entrusted to
make the buy and sell decisions for a Fund.
K. "Private Placement" shall have the same meaning as
that set forth in Section 4(2) of the Securities Exchange Act.
L. "Purchase or sale of a security" includes inter alia,
the writing of an option or the purchase or sale of a security
that is exchangeable for or convertible into, a security that
is held or to be acquired by a Fund.
M. "Security" shall have the meaning set forth in
Section 2(a)(36) of the Investment Company Act, as amended,
except that it shall not include securities issued by the
Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and shares of
registered open-end investment companies.
3. Exempted Transactions
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The prohibitions of Section 4 of this Code 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 in the reasonable estimation of the Compliance
Officer.
B. Purchases or sales of securities (1) not eligible for
purchase or sale by the Fund; or (2) specified from time to
time by the Trustees, subject to such rules, if any, as the
Trustees shall specify.
C. Purchases or sales which are non-volitional on the
part of either the Access Person or the Fund.
D. Purchases of shares necessary to establish an
automatic dividend reinvestment plan or pursuant to an
automatic dividend reinvestment plan, and subsequent sales of
such securities.
E. 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.
4. Prohibited Activities
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A. IPO Rule: No Advisory Person or Portfolio Manager may
purchase securities in an Initial Public Offering, except with
the prior approval of the Compliance Officer of the
Fund.
B. Private Placement Rule: No Advisory Person or
Portfolio Manager may purchase securities in a Private
Placement unless such purchase has been approved by the
Compliance Officer of the Fund. Any such approved purchase
should be disclosed to the Fund if that issuer's securities
are being considered for purchase or sale by the Fund. Such
consideration for purchase or sale shall be conducted by a
person other than the interested Advisory Person or Portfolio
Manager.
C. Preclearance Rule: No Access Person, Advisory Person
nor Portfolio Manager may purchase or sell a security unless
such purchase or sale has been precleared by the Compliance
Officer of the Fund. Preclearance shall be valid through the
business day next following the day preclearance is given.
Exceptions: The following securities transactions are exempt
from the pre-clearance requirement:
1. Purchases or sales of up to 500 shares of
securities of issuers ranked within the top
200 of the Standard & Poor's 500 Composite
Stock Index (S&P 500) (the "Large Cap List")
at the time of purchase or sale. The
Compliance Officer of the Fund shall
distribute an updated list of such
securities quarterly.
2. Purchase orders sent directly to the issuer
via mail (other than in connection with a
Private Placement) or sales of such
securities which are redeemed directly by
the issuer via mail.
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Note: The Compliance Officer of the Fund may deny approval of
any transaction requiring preclearance under this Preclearance
Rule, even if nominally permitted under this Code of Ethics,
if he/she reasonably believes that denying preclearance is
necessary for the protection of a Fund. Any such denial may be
appealed to the Fund's Counsel. The decision of Counsel shall
be final.
D. Open Order Rule: No Access Person, Advisory
Person or Portfolio Manager may 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, when a Fund has a pending "buy" or "sell" order for
that security of the same type (i.e. buy or sell) as the
proposed personal trade, until the Fund's order is executed or
withdrawn.
Exceptions: The following securities transactions are exempt
from the Open Order Rule:
1. Purchases or sales of up to 500 shares of
securities of issuer on the Large Cap List
at the time of the transaction.
2. Purchases or sales approved by the
Compliance Officer of the Fund in his/her
discretion.
Any profits realized on a personal trade in violation of this
Section 4D must be disgorged.
E. Blackout Rule: If a Portfolio Manager's Managed Fund
holds a security that is the subject of a proposed personal
trade by that Portfolio Manager, such personal trade may be
permitted only as follows:
1. If the proposed personal trade is on the
same side as the last Managed Fund
transaction in that security, the personal
trade cannot occur within two days of such
Managed Fund transaction (i.e. neither at T
nor T + 1 calendar day).
