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MACKAY SHIELDS LLC
CODE OF ETHICS
This Code of Ethics (the "Code") has been issued by MacKay Shields LLC ("MacKay"
or the "Company") in order to set forth applicable guidelines and procedures
that promote ethical practices and conduct by all of its employees.(1) All
recipients of the Code are to read it carefully, retain it for future reference
and abide by its requirements. Also, please refer to the MacKay policy entitled,
"Personal Investment Policy," which has been incorporated into the Code and is
an integral part of its requirements(Exhibit F). The Personal Investment Policy
will provide each employee with specific guidance concerning personal security
investments and the responsibilities associated with that activity.
MacKay requires that all employees observe the applicable standards' of duty and
care. An employee may not evade the provisions of the Code by having another
person, including a friend relative or other, act or fail to act in a manner in
which the employee is prohibited.
I. GENERAL POLICY
It shall be a violation of this Code and its procedures, for any
employee of the firm, in connection with the purchase or sale, directly or
indirectly, of any security held or to be acquired by any client including a
registered investment company or other entity (collectively a "Client"):
1. to employ any device, scheme or artifice to defraud any Client
for which the firm serves as an investment adviser or
sub-adviser;
2. to make to the Client any untrue statement of a material fact
necessary or to omit to state to the Client a material fact
necessary in order to make the statements made, in light of
the circumstances under which they are made not misleading;
3. to engage in any act, practice or course of business that
operates or would operate as a fraud or deceit upon the
Client; or
4. to engage in any manipulative practice with respect to the
Client.
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(1) In addition to every MacKay employee adhering to the requirements of the
Code, certain MacKay employees (i.e., members of the Financial Analysts
Federation, the Institute of Chartered Financial Analysts and holders of
and candidates for the Chartered Financial Analyst designation) must also
comply with the Code of Ethics and Standards of Professional Conduct
established by the Association for Investment Management and Research
("AIMR").
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II. GUIDELINES AND PROCEDURES
Guidelines
As a fundamental requirement, MacKay demands the highest standards of
ethical conduct on the part of all its employees. All employees must
abide by this basic standard and never take inappropriate advantage of
their position with the Company.
Each employee is under a duty to exercise his or her authority and
responsibility for the primary benefit of MacKay and may not have
outside interests conflicting with the interests of the Company. Each
person must avoid any circumstance which might adversely affect or
appear to affect MacKay, its clients or his or her duty of complete
loyalty to MacKay in the discharge of his or her responsibilities. This
duty includes the protection of client and company confidential
information and MacKay's reputation for trustworthy financial service.
As part of this ongoing responsibility, each employee has the duty to
disclose to MacKay any interest that he or she may have in any firm,
corporation or business unit which is not affiliated or participating
in any joint venture or partnership with MacKay or its affiliates.(2)
Disclosure should be timely so that MacKay may take action concerning
any possible conflict as it deems appropriate. It is recognized,
however, that MacKay has or may have business relationships with many
organizations and that a relatively small interest in publicly traded
securities of an organization does not necessarily give rise to a
conflict of interest. Therefore, the following procedures and the
Annual Questionnaire have been adopted and approved by MacKay.
Procedures
a) It is considered generally incompatible with an employee's duties to
MacKay to assume the position of director of a corporation. A report
should be made by an employee to MacKay of any invitation to serve as a
director of a corporation which is not an affiliate and the person must
receive the approval of the General Counsel or Chief Compliance Officer
("CCO") prior to accepting any such directorship. In the event that
approval is given, the corporation in question shall immediately be
placed on MacKay's "Restricted List".
b) Except as approved by the General Counsel or CCO, it is considered
generally incompatible with the duties of an employee of MacKay to act
as an officer, general
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(2) Affiliates shall mean any corporation controlling, controlled by or under
common control with, MacKay.
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partner, consultant, agent, representative or employee of any other
business, other than an affiliate.
c) Except as approved by the General Counsel or CCO, employees may not
have a monetary interest, as principal, co-principal, agent or
beneficiary, directly or indirectly, or through any substantial
interest in any other corporation or business unit, in any transaction
involving MacKay, subject to the same exceptions as are specifically
permitted under law.
d) Once a year, a "Questionnaire On Conflicts Of Interest", substantially
in the form of Exhibit A, shall be distributed to each employee for
completion and filing with the General Counsel or CCO. Each employee
shall supplement the annual questionnaire as necessary to reflect any
material change between annual filings.
e) Gifts/entertainment from third parties that do business with MacKay,
its affiliates, or its clients and exceed a value of $50 (promotional
gifts) and $100 (meals) must be approved by the employee's Division
Head. Registered representatives of NYLIFE Securities Inc. and
Investment Personnel for the mutual funds are prohibited from accepting
gifts/entertainment valued at more than $100 (in the aggregate) per
year.
f) Employees are to disclose to the General Counsel or CCO all personal
securities holdings immediately upon commencement of employment, and in
no case later than ten (10) days beyond the employee's start date. (See
Exhibit B of the Personal Investment Policy attached for a copy of the
"Employee Initial Securities Holdings Report and Certification" form).
g) On an annual basis, employees must disclose to the General Counsel or
CCO all personal securities holdings (i.e., all securities that are
beneficially owned by an employee AS OF YEAR-END). The required
disclosure should be made immediately after each calendar year and in
no case later than January 30th of any year. (See Exhibit C of the
Personal Investment Policy attached for a copy of the "Employee Annual
Securities Holdings Report and Certification" form).
h) All reports furnished pursuant to this policy will be maintained on a
confidential basis and will be reasonably secured to prevent
unauthorized access to such files.
II. THE CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT - FOR
FINANCIAL ANALYSTS
The Code of Ethics and Standards of Professional Conduct applicable to
financial analysts are set forth as Exhibit D. MacKay requires that
each of its financial analysts comply with the provisions of that code
and standards.