2. If the proposed personal trade is on the
opposite side of the last Managed Fund
transaction in that security, the personal
trade cannot occur unless (a) it is more
than two days after the Managed Fund
transaction (i.e. T + 2 calendar days or
later) and (b) the Preclearance Request, if
required for such personal transaction (i.e.
it is not eligible for the Large Cap List
exception to the Preclearance Rule) sets
forth, to the reasonable satisfaction of the
Compliance Officer, an explanation of the
reasons the Managed Fund is not effecting a
similar transaction.
Transactions permitted under the Blackout Rule must also
satisfy the Open Order Rule and the Preclearance Rule if and
to the extent the transaction is not covered by exceptions to
those rules.
Any profits realized by a Portfolio Manager on a personal
trade in violation of this Section 4E must be disgorged.
F. Holding Period Rule: Access Persons, Advisory Persons
and Portfolio Managers must hold each Security, other than
those described in Section 3B, (securities (1) not eligible
for purchase or sale by the Fund; or (2) specified from time
to time by the Trustees, subject to such rules, if any, as the
Trustees shall specify) for a period of not less than sixty
(60) days, whether or not the purchase of such Security was an
exempt transaction under any other provision of Section 4.
Any profits realized on trading in contravention of this
policy must be disgorged.
G. No Advisory Person shall accept any gift or other
item of more than de minimis value from any person or entity
that does business with or on behalf of the Fund.
H. No Advisory Person shall serve on the board of
directors of a publicly traded company without prior
authorization by the President or the Compliance Officer of
the Fund. If board service is authorized, such Advisory Person
shall have no role in making investment decisions with respect
to the publicly traded company.
5. Compliance Procedures
---------------------
A. All Access Persons shall direct their brokers to
supply, at the same time that they are sent to the Access
Person, a copy of the confirmation for each personal
securities trade and a copy of each periodic account statement
to the Fund's Compliance Officer.
25
<PAGE>
B. Every Access Person shall report to the Fund the
information described in Section 5D of this Code with respect
to transactions in any security in which such Access Person
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; 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.
C. A Disinterested Trustee of the Fund need only report
a transaction in a security if such Trustee, at the time of
that transaction knew or, in the ordinary course of fulfilling
his official duties as a Trustee of the Fund, should have
known that, (1) during the 7-day period immediately preceding
or after the date of the transaction by the Trustee, such
security was purchased or sold by the Fund or (2) such
security was being considered for purchase or sale by the
Fund.
D. Every report required pursuant to Section 5B above
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, and shall 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 (i.e.,
purchase, sale, or any other type of acquisition or
disposition);
(iii) The price at which the transaction was
effected;
(iv) The name of the broker, dealer or bank with
or through whom the transaction was effected; and
(v) The date of approval of the transaction and
the person who approved it as required by Section 4B
or C above.
E. Each Access Person shall submit a report listing all
personal securities holdings to the Compliance Officer upon
the commencement of service and annually thereafter. This
annual report shall include a certification by the Access
Person that he or she has read and understood the Code of
Ethics and has complied with the Code's requirements.
F. Any report made under this Section 5 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.
G. The Compliance Officer shall submit an annual report
to the Fund's Board of Trustees that summarizes the current
Code of Ethics procedures, identifies any violations requiring
significant remedial action, and recommends appropriate
changes to the Code, if any.
H. Any Access Person or Disinterested Trustee shall
immediately report any potential violation of this Code of
which he or she becomes aware to the Fund's Compliance
Officer.
6. Sanctions
---------
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as it deems appropriate, including inter
alia, a letter of censure or suspension or termination of employment,
or suspension of personal trading privileges for such period as it may
deem appropriate.
26
<PAGE>
SENECA CAPITAL MANAGEMENT
CODE OF ETHICS
ADDENDUM
As stated in Section 3B(2) of the Code of Ethics, the Trustees/Directors may
specify from time to time, Exempted Transactions, which are purchases or sales
of securities, which are exempt from Section 4 of the Code.
The following transactions have been specified as Exempt Transactions by the
Trustees/Directors:
1. Purchases or sales of securities issued by Phoenix Investment Partners,
Ltd.