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III. MUTUAL FUND CODE OF ETHICS AND SUPPLEMENT THERETO
As discussed above, each employee is under a duty to exercise his or
her authority and responsibility for the primary benefit of the
Company. Employees must abstain from participation (or any other
involvement) in "insider trading" in contravention of applicable laws
or regulations. All personal securities transactions must be conducted
consistent with the Code (which includes MacKay's Personal Investment
Policy) and in such a manner as to avoid any actual, potential or
apparent conflict of interest or any abuse of an individual's position
of trust and responsibility. Although MacKay limits employee compliance
in this area to its Code (and not the code of ethics of each registered
investment for which it sub-advises), as an investment adviser to
registered investment companies, the Company and certain of its
employees (i.e., Portfolio Managers, Analysts, Traders etc.) may owe a
specific duty of care to each fund depending upon an employee's status
as an "Access Persons" of that mutual fund. .(3) MacKay's
legal/compliance group has reviewed the requirements of Rule 17j-1 of
the Investment Company Act of 1940 and has determined that an
employee's compliance with the firm's Code will satisfy not only that
Rules requirements, but the substantive code of ethics requirements of
every registered investment company that we sub-advise.
IV. ACKNOWLEDGMENT
Each employee must certify annually, in substantially the form of
Exhibit F, that he or she has read and understood, and that they are
subject to and have compiled with, the Code(s).
V. SANCTIONS
While compliance with the provisions of the Code(s) is anticipated,
employees should be aware that in response to any violations, the
Company shall take whatever action is deemed necessary under the
circumstances including, but with out limitation, the
imposition of appropriate sanctions. These sanctions may include,
among others, the reversal of trades, reallocation of trades to client
accounts, disgorging profits or, in more serious cases, employee
suspension or termination.
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(3) For MacKay's purposes, an Access Person is any employee who, in connection
with his or her regular duties, makes, participates in, or obtains information
regarding, the purchases or sale of securities by a fund, or whose functions
relate to the making of any recommendations with respect to such purchases or
sales. An access person would also include any employee who has the power to
exercise a controlling influence over the management or policies of the Company.
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VI. REVIEW BY GENERAL COUNSEL OR CCO
The General Counsel or CCO will undertake a quarterly review with
respect to the Code to verify that the Code is being followed. The
results of this review will be set forth in a quarterly report. The
report shall specify any related concerns and recommendations and be
accompanied by the appropriate exhibits.
VII. RESPONSIBILITIES OF THE COMPLIANCE COMMITTEE
The Compliance Committee will review quarterly the summary report of
the General Counsel or CCO and shall take appropriate action.
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EXHIBIT A
MACKAY SHIELDS LLC
NAME:____________________________
TITLE:___________________________
QUESTIONNAIRE ON CONFLICT OF INTERESTS
1. Please list any officership, directorship, trusteeship or material
employment which you (or any dependent relative) hold in any
corporations, associations, partnerships or companies or in any
affiliates of MacKay Shields LLC (the "Limited Liability Company"). If
you do not have any, please insert "NONE" below.
2. (a) Please list any substantial financial interest (such as 1% or more
of the outstanding stock or other equity or ownership interests) you (or
any dependent relative) may have in any business unit which you know is
a supplier of or soliciting orders for sales or services to the Company
or its affiliates. If you do not have any, please insert NONE below.
(b) Please list any substantial financial interest (such as 1% or more
of the outstanding stock or other equity or ownership interests) you (or
any dependent relative) may have in any business unit which you know is
doing business with the Company or its affiliates, other than suppliers
referred to above. If you do not have any, please insert NONE below.
3. Please list any substantial financial interest (such as 1% or more of
the outstanding stock or other equity or ownership interests) you (or
any dependent relative) may have in any business unit. If you do not
have any, please insert NONE below.
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4. Please list the names (not amount of the holdings) of any corporations
or business units in which you (or any dependent relative) have a
substantial financial interest (such as 1% or more of the outstanding
stock or other equity or ownership interests) and in which, to your
knowledge, the Company or its affiliates or clients has an investment.
If you do not have any, please insert NONE below.
5. Please list the names of any corporations or business units in the
following categories in which you (or any dependent relative) may have
any interest or financial holding. (The amount of holding or the number
of shares of stock need not be listed.) If you do not have any, please
insert NONE below.
(a) Any investment advisor, investment banking firm, brokerage firm or
other business unit other than affiliates. (Do not include brokerage or
similar accounts or investments in mutual funds.)
(b) Any Company or business unit in which to your knowledge the Company
or a client or an affiliate has an investment.
(c) Any company, other than affiliates, whose principal business is the
issuance and sale of life insurance, annuities or accident and health
insurance policies, or the provision of financial or health services or
products (including any life insurance or health insurance agency,
brokerage or insurance consultant firm). Do not include interests in
policies, annuities or health insurance contracts.
(d) Any mortgage loan correspondent of any affiliate or any other
concern engaged primarily in the business of buying, selling or
servicing real estate mortgages. Do not include mortgages upon property
owned by you, or personal investments in real estate investment
trusts.)
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6. Please list (i) the names of any business firms in which you (or any
dependent relative) have an interest or financial holding and which have
property which to your knowledge is subject, in whole or in part, to a
real estate mortgage held by the Company, its affiliates or the
Company's employees, officers or members of its board of directors and
(ii) any of your (or your dependent relative's) financial liabilities,
including with respect to real estate to the Company, its affiliates or
the Company's employees, officers or members of its board of directors.
If you do not have any, please insert NONE below.
7. Please list or summarize any financial interest you (or any dependent
relative), have which, in your opinion, affects or might appear to
affect adversely the discharge of your duties and responsibilities to
the Company. If you do not have any, please insert NONE below.
If a material change occurs in any matters reported in this
Questionnaire or new circumstances are discovered evidencing any
conflict of interests or other deviations from the Company's Code of
Ethics, the undersigned hereby undertakes promptly to file with the
General Counsel an appropriate amendment or supplement to this
Questionnaire until it is superseded by the next completed Annual
Questionnaire.