2. Purchases or sales by Directors or Trustees who are not employees of
the adviser or distributor of a fund or any affiliates thereof provided
such Director or Trustee does not obtain information concerning
recommendations to the Fund regarding the purchase or sale of a
security.
27
<PAGE>
CLEMENTE CAPITAL, INC.
----------------------
CODE OF ETHICS
--------------
1. Statement of General Principles
This Code of Ethics expresses the policy and procedures of
Clemente Capital, Inc., its affiliates and subsidiaries ("Clemente"), and is
enforced to insure that no one is taking advantage of his or her position, or
even giving the appearance of placing his or her own interests above those of
Clemente's clients, hereinafter referred to as any "Fund". Clemente company
personnel must at all levels act as fiduciaries, and as such must place the
interests of any Fund before their own. Thus, we ask that when contemplating any
personal transaction you ask yourself what you would expect or demand if you
were a shareholder of any Fund.
Rule 17j-1(a), under the Investment Company Act of 1940 (the
"Act"), included as Appendix A attached hereto, makes it unlawful for certain
persons, in connection with the purchase or sale of securities, to, among other
things, engage in any act, practice or course of business which operates or
would operate as a fraud or deceit upon a registered investment company.
Clemente serves as Advisor to certain registered investment companies. In
compliance with paragraph (b)(1) of Rule 17j-1, this Code contains provisions
that are reasonably necessary to eliminate the possibility of any such conduct.
We ask that all personnel follow not only the letter of this Code, but also
abide by the spirit of this Code and the principles articulated herein.
2. Definitions
"Access Person" shall mean any director, officer, general
partner, Portfolio Manager, Advisory Person or Investment Personnel of the
Advisor, who in the ordinary course of his or her business makes, participates
in or obtains information regarding the purchase or sale of securities for any
Fund or who functions or duties as part of the ordinary course of his or her
business relate to the making of any recommendation to any Fund regarding the
purchase or sale of securities.
"Advisor" shall mean Clemente.
"Advisory Person" means any employee of the Advisor (or of any
company in a control relationship with the Advisor) 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 any Fund, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales, and shall include any natural person in a control
relationship with the Advisor who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a security.
The term "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 there under, except that the determination of direct or indirect
beneficial ownership shall apply to all securities which a person subject to
this Code has or acquires.
"Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act.
"Fund" shall mean The First Philippine Fund Inc., Clemente
Global Growth Fund, any other investment company for which Clemente acts as
investment advisor and any other client for which the Advisor provides
discretionary investment management services.
"Investment Personnel" of the Advisor includes Fund Portfolio
Managers and those persons who provide information and advice to the Portfolio
Managers or who help execute the Portfolio Managers' decisions (e.g., securities
analysts and traders).
"Portfolio Managers" of the Fund shall mean those persons who
have direct responsibility and authority to make investment decisions for the
Fund.
The term "security" shall have the meaning set forth in
Section 2(a)(36) of the Act and shall include options, but shall not include
securities issued or guaranteed by the United States government or its agencies
or instrumentalities, short-term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the Act, bankers
acceptances, bank certificates of deposit, commercial paper, shares of
registered open-end investment companies and such other money market instruments
as may be designated by the Board of Directors of the Fund.
The "purchase or sale of a security" includes, among other
things, the writing of an option to purchase or sell a security.
Appendix B provides definitions of and supplemental
information on the following terms: beneficial ownership, control, interested
person, security and government securities.
3. Prohibited Transactions
The prohibitions described below will only apply to a
transaction in a security in which the designated person has, or by reason of
such transaction acquires, any direct or indirect beneficial ownership.
A. Blackout Trading Periods - Access Persons
-----------------------------------------
No Access Person shall execute a securities transaction on a
day during which the Fund has a pending buy or sell order in that same security
until that order is executed or withdrawn. Any profits realized on trades within
the proscribed periods are required to be disgorged to the applicable Fund. A
pending buy or sell order exists when a decision to purchase or sell a security
has been made and communicated to the Advisor's Legal Compliance Officer.
B. Blackout Trading Periods - Portfolio Managers
---------------------------------------------
No Portfolio Manager shall buy or sell a security within seven
calendar days before and after the Fund that he or she manages trades in that
security. Any profits realized on trades within the proscribed periods are
required to be disgorged to the applicable Fund.
C. Ban on Short-Term Trading Profits - Investment Personnel
--------------------------------------------------------
Investment Personnel may not profit in the purchase and sale,
or sale and purchase, of the same (or equivalent) securities within 60 calendar
days. Any profits realized on such short-term trades are required to be
disgorged to the applicable Fund.
D. Ban on Securities Purchases of an Initial Public Offering -
-----------------------------------------------------------
Investment Personnel
--------------------
Investment Personnel may not acquire any securities in an
initial public offering.
13
<PAGE>
E. Securities Offered in a Private Offering - Investment
-----------------------------------------------------
Personnel
---------
Investment Personnel may not acquire any securities in a
private offering without the prior written consent of Clemente's Legal
Compliance Officer. Furthermore, should written consent be given, Investment
Personnel are required to disclose such investment when participating in any
subsequent consideration of an investment in such issuer. In such circumstances,
Clemente's decision to purchase securities of such issuer should be subject to
an independent review by Investment Personnel of Clemente, who have no personal
interest in the issuer.
4. Exempted Transactions
A. Subject to compliance with preclearance procedures in
accordance with Section 5 below, the prohibitions of Sections 3A, 3B and 3C of
this Code shall not apply to:
(i) Purchases or sales effected in any account over which
the Access Person has no direct or indirect influence
or control, or in any account of the Access Person
which is managed on a discretionary basis by a person
other than such Access Person and with respect to
which such Access Person does not, in fact, influence
or control such transactions.
(ii) Purchases or sales of securities, which are not
eligible for purchase or sale, by any Fund.
(iii) Purchases or sales which are nonvolitional on the
part of either the Access Person or any Fund.
(iv) Purchases which are part of an automatic dividend
reinvestment plan.
(v) 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.
(vi) Any equity securities transaction, or series of
related transactions, involving 500 shares or less in
the aggregate, if (i) the Access Person has no prior
knowledge of transactions in such security by any
Fund and (ii) if the issuer has a market
capitalization (outstanding shares multiplied by the
current price per share) greater than $1 billion.
(vii) Any fixed income securities transaction involving
$10,000 principal amount or less, if the Access
Person has no prior knowledge of transactions in such
securities by any Fund.
(viii) All other transactions contemplated by Access Persons
which receive the prior approval of the Legal
Compliance Officer in accordance with the
preclearance procedures described in Section 5 below.
Purchases or sales of specific securities may receive
the prior approval of the Legal Compliance Officer
because the Legal Compliance Officer has determined
that no abuse is involved and that such purchases and
sales would be very unlikely to have any economic
impact on any Fund or on any Fund's ability to
purchase or sell such securities.
C. A transaction by Access Persons (other than Investment
Personnel) inadvertently effected during the period proscribed in Section 3A
will not be considered a violation of the Code and disgorgement will not be
required so long as the transaction was effected in accordance with the
preclearance procedures described in Section 5 and without prior knowledge of
any Fund trading.
D. Notwithstanding Section 4A(viii), the prohibition in Section
3C shall not apply to profits earned from transactions in securities which
securities are not the same (or equivalent) to those owned, shorted or in any
way traded by any Fund during the 60-day period; provided, however, that if the
Legal Compliance Officer determines that a review of the Access Person's
reported personal securities transactions indicates an abusive pattern of
short-term trading, the Legal Compliance Office may prohibit such Access Person
from profiting in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days whether or not such security is
the same (or equivalent) to that owned, shorted or in any way traded by any
Fund.
5. Preclearance
Access Persons must preclear all personal investments in securities.
All requests for preclearance must be submitted to the Legal Compliance Officer.
Such requests shall be made by submitting a Personal Investment Request Form, in
the form annexed hereto as Appendix C. All approved orders must be executed by
the close of business on the day preclearance is granted. If any order is not
timely executed, a request for preclearance must be resubmitted.