Date:_______________________, __________________________________
(Signature)
__________________________________
(Name)
__________________________________
(Title)
If any of the spaces allocated above are insufficient, please attach a complete
list following this signature page.
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EXHIBIT- B
EMPLOYEE INITIAL SECURITIES HOLDINGS REPORT AND CERTIFICATION
Statement to MacKay Shields LLC By
------------------------------------------
(Please print your full name)
Today's Date:
---------------
As of the date appearing above, the following are each and every
security and account in which I have a direct or indirect "Beneficial
Ownership" Interest (not including bank certificates of deposit,
open-end mutual fund shares Treasury obligations and Unit Investment
Trusts that hold securities in proportion to a broad base index). For
purposes of this report, the term Beneficial Ownership shall mean,
ownership of securities or securities accounts by or for the benefit of
a person, or such person's "family member", including any account in
which the employee, or family member of that person holds a direct or
indirect beneficial interest, retains discretionary investment
authority or exercises a power of attorney. The term "family member"
means any person's spouse, child or other relative, whether related by
blood, marriage or otherwise, who either resides with, or is
financially dependent upon, or whose investments are controlled by that
person and any unrelated individual whose investments are controlled
and whose financial support is materially contributed to by the person,
such as a "significant other."
<TABLE>
<CAPTION>
AMOUNT (NO. OF NATURE OF INTEREST BROKER, DEALER (OR
NAME OF SECURITY/ SHARES OR (DIRECT OWNERSHIP, BANK ACTING AS
TYPE OF SECURITY PRINCIPAL AMOUNT) SPOUSE, CONTROL, ETC.) BROKER) INVOLVED
<S> <C> <C> <C>
</TABLE>
I CERTIFY THAT THE SECURITIES LISTED ABOVE, ARE THE ONLY SECURITIES IN WHICH I
HAVE A DIRECT OR INDIRECT BENEFICIAL OWNERSHIP INTEREST.
EMPLOYEE SIGNATURE: ______________________________
<TABLE>
<S> <C> <C>
Received By: _____________________ Reviewed By: ____________________ COMMENTS:
Title:____________________________ Title:___________________________
Date: ___________________ Date:______________________
</TABLE>
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EXHIBIT- C
EMPLOYEE ANNUAL SECURITIES HOLDINGS REPORT AND CERTIFICATION
Statement to MacKay Shields LLC By
-------------------------------------------
(Please print your full name)
For the Calendar year ended
--------------------------
I certify that the following are all Personal Securities holdings (not
including bank certificates of deposit, registered open-end mutual fund shares,
Treasury obligations (i.e., TBills, Notes and Bonds) and Unit Investment Trusts
that hold securities in proportion to a broad base index) beneficially held by
me as of the year end appearing above.* By "Personal Securities" I mean any
securities over which I have influence or control and also any securities (i) in
which I, my spouse, or members of our family (including my parents, minor
children and any relative of mine who is sharing my home) have beneficial
ownership or (ii) from which I or they derive in any manner benefits
substantially equivalent to those of ownership.
<TABLE>
<CAPTION>
Amount (No. of Nature of Interest Broker, Dealer (or
Name of Shares or Trade Nature of Transaction, (Direct Ownership, Bank acting as
Security Principal Amount) Date (Purchase, Sale, Etc.) Price Spouse, Control, Etc.) Broker) Involved
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C> <C>
Signature: Date:
---------------------------- --------------------------
Received By: Reviewed By: Comments:
-------------------------- ---------------------------------
Title: Title:
--------------------- ---------------------------
Date: Date:
--------------------- ---------------------------
</TABLE>
* NOTE: IN LIEU OF AN EMPLOYEE LISTING ON THIS FORM EACH SECURITY HELD AS OF
YEAR-END, HE/SHE MAY ATTACH AS AN EXHIBIT TO THIS DOCUMENT, AND ANNUAL
STATEMENT(S) FROM EVERY BROKERAGE FIRM WITH WHICH AN EMPLOYEE HAS A
BENEFICIAL SECURITY INTEREST. NOTWITHSTANDING THIS ACCOMMODATION, IT IS THE
EMPLOYEE'S SOLE RESPONSIBILITY TO ENSURE THAT THE INFORMATION REFLECTED IN
THAT STATEMENT(S) IS ACCURATE AND COMPLETELY DISCLOSES ALL RELEVANT
SECURITIES HOLDINGS.
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EXHIBIT D
AIMR CODE OF ETHICS
(INSERT HERE)
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EXHIBIT E
MACKAY SHIELDS LLC CODE OF ETHICS
ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE(S) OF ETHICS
I hereby certify that I have received a copy of MacKay Shields Code of
Ethics (the "Code") and have read the Code and understand its
requirements. I further certify that I am subject to the Code and have
complied with its all the requirements set forth there in.
-----------------------------
Name:
Position:
--------------------------
Date
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EXHIBIT F
MACKAY SHIELDS LLC
PERSONAL INVESTMENT POLICY
I. IN GENERAL
MacKay Shields LLC ("MacKay") owes an undivided loyalty to its clients.
MacKay also recognizes the need to permit its employee's reasonable
freedom with respect to their personal investment activities. It is
important to accommodate in an appropriate way which (a) acknowledges
the possibility of conflict between these duties and (b) sets forth
standards to assure that the primary duty of loyalty to its clients is
fulfilled.
This policy ("Policy") supersedes and replaces in full any earlier
policies on the subjects regulated.
The Policy has been implemented by MacKay although securities purchased
or sold for clients ordinarily trade in a sufficiently broad market to
permit transactions for clients or personal accounts to be completed
without any appreciable impact on the market for such securities.