6. Reporting
A. Access Persons are required to direct their broker(s) to
supply to the Legal Compliance Officer on a timely basis duplicate copies of
confirmations of all personal securities transaction and copies of periodic
statements for all securities accounts. Access Persons should direct their
broker(s) to transmit to the Legal Compliance Officer of the Advisor duplicate
confirmations of all transactions effected by such Access Person, and copies of
the statements of such brokerage accounts, whether existing currently or to be
established in the future. A sample letter for this purpose is attached as
Appendix D. The transaction reports and/or duplicates should be addressed
"Personal and Confidential." The report submitted to the Legal Compliance
Officer 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.
Compliance with this Code requirement will be deemed to satisfy the reporting
requirements imposed on Access Persons under Rule 17j-1(c).
B. Whenever an Access Person recommends that any Fund purchase or
sell a security, he or she shall disclose whether he or she presently owns such
security, or whether he or she is considering its purchase or sale.
C. Upon commencement of employment and thereafter on an annual
basis, Access Persons will disclose all personal securities holdings. On an
annual basis, Access Persons will be sent a copy of the Advisor's statement of
such Access Person's personal securities accounts to verify its accuracy and
make any necessary additions or deletions.
D. All personal matters discussed with the Legal Compliance
Officer and all confirmations, account statements and personal investment
reports shall be kept in confidence, but will be available for inspection by the
Board of Directors of any Fund and the Advisor for which such person is an
Access Person, and by the appropriate regulatory agencies.
7. Annual Certification
On an annual basis, Access Persons will be sent a copy of this Code for
their review. Access Persons will be asked to certify that they have read and
understand this Code and recognize that they are subject hereto. Access Persons
will be further asked to certify annually that they have complied with the
requirements of this Code and that they have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to this
Code. A sample of the certification is attached as Appendix F.
14
<PAGE>
8. Confidential Status of Clients' Portfolio
The current portfolio positions of any Fund managed, advised and/or
administered by the Advisor and current portfolio transactions, programs and
analysis must be kept confidential.
If nonpublic information regarding any Fund's portfolio should become
known to any Access Person, whether in the line of duty or otherwise, he or she
should not reveal it to anyone unless it is properly part of his or her work to
do so.
If anyone is asked about any Fund's portfolio or whether a security has
been sold or bought, his or her reply should be that this is an improper
question and that this answer does not mean that any Fund has bought, sold or
retained the particular security. Reference, however, may, of course, be made to
the latest published report of any Fund's portfolio.
9. Nonpublic Material Information
From time to time, the Advisor has circulated and discussed with Access
Persons the latest administrative and judicial decisions regarding the absolute
prohibition against the use of nonpublic material information, also known as
"inside information." In view of the many forms in which the subject can arise,
the Advisor must reiterate that a careful and conservative approach must prevail
and no action should be taken where "inside information" may be involved without
a thorough review by the Legal Compliance Officer.
Material inside information is any information about a company or the
market for the company's securities which has come directly or indirectly from
the company and which has not been disclosed generally to the marketplace, the
dissemination of which is likely to affect the market price of any of the
company's securities or is likely to be considered important by reasonable
investors, including reasonable speculative investors, in determining whether to
trade in such securities.
Information should be presumed "material" if it relates to such matters
as dividend increases or decreases, earnings estimates, changes in previously
released earnings estimates, significant expansion or curtailment of operations,
a significant increase or decline of orders, significant merger or acquisition
proposals or agreements, significant new products or discoveries, extraordinary
borrowing, major litigation, liquidity problems, extraordinary management
developments, purchase or sale of substantial assets, etc.
"Inside information" is information that has not been publicly
disclosed. Information received about a company under circumstances, which
indicate that it is not yet in general circulation and that such information may
be attributable, directly or indirectly, to the company (or its insiders) should
be deemed to be inside information.
Whenever an Access Person receives material information about a company
which he or she knows or has reason to believe is directly or indirectly
attributable to such company (or its insiders), the Access Person must determine
that the information is public before trading or recommending trading on the
basis of such information or before divulging such information to any person who
is not an employee of the Advisor or a party to the transaction. As a rule, one
should be able to point to some fact to show that the information is generally
available; for example, its announcement on the broad tape or by Reuters, the
Wall Street Journal or trade publications. If the Access person has any question
at all as to whether the information is material or whether it is inside and not
public, he or she must resolve the question or questions before trading,
recommending trading or divulging the information. If any doubt at all remains,
the Access Person must consult with the Legal Compliance Officer.
10. Gifts - Investment Personnel
Investment Personnel shall not receive any gift or other thing of more
than de minimis value from any person or entity that does business with or on
behalf of the Fund. For purposes of this Code, "more than de minimis value"
shall mean any gift in excess of a value of $100 per year.
11. Services as a Director in a Publicly Traded Company - Investment
Personnel
Investment Personnel shall not serve on the boards of directors of
publicly traded companies, absent prior authorization by the Advisor's Board of
Directors, based upon a determination that the board service would be consistent
with the interests of the Advisor's clients. When such authorization is
provided, the Investment Personnel serving as a director will be isolated from
making investment decisions with respect to the pertinent company through
"Chinese Wall" or other procedures.
12. Compliance Review
A. The Legal Compliance Officer shall compare the reported
personal securities transactions with completed and contemplated portfolio
transactions of the Fund to determine whether a violation of this Code may have
occurred. Before making any determination that a violation has been committed by
any person, the Legal Compliance Officer shall give such person an opportunity
to supply additional information regarding the transaction in question.
15
<PAGE>
13. Sanctions
The Board of Directors of the Advisor will be informed of Code
violations on a quarterly basis and my impose such sanctions as it deems
appropriate, including inter alia, a letter of censure or suspension or
termination of employment of the Access Person or a request for disgorgement of
any profits received from a securities transaction done in violation of this
Code.
14. Board of Directors Review
Annually, the Board of Directors of the First Philippine Fund,
Clemente Global Growth Fund and of any Fund for which Clemente provides
investment management services shall receive the following:
A. A copy of the existing Code of Ethics.
B. A report completed by the Legal Compliance Officer identifying
any violations requiring significant remedial action during the last year.
C. A list of recommendations, if any, to change the existing Code
of Ethics based upon experience, evolving industry practices or developments in
applicable laws or regulations.
16
<PAGE>
APPENDIX C
This Appendix B provides supplemental information to certain terms used
in the Code of Ethics (the "Code").
"BENEFICIAL OWNERSHIP"
----------------------
What constitutes "beneficial ownership" within the meaning of the Code
(which incorporates the standards under Section 16 of the Securities Exchange
Act of 1934) has been dealt with in a number of SEC releases and has grown to
encompass many diverse situations. These include securities held:
(a) by you for your own benefit, whether bearer, registered in your name,
or otherwise;
(b) by others for your benefit (regardless of whether or how registered),
such as securities held for you by custodians, brokers, relatives,
executors or administrators;
(c) for your account by pledges;
(d) by a trust in which you have an income or remainder interest.
Exceptions: where your only interest is to get principal if (1) some
other remainder man dies before distribution or (2) if some other
person can direct by will a distribution of trust property or income to
you;
(e) by you as trustee or co-trustee, where either you or members of your
immediate family, i.e., spouse, children and their descendants,
stepchildren, parents and their ancestors, and stepparents (treating a
legal adoption as blood relationship), have an income or remainder
interest in the trust;
(f) by a trust of which you are the settlor, if you have the power to
revoke the trust without obtaining the consent of all the
beneficiaries;
(g) by any partnership in which you are a partner;
(h) by a personal holding company controlled by your alone or jointly with
others;
(i) in the name of your spouse unless legally separated;
(j) in the name of minor children or in the name of any relative of yours
or of your spouse (including an adult child) who is presently sharing
your home. This applies even if the securities were not received from
you and the dividends are not actually used for the maintenance of your
home;
(k) in the name of another person (other than those listed in (i) and (j)
just above), if by reason of any contract, understanding, relationship,
agreement, or other arrangement, you obtain benefits substantially
equivalent to those of ownership; or
(l) in the name of any person other than yourself, even though you do not
obtain benefits substantially equivalent to those of ownership (as
described in (k) just above), if you can vest or revest title in
yourself.