Any questions which arise relating to the Policy should be referred to
the General Counsel or Chief Compliance Officer ("CCO"). If necessary,
any final determination may be made by the Chairman or President in
consultation with the General Counsel or CCO. This Policy is applicable
to all employees and directors.(4)
II. RECORD KEEPING AND REPORTING REQUIREMENTS
1. Personal Record Keeping
Each employee of MacKay is to maintain records adequate to
establish that the individual's personal investment decisions
did not involve a conflict with the requirements of the
Policy. If there is any question as to whether a proposed
transaction might involve a possible violation of the Policy,
the transaction should be discussed in advance with the
General Counsel or CCO.
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(4) Because they are subject to compliance policies of affiliates and not
involved in the detailed day to day management of MacKay, members of the
board of directors of MacKay who are not employees of MacKay are required
hereunder solely to complete and file the reports required in accordance
with Part II 3a (1).
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2. Pre-Clearance Reporting Requirement
Each employee shall file with the General Counsel or CCO (via
electronic means), a request ("Request") in substantially the form of
Exhibit A before completing any transaction in securities ("Personal
Securities") in any account over which the employee exercises
beneficial ownership(5); provided, however, that a Request need not be
filed with respect to any transaction (a) effected in any account which
is managed on a discretionary basis by a person other than such
employee and with respect to which such employee does not in fact
influence or control such transactions or (b) in securities listed in
Part III 1 (1-4) which do not require prior approval. All Personal
Securities transactions are, of course, subject to all other MacKay
compliance policies relating to personal trading.(6)
3. Other Reporting Requirements
a) Statutory
MacKay is required under the Investment Advisers Act of 1940 and
Investment Company Act of 1940 to keep records of transactions in
securities in which its directors and employees have direct or indirect
beneficial ownership. The following reporting requirements have been
adopted to enable MacKay to satisfy these requirements:
1. At the time of hiring, but in no case later than ten (10) days
from the date of commencement of employment with the firm, every
new employee shall submit to the General Counsel or CCO, a report
in substantially the form of Exhibit B ("Employee Initial
Securities Holdings Report and Certification"), disclosing every
security and account in which that employee has a direct or
indirect beneficial ownership interests;
2. At the end of each calendar year, but in no case later than
January 30th of the following year, every employee shall submit to
the General Counsel or CCO, a report in substantially the form of
Exhibit C ("Employee Annual Securities Holdings Report and
Certification"), disclosing all personal securities holdings
beneficially owned by an employee AS OF YEAR-END;
3. Each director and employee shall file with the General Counsel or
CCO, a report in substantially the form of Exhibit D ("Quarterly
Report"), within 10 days following the end of each calendar
(5) "Beneficial Ownership" means ownership of securities or securities accounts
by or for the benefit of a person, or such person's "family member", including
any account in which the employee, or family member of that person holds a
direct or indirect beneficial interest, retains discretionary investment
authority or exercises a power of attorney. The term "family member" means any
person's spouse, child or other relative, whether related by blood, marriage or
otherwise, who either resides with, or is financially dependent upon, or whose
investments are controlled by that person. The term also includes any unrelated
individual whose investments are controlled and whose financial support is
materially contributed to by the person, such as a "significant other."
(6) See MacKay compliance policies entitled "Restricted List", "Partnership
Investments", "Code of Ethics", and "Inside Information"
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quarter in which a transaction occurs in Personal Securities,
other than those listed in Part III (1-4). The Quarterly Report
must be filed for transactions in any security in which a director
or an employee has, or by reason of such transaction acquires or
disposes of, any beneficial ownership. Each director and employee
must sign and print the date of submission on their Quarterly
Report; and
4. Each employee of MacKay must annually execute an acknowledgment
with respect to the Policy in substantially the form of Exhibit E.
b) Additional Quarterly Reporting
Each employee shall file with the General Counsel or CCO, as part of
the Quarterly Report, the names and affiliations of family members(7)
who are employed in the securities or commodities industries and who
might be in a position to benefit directly or indirectly from the
activities of MacKay's personnel in the discharge of their duties.
c) Duplicate Confirmations
Each employee shall arrange for prompt filing by the broker, dealer
and, if possible, bank (only applies to bank accounts used
substantially as brokerage accounts) with the General Counsel or CCO of
duplicate confirmations of all trades of personal securities and
quarterly account statements. The duplicates shall be mailed to MacKay
Shields LLC, 9 West 57th Street, 34th Floor, New York, New York 10019,
Attention: General Counsel or CCO.
d) Accounts List
Each employee shall be required to complete a list in substantially the
form of Exhibit F setting forth each brokerage account (and each bank
account which is used substantially as a brokerage account) name,
number, and the name of each firm through which transactions are
directed with respect to all accounts in which the individual may have
beneficial ownership. Each individual shall keep this list current by
listings in the Quarterly Report.
III. STATEMENT OF RESTRICTIONS
1. Pre-Clearance
To help prevent front running and insider trading abuses, particularly
with respect to thinly traded securities, no employee of MacKay may
purchase or sell, directly or indirectly, Personal Securities (except
pursuant to the next paragraph) without prior approval of the General
Counsel or CCO. The final determination shall be noted by the General
Counsel or CCO on the Request and dated and communicated to the
employee who submitted the request. The authorization provided by the
General
(7) For purposes of this Policy, family members include the individual's spouse,
minor children, parents or any relative of the individual or the individual's
spouse who is sharing the individual's home.
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Counsel or CCO is effective, unless revoked, only for the calendar day
that the request was submitted and ultimately approved. If the Personal
Securities transaction is not executed on that same day, a new
authorization must be obtained. Subject to the other restrictions set
forth in this Part III and other applicable MacKay's compliance
policies relating to personal trading, transactions in the following
instruments only shall not require prior approval of the General
Counsel or CCO:
1. Bank Certificates of Deposit
2. Registered Open-End Mutual Fund Shares
3. Treasury Obligations
4. Unit Investment Trusts that hold securities in proportion to a
broad based market index
2. Front Running
No employee of MacKay may effect any transaction in Personal Securities
which MacKay is purchasing or selling for any client or proposes to
purchase or sell for any client if such transaction would in any way
conflict with, or be detrimental to, the interest of the client. Each
employee should consult the other restrictions set forth in this Part
III and the MacKay policies entitled "Restricted List and Daily Open
Trades Lists", "Partnership Investments", "Code of Ethics" and "Inside
Information" before making any trades in Personal Securities.
In order to implement the preceding paragraph and to minimize the
possibility of conflicts of interest, the following rules are hereby
made applicable to all transactions by employees in Personal
Securities:
1. No Personal Securities may be purchased or sold if
(i) there is a pending buy or sell order for clients
of MacKay(8) or (ii) any purchase or sale of such
securities have been made for MacKay client accounts
in the prior seven calendar days or can reasonably be
anticipated for MacKay client accounts in the next
seven calendar days.
The CCO or the General Counsel may make an exception
to this rule in the event that the contemplated
transaction involves (i) 500 shares or less in the
aggregate and the issuer has market capitalization
(outstanding shares multiplied by the current market
price per share) greater than $5 billion; or (ii)
less than .0001% of the issuer's market
capitalization, with a maximum of 500 shares that may
be trade within any seven-day period.
2. No Personal Securities may be purchased or sold if
such purchase or sale is effected with a view to
making a profit from a change in the price of such
security resulting from anticipated transactions by
or for MSFC's clients.
(8) Notwithstanding this general prohibition, MacKay will not be deemed
to have a pending buy or sell order in a security if (i) the percentage
difference in price between the then current market price and order price is 20%
or greater, and (2) the issuer of the security has a market capitalization of at
least $5 Billion. For purposes of this policy, a "pending buy or sell order"
shall include both an order placed with a broker to buy or sell a security at a
specified price or better OR an internal decision by MacKay to buy or sell a
security at a specified price or better.
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A DESIGNATED INDIVIDUAL FROM THE MACKAY SHIELDS COMPLIANCE
DEPARTMENT WILL CONSULT WITH PORTFOLIO MANAGERS AND TRADERS IN
THE FIXED INCOME, EQUITY AND CONVERTIBLE DIVISIONS TO ENSURE
COMPLIANCE WITH THESE LIMITATIONS.
3. Use of Brokerage for Personal or Family Benefit
No employee may, for direct or indirect personal or family members
benefit, execute a trade with a broker by using the influence (implied
or stated) of MacKay or any director's or employee's influence (implied
or stated) with MacKay.
4. No Personal Trades Through MacKay's Traders
No Personal Securities trades may be effected through MacKay's traders.
Employees must effect such trades through their personal
broker-dealers.
5. Initial Public Offerings
No initial public offering of securities may be purchased for any
account in which an employee has beneficial ownership, except with the
express written prior approval by the General Counsel or CCO.
6. Private Placements
No private placement securities may be purchased for any account in
which an employee has beneficial ownership, except with the express
written prior approval by the General Counsel or CCO. All employees who
have obtained prior approval and made an investment in a private
placement must disclose that investment if that employee plays a part
in any subsequent consideration of an investment in the issuer by
client accounts. Under such circumstances, MacKay's decision to
purchase securities of the private placement issuer will be subject to
an independent review by investment personnel with no investment in the
issuer.
7. Restricted and Watch Lists
No employee may make a personal trade in securities of an issuer listed
on the Restricted List. Please refer to the MacKay policies entitled,
"Restricted List," for specific guidelines on when issuers of
securities are to be placed on the Restricted List. Securities on the
Watch List will be dealt with on a case by case basis. A designated
individual from the MacKay Compliance Department will compare issuers
listed on the Restricted and Watch Lists to ensure compliance with this
limitation.
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8. Inside Information
Employees may not trade on inside information (i.e., material and
non-public information) or communicate such information to others.
However, inside information matters must be raised immediately with the
General Counsel or CCO. Please refer to the Mackay policy entitled,
"Inside Information," for specific guidelines governing inside
information.
9. Maximum Trades Per Quarter
Employees will be allowed to execute a maximum of fifty trades per
calendar quarter; however, exceptions may be approved by the General
Counsel or CCO on a case-by-case basis.
10. Sixty Day Holding Period
No employee may profit from the purchase and sale or sale and purchase
of the same (or equivalent) security within sixty calendar days.
Exceptions may be made for emergency trades if approved by the General
Counsel or CCO.
IV. SANCTIONS
Upon discovering a violation of the Policy, MacKay may impose sanctions
as it deems appropriate, including, among other sanctions, reversal of
any trade, reallocation of trades to client accounts or suspension or
termination of the employment of the violator.
V. REVIEW BY GENERAL COUNSEL OR CCO
The General Counsel or CCO will review Personal Securities to verify
that the Policy is being followed. The results of this review will be
set forth in a quarterly summary report. The report shall specify any
related concerns and recommendations and be accompanied by appropriate
exhibits.
VI. RESPONSIBILITIES OF THE COMPLIANCE COMMITTEE
The Compliance Committee will review quarterly the summary report of
the General Counsel or CCO and shall take appropriate action.
Page 8
<PAGE> 19
EXHIBIT A.
PERSONAL TRADING FORM
(ONLY AVAILABLE VIA HARD COPY -- SYSTEM GENERATED FORM)
Page 9
<PAGE> 20
EXHIBIT A-1
MACKAY SHIELDS LLC
REQUEST FOR PRE-CLEARANCE OF PERSONAL SECURITIES TRADING
NAME:
_______________________________________________
General Counsel/Senior Compliance Officer:
Initials:
__________________________________________
APPROVED [ ] __________________________________________
DISAPPROVED [ ] __________________________________________
- Trades must be made on the same day that approval is received.
- On small cap or illiquid securities where extra time is needed, advance
approval by the General Counsel or Senior Compliance Officer is required.