Disclaimer of Beneficial Ownership
This broad definition of "beneficial ownership" is for purposes of the
Code; it does not necessarily cover other securities law or tax areas. The Code
states that in reporting a securities transaction to the Fund, the reporting
person can include in his or her report a statement declaring that the report
shall not be construed as an admission that the reporting person has any direct
or indirect beneficial ownership in the security. For example, if a parent as
custodian sold securities owned by a minor child under a Uniform Gifts to Minors
Acts, the other parent would report such transaction, but could disclaim
beneficial ownership by checking the appropriate box on the report. Whether or
not your report carries such a disclaimer is entirely a matter for your own
decision. You may wish to consult your own attorney. A disclaimer may be
important not only in connection with the securities laws, but also because
without it, your report of the stock holdings of family members and relatives
might be evidence of ownership for other purposes, such as estate taxes.
No Influence or Control
The Code states that Disinterested Directors need not report securities
transactions effected in any account over which they do not have "any direct or
indirect influence or control." However, as a practical matter, this "no direct
or indirect influence or control" exception is limited to few situations. The
principal one is that described in paragraph (d) above, where securities are
held in a trust, in which the Disinterested Director has a beneficial interest,
but where he or she is not the trustee and has no control or influence over the
trustee.
Questions regarding beneficial ownership or reporting responsibility
may be directed to the Fund's Legal Compliance Officer.
CONTROL
-------
"Control" is defined in Section 2(a)(9) of the Act as follows:
"[T]he 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.
Any person who owns beneficially, either directly or through one or
more controlled companies, more than 25 per centum of the voting securities of a
company shall be presumed to control such company. Any person who does not own
more than 25 per centum of the voting securities of any company shall be
presumed not to control such company. A natural person shall be presumed not to
be a controlled person within the meaning of this title. Any such presumption
may be rebutted by evidence, but except as hereinafter provided, shall continue
until a determination to the contrary made by the Commission by order either on
its own motion or on application by an interested person. If an application
filed hereunder is not granted or denied by the Commission within sixty days
after filing thereof, the determination sought by the application shall be
deemed to have been temporarily granted pending final determination of the
Commission thereon. The Commission, upon its own motion or upon application, may
by order
17
<PAGE>
revoke or modify an order issued under this paragraph whenever it shall find
that the determination embraced in such original order is no longer consistent
with the facts."
INTERESTED PERSON
-----------------
"Interested person" within the meaning of Section 2(a)(19) of the Act is defined
as follows:
"(19) `Interested person' of another person means -
(A) when used with respect to an investment company -
(i) any affiliated person of that 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 advisor 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 advisor 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 cause (aa) of this
proviso; and
(B) when used with respect to an investment advisor of or a
principal underwriter for any investment company -
(i) any affiliated person of such investment advisor or principal
underwriter,
(ii) any member of the immediate family of any natural person who
is an affiliated person of such investment advisor 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 issues either
by such investment advisor or principal underwriter or by a
controlling person of such investment advisor 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 advisor 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 anytime since the beginning of the last two completed
fiscal years of such investment company a material business or
professional relationship with such investment advisor or
principal underwriter or the principal executive officer or
any controlling person of such investment advisor 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
purpose of this title or for any other purpose for any period prior to the
effective date of such order."
SECURITY
--------
"Security" is defined in Section 2(a)(36) of the Act as follows:
"[A]ny 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 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."
GOVERNMENT SECURITIES
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"Government securities" within the meaning of Section 2(a)(16) of the Act is
defined as follows:
"[A] company which is organized as an insurance company, whose primary
and predominant business activity is the writing of insurance or the reinsuring
of risks underwritten by insurance companies, and which is subject to
supervision by the insurance commissioner or a similar official or agency of the
State; or any receiver or similar official or any liquidating agent for such a
company, in his capacity as such."
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