<TABLE>
<CAPTION>
# OF SHRS, SYMBOL OR PURCHASE (P) DIRECT OWNERSHIP(D)
DATE NAME OF SECURITY PRINCIPAL AMOUNT, APPROX PRICE CUSIP # SALE SPOUSE (S)
ETC. (S) CONTROL (C)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------ --------------- ---------------- ------------------ ---------------- ---------------- --------------
--------------- ---------------- ------------------ ---------------- ---------------- --------------
--------------- ---------------- ------------------ ---------------- ---------------- --------------
--------------- ---------------- ------------------ ---------------- ---------------- --------------
------------ --------------- ---------------- ------------------ ---------------- ---------------- --------------
</TABLE>
THE PERSON INDICATED ABOVE HAS STATED AND REPRESENTS THAT:
(a) he/she has no insider information relating to the above referenced
issuer(s);
(b) there is no conflict of interest in these transactions with respect to
client portfolios (IF A CONFLICT OF INTEREST EXIST, PLEASE CONTACT
COMPLIANCE DEPARTMENT IMMEDIATELY.); and
(c) these securities are not initial public offerings nor private
placements.
Page 10
<PAGE> 21
EXHIBIT- B
EMPLOYEE INITIAL SECURITIES HOLDINGS REPORT AND CERTIFICATION
<TABLE>
<CAPTION>
<S> <C> <C>
Statement to MacKay Shields LLC By (Please print your full name)
----------------------------------------------------------
</TABLE>
Today's Date:
---------------
As of the date appearing above, the following are each and every
security and account in which I have a direct or indirect "Beneficial
Ownership" Interest (not including bank certificates of deposit,
open-end mutual fund shares Treasury obligations and Unit Investment
Trusts that hold securities in proportion to a broad base index). For
purposes of this report, the term Beneficial Ownership shall mean,
ownership of securities or securities accounts by or for the benefit of
a person, or such person's "family member", including any account in
which the employee, or family member of that person holds a direct or
indirect beneficial interest, retains discretionary investment
authority or exercises a power of attorney. The term "family member"
means any person's spouse, child or other relative, whether related by
blood, marriage or otherwise, who either resides with, or is
financially dependent upon, or whose investments are controlled by that
person and any unrelated individual whose investments are controlled
and whose financial support is materially contributed to by the person,
such as a "significant other."
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount (No. of Nature of Interest Broker, Dealer (or Bank acting as
Name of Security/ Shares or (Direct Ownership, BROKER) INVOLVED
TYPE OF SECURITY PRINCIPAL AMOUNT) SPOUSE, CONTROL, ETC.)
</TABLE>
.
I CERTIFY THAT THE SECURITIES LISTED ABOVE, ARE THE ONLY SECURITIES IN WHICH I
HAVE A DIRECT OR INDIRECT BENEFICIAL OWNERSHIP INTEREST.
EMPLOYEE SIGNATURE: ______________________________
Received By: ___________ Reviewed By: __________ COMMENTS:
Title:__________________ Title:_________________
Date: __________________ Date:__________________
<PAGE> 22
EXHIBIT- C
EMPLOYEE ANNUAL SECURITIES HOLDINGS REPORT AND CERTIFICATION
Statement to MacKay Shields LLC By Please print your full name)
__________________
For the Calendar year ended
__________________
I certify that the following are all Personal Securities holdings (not
including bank certificates of deposit, registered open-end mutual fund shares,
Treasury obligations (i.e., TBills, Notes and Bonds) and Unit Investment Trusts
that hold securities in proportion to a broad base index) beneficially held by
me as of the year end appearing above.* By "Personal Securities" I mean any
securities over which I have influence or control and also any securities (i) in
which I, my spouse, or members of our family (including my parents, minor
children and any relative of mine who is sharing my home) have beneficial
ownership or (ii) from which I or they derive in any manner benefits
substantially equivalent to those of ownership.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Amount (No. of Nature of Interest Broker, Dealer (or
Name of Shares or Trade Nature of Transaction, (Direct Ownership, Bank acting as
Security Principal Amount) Date (Purchase, Sale, Etc.) Price Spouse, Control, Etc.) Broker) Involved
__________ __________________ _____ _______________________ ______ ______________________ _________________
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Signature:____________________________________ Date:_____________________________
</TABLE>
Received By:__________________ Reviewed By:________________ Comments:
Title:___________________ Title:_____________________
Date:__________________ Date: ____________________
<PAGE> 23
*NOTE: IN LIEU OF AN EMPLOYEE LISTING ON THIS FORM EACH SECURITY HELD AS OF
YEAR-END, HE/SHE MAY ATTACH AS AN EXHIBIT TO THIS DOCUMENT, AND ANNUAL
STATEMENT(S) FROM EVERY BROKERAGE FIRM WITH WHICH AN EMPLOYEE HAS A BENEFICIAL
SECURITY INTEREST. NOTWITHSTANDING THIS ACCOMMODATION, IT IS THE EMPLOYEE'S SOLE
RESPONSIBILITY TO ENSURE THAT THE INFORMATION REFLECTED IN THAT STATEMENT(S) IS
ACCURATE AND COMPLETELY DISCLOSES ALL RELEVANT SECURITIES HOLDINGS.
Page 2
<PAGE> 24
EXHIBIT-D
QUARTERLY REPORT
Statement to MacKay Shields LLC By (Please print your full name)
____________
For the Calendar quarter ended 3/31/00
The following are all transactions in Personal Securities (not
including bank certificates of deposit, registered open-end mutual fund shares,
Treasury obligations (i.e., TBills, Notes and Bonds) and Unit Investment Trusts
that hold securities in proportion to a broad base index) effected during the
quarter. By "Personal Securities" I mean any securities over which I have
influence or control and also any securities (i) in which I, my spouse, or
members of our family (including my parents, minor children and any relative of
mine who is sharing my home) have beneficial ownership or (ii) from which I or
they derive in any manner benefits substantially equivalent to those of
ownership.
<TABLE>
<CAPTION>
Amount (No. of Nature of Interest Broker, Dealer (or
Name of Shares or Trade Nature of Transaction, (Direct Ownership, Bank acting as
<S> <C> <C> <C> <C> <C> <C>
Security Principal Amount) Date (Purchase, Sale, Etc.) Price Spouse, Control, Etc.) Broker) Involved
-------- ----------------- ---- ---------------------- ----- ---------------------- ----------------
</TABLE>
Since the prior Quarterly Report, I have opened or closed the following
accounts (including brokerage accounts and bank accounts used substantially as
brokerage accounts):
<TABLE>
<CAPTION>
Firms Through Which Date Account
Account Name and Number Transactions Are Effected Opened or Closed
----------------------- ------------------------- ----------------
<S> <C> <C>
</TABLE>
In connection with any purchases or sales of securities for clients
during the quarter, I disclosed to MacKay Shields LLC any material interests in
my Personal Securities which might reasonably have been expected to involve a
conflict with the interests of clients. Also, I have disclosed all my Personal
Securities holdings to MacKay Shields LLC.
The names and affiliations of family members (see above) who are
employed in the securities or commodities industries and who might be in a
position to benefit directly or indirectly from the activities of MacKay
Shields' personnel in the discharge of their duties are as follows:
Names Affiliations
----- ------------
Date: Signature:
_______________________ _______________________
<PAGE> 25
EXHIBIT E
ACKNOWLEDGMENT
TO: MACKAY SHIELDS LLC
The undersigned hereby:
(i) states that the undersigned has examined a copy of the policy
entitled "Personal Investment Policy" (the "Policy") and understands the
requirements contained therein;
(ii) states that the undersigned has complied with and will comply with
the Policy; and
(iii) authorizes the Corporation to furnish the information contained
in any report of securities transactions filed by the individual to such federal
and state agencies and to the Trustees/Directors of the MainStay Funds as may be
required by law or applicable rules and regulations, on the understanding that,
except for such requirements, the information contained in such reports shall be
treated as confidential and disclosed to no one outside of the Corporation
without the consent of the individual submitting the report.
__________________________________________
(Signature)
__________________________________________
(Print Name)
__________________________________________
(Date)
<PAGE> 26
EXHIBIT F
LIST OF PERSONAL SECURITIES ACCOUNTS
MacKay Shields LLC
9 West 57th Street
New York, NY 10019
Att: General Counsel
Ladies and Gentlemen:
The following are all Personal Securities Accounts in which I have a
beneficial ownership interest:
Account Name and Number (including
brokerage accounts and bank accounts
which are used substantially as Firms Through Which
brokerage accounts) Transactions Are Effected
------------------- -------------------------
By "Personal Securities accounts" I mean any accounts over which I have
influence or control and also any accounts (i) in which I, my spouse or members
of my family (including minor children, my parents and any relative of mine or
my spouse who is sharing my home) have beneficial ownership or (ii) from which I
or they derive in any manner benefits substantially equivalent to those of
beneficial ownership.
______________________________
(Signature)
______________________________
(Print Name)
Date:_______________________
Page 2
<PAGE> 27
INSIDE INFORMATION
SECTION I. General Policy
MacKay Shields LLC ("MacKay") forbids any employee from (i) trading,
either for any MacKay client account or in Personal Securities (as defined in
the MacKay compliance policy entitled "Personal Investment Policy"), on material
and nonpublic information or (ii) communicating material and nonpublic
information to others in violation of the law. This conduct is frequently
referred to as "insider trading." This MacKay policy applies to every employee
and extends to activities within and outside their duties at MacKay. Every
employee must read and retain this policy. Any questions regarding this policy
should be referred to the General Counsel or the Chief Compliance Officer.
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material and nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material and nonpublic information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
a. trading by an insider, while in possession of material and
nonpublic information, or
b. trading by a non-insider, while in possession of material and
nonpublic information, where the information either was
disclosed to the non-insider in violation of an insider's duty
to keep it confidential or was misappropriated, or
c. communicating material and nonpublic information to others.
The elements of insider trading and the penalties for such unlawful
conduct are discussed below. If, after reviewing this policy, you have any
questions you should consult with the General Counsel or the Chief Compliance
Officer.
Page 3
<PAGE> 28
1. Who is an Insider?
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, investment advisers
(including MacKay) and the employees of such organizations. According to the
Supreme Court, the company must expect the outsider to keep the disclosed
nonpublic information confidential and the relationship must at least imply such
a duty before the outsider will be considered an insider.
2. What is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that employees should consider
material includes, but is not limited to: dividend changes, earnings estimates,
changes in previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation, liquidation problems and
extraordinary management developments.
Material information does not have to relate to a company's business.
For example, in the 1987 Carpenter v. U.S. case, the Supreme Court considered as
material certain information about the contents of a forthcoming newspaper
column that was expected to affect the market price of a security. In that case,
a Wall Street Journal reporter was found criminally liable for disclosing to
others the dates that reports on various companies would appear in the Journal
and whether those reports would be favorable or not.
3. What is Nonpublic Information?
Information is nonpublic until it has been effectively communicated to
the marketplace. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The
Wall Street Journal or other publications of general circulation would be
considered public.
Page 4
<PAGE> 29
4. Penalties for Insider Trading
Penalties for trading on or communicating material and nonpublic
information are severe, both for individuals involved in such unlawful conduct
and their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
a. civil injunctions
b. treble damages
c. disgorgement of profits
d. jail sentences
e. fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person
actually benefited, and
f. fines for the employer or other controlling person.
In addition, you should note that bounties may now be paid to persons
who provide information leading to penalties being imposed.
SECTION II. Procedures
The following procedures have been established to aid employees of MS
in avoiding insider trading, and to aid MS in preventing, detecting and imposing
sanctions against insider trading.
If you have any questions about these procedures you should consult the
General Counsel or the Chief Compliance Officer.
Upon discovering a violation of this policy, MS may impose sanctions as
it deems appropriate, including, among other sanctions, reversal of any trade,
reallocation of trades to client accounts or suspension or termination of the
employment of the violator.
1. Identifying Inside Information
Before trading, for others or yourself, in the securities of a company
about which you may have potential inside information, ask yourself the
following questions:
a. Is the information material? Is this information that an
investor would consider important in making his or her
investment decisions? Is this information that would
substantially affect the market price of the securities if
generally disclosed?
b. Is the information nonpublic? To whom has this information
been provided? Has the information been effectively
communicated to the marketplace by being published in Reuters,
The Wall Street Journal or other publications of general
circulation?
Page 5
<PAGE> 30
If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps:
a. Report the matter immediately to the General Counsel or the Chief
Compliance Officer.
b. Do not purchase or sell the securities on behalf of yourself or
others.
c. Do not communicate the information inside or outside MS, other than
to your Division Head and the General Counsel or the Chief
Compliance Officer.
d. After the General Counsel or the Chief Compliance Officer has
reviewed the issue, you will be instructed to continue the
prohibitions against trading and communication, or you will be
allowed to trade and communicate the information.
2. Restricting Access to Material and Nonpublic Information
As indicated above, information in your possession that you identify as
material and nonpublic may not be communicated to anyone, including persons
within MS, except as provided in paragraph 1 above. In addition, care should be
taken so that such information is secure. For example, files containing material
and nonpublic information should be sealed; access to computer files containing
material and nonpublic information should be restricted.
3. Resolving Issues concerning Insider Trading
If, after consideration of the items set forth in paragraph 1, doubt
remains as to whether information is material or nonpublic, or if there is any
unresolved question as to the applicability or interpretation of the foregoing
procedures, or as to the propriety of any action, it must be discussed, as
indicated above, with the General Counsel or the Chief Compliance Officer before
trading or communicating the information to anyone.
4. Acknowledgment
Each employee must annually in writing execute an acknowledgement with
respect to this policy in substantially the form of Exhibit A.
Page 6
<PAGE> 31
5. Other Responsibilities
a. The General Counsel or the Chief Compliance Officer shall place the
names of appropriate issuers on the MacKay Restricted List
maintained in accordance with the MacKay compliance policy entitled
"Restricted List".
b. The General Counsel shall on a semi-annual basis review compliance
with this policy and prepare a report specifying any related
concerns and recommendations (with appropriate exhibits).
c. When appropriate, the General Counsel or the Chief Compliance
Officer shall coordinate with MacKay affiliates with respect to this
policy.
d. The General Counsel or the Chief Compliance Officer shall assure
that each employee of MacKay is familiar with this policy and that
new employees receive a copy of this policy and are given the
opportunity to discuss its provisions with the General Counsel upon
joining MacKay.
e. The General Counsel or the Chief Compliance Officer shall undertake
appropriate educational efforts to acquaint all employees with this
policy.
6. Responsibilities of Compliance Committee
The MS Compliance Committee ("CC") will review on a semi-annual basis
the summary report of the General Counsel and shall take any appropriate action.
Page 7
<PAGE> 32
EXHIBIT A
MACKAY SHIELDS LLC POLICY ON INSIDE INFORMATION
ACKNOWLEDGMENT AND REPRESENTATION
The undersigned hereby:
(i) states that I have examined and understand MacKay's policy entitled
"Inside Information" (the "Policy"); and
(ii) states that the undersigned has and will continue to comply with the
Policy and its requirements.
_________________________________
(Signature)
_________________________________
(Print Name)
_________________________________
(Date)
Page 8
<PAGE> 33
Restricted List Policy
I. In General
MacKay Shields ("MacKay") has determined to maintain a Restricted List
under the supervision of the General Counsel and the Chief Compliance Officer.
The Restricted List shall, as appropriate, list the names of issuers
(i) as to which MacKay may have material inside information, (ii) with which
MacKay may have significant affiliations through directorships or otherwise (as
the General Counsel or the Chief Compliance Officer determines appropriate) and
(iii) as the General Counsel or Chief Compliance Officer may determine to list.
The General Counsel or the Chief Compliance Officer shall remove names of
issuers from the Restricted List as he determines appropriate. The General
Counsel or the Chief Compliance Officer will deliver the Restricted List to all
employees of MS at the times he determines appropriate.
No employee shall disclose, except as the General Counsel or the Chief
Compliance Officer shall approve, the securities or issuers listed in the
Restricted List to any person who is not an employee of MacKay .
The General Counsel or the Chief Compliance Officer is to maintain a
file including each Restricted List.
II. Basic Policy
No employee of MacKay may trade in "Personal Securities" (as defined in
the policy entitled "Personal Investments Policy") if the issuer of the
securities is currently listed in the Restricted List, except as otherwise
permitted as stated in the Restricted List.
No portfolio manager or trader may trade for the benefit of any MacKay
client in any securities of an issuer currently listed in the Restricted List,
except as otherwise permitted as stated in the Restricted List.
Employees of MacKay are to review the Restricted List policy and all
other MacKay compliance policies relating to personal trading* before completing
any trade in "Personal Securities".
----------------
*See MacKay compliance policies entitled "Personal Investment Policy", "Code of
Ethics" and "Inside Information".
Page 9
<PAGE> 34
III. Review
The General Counsel or the Chief Compliance Officer will conduct a
semi-annual review of the Restricted List and of trades for MacKay clients and
of "Personal Securities" trades to verify that this policy is effective. The
results of this review will be set forth in a semi-annual summary report. The
report shall specify any related concerns and recommendations and be accompanied
by any appropriate exhibits.
IV. Responsibilities of Compliance Committee
The MacKay Compliance Committee will review semi-annually the summary
report and shall take any appropriate related action.
Page 10
