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FIRST FUNDS
Code of Ethics
(Amended and Restated on December 5, 1994
and December 6, 1995)
August 23, 2000
1. Purposes.
This Code of Ethics has been adopted by the Board of Trustees of First
Funds in accordance with Rule 17j-1(b) under the Investment Company Act of 1940
(the "1940 Act"). Rule 17j-1 under the 1940 Act generally proscribes fraudulent
or manipulative practices with respect to purchases or sales of securities held
or to be acquired by investment companies, if effected by associated persons of
such companies. The Code of Ethics is intended to reflect the following general
fiduciary principles governing personal investment activities by Fund Access
Persons: (a) the duty at all times to place the interests of the Fund's
shareholders first; (b) the requirement that all personal securities trades be
conducted in a manner consistent with the provisions of this Code of Ethics and
in such a manner as to avoid any actual or potential conflict of interest or
abuse of a position of trust and responsibility; and (c) that Fund investment
personnel should not take advantage of their positions.
The purpose of this Code of Ethics is to provide regulations and
procedures which, consistent with the 1940 Act and the foregoing fiduciary
principles, give effect to the following general prohibitions set forth in Rule
17j-1(a):
(a) It shall be unlawful for any affiliated person of or principal
underwriter for a registered investment company, or any affiliated person of an
investment adviser of or principal underwriter for a registered investment
company in connection with the purchase or sale, directly or indirectly, by such
person of a security held or to be acquired, as defined in this section, by such
registered investment company:
(i) to employ any device, scheme or artifice to defraud such registered
investment company;
(ii) to make to such registered investment company any untrue statement
of a material fact or omit to state to such registered investment company a
material fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(iii) to engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any such registered
investment company; or
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(iv) to engage in any manipulative practice with respect to such
registered investment company.
2. Definitions.
(a) "Access Person" means any trustee, director, officer, general
partner or Investment Personnel of the Fund.
(b) "Adviser" means any entity engaged by the Fund to act as investment
advisor (including sub-advisors) with respect to one or more of the Fund's
Portfolios and which is required by the Rule to maintain a code of ethics with
respect to the Fund's investments.
(c) "Beneficial Ownership" is to 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.
"Beneficial Ownership" includes accounts of a spouse, minor children and
relatives resident in the Access Person's home, as well as accounts of another
person if, by reason of any contract, understanding, relationship, agreement or
other arrangement, the Access Person obtains therefrom benefits substantially
equivalent to those of ownership. Access Persons should contact the Compliance
Officer regarding any questions they have concerning what constitutes Beneficial
Ownership.
(d) "Compliance Officer" means the person acting pursuant to delegated
authority from the Fund's Board of Trustees, who administers this Code of
Ethics.
(e) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act.
(f) "Disinterested Director" means a trustee of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
Investment Company Act.
(g) "Fund" means First Funds, including all of its Portfolios.
(h) "Investment Personnel" means (i) any employee of the Fund, or of
any company in a Control relationship to the Fund, who, in connection with his
or her regular functions or duties, performs the functions of portfolio manager,
research analyst or trader, or 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
provides or obtains information concerning recommendations made to the Fund with
regard to the purchase or sale of a Security, other than a natural person who is
required, or whose employer is required, to have a code of ethics which complies
with the requirements of the Act and Rule 17j-1 promulgated thereunder, to which
such person and the person's personal trading activities are subject (in which
case the Fund's Code of Ethics would not also be applicable to such person).
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(i) "Purchase or sale of a security" includes, inter alia, the writing
of an option to purchase or sell a security.
(j) "Security" shall have the meaning set forth in Section 2(a)(36) of
the Investment Company Act, except that it shall not include shares of
registered open-end investment companies, securities issued by the U.S.
Government, short term debt securities which are "government securities" within
the meaning of Section 2(a)(16) of the 1940 Act, bankers' acceptances, bank
certificates of deposit, commercial paper, and repurchase agreements. Any
questions as to whether a particular investment constitutes a "Security" should
be referred to the Compliance Officer.
(k) "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2) or 4(6)
or pursuant to Rules 504, 505 or 506 under the Securities Act of 1933.
3. Prohibited Transactions. (a) No Investment Personnel of the Fund
shall acquire Securities in an initial public offering where no public market
for such Securities previously existed. Further, no Investment Personnel of the
Fund shall acquire Securities in a private placement Limited Offering unless
such person shall have obtained the express prior approval of the Compliance
Officer to any such purchase. In determining whether to grant or deny such
approval, the Compliance Officer should take into account, among other factors,
whether the investment opportunity should be reserved to the appropriate
Portfolio of the Fund and whether the opportunity is being offered to an
individual by virtue of such person's position with the Fund.
(b) No Access Person, other than trustees and officers of the Fund who
are not employees of the Adviser, shall execute a securities transaction in a
Security being actively considered by the Adviser or any Investment Personnel of
the Adviser for recommendation to the Fund for purchase or sale, or execute a
securities transaction on a day during which any Portfolio of the Fund has a
pending "buy" or "sell" order in that same Security until that order is executed
or withdrawn; (i) no Investment Personnel of the Fund shall buy or sell a
Security within at least seven (7) calendar days before and after a Portfolio of
the Fund that he or she has actual knowledge of trades in that Security, except
that this provision does not apply to "same way" trades following a Fund
transaction. Any profits realized on trades within the proscribed periods shall
be required to be disgorged as directed by the Compliance Officer. The
Compliance Officer may grant exceptions to this prohibition in whole or in part
upon such conditions as the Compliance Officer may impose if the Compliance
Officer determines that no harm resulted to the Fund and that to require
disgorgement would be inequitable or result in undue hardship to the individual
who entered into the transaction.
(c) These prohibitions apply to any purchase or sale by any Access
Person of any convertible Security, option or warrant or any Security of a
different class of any issue whose underlying or other class of Securities is
being actively considered for recommendation to, or are purchased, sold or held
by the Fund or other accounts within the seven (7) days preceding the Access
Person's transaction.
(d) No Investment Personnel of the Fund shall profit in the purchase
and sale, or sale and purchase, of the same (or equivalent) Securities within
sixty (60) calendar days. Any profits
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realized on such short-term trades shall be required to be disgorged. The
Compliance Officer may grant exceptions to this prohibition in whole or in part
upon such conditions as the Compliance Officer may impose, if the Compliance
Officer determines that no harm resulted to the Fund and that to require
disgorgement would be inequitable or result in undue hardship to the individual
who entered into the transactions.
(e) No Access Person shall reveal to any other person (except in the
normal course of his or her duties on behalf of the Fund) any information
regarding Securities transactions by the Fund or under consideration by the Fund
or the Adviser of any such Securities transaction.
(f) No Access Person shall recommend or otherwise attempt to cause any
Securities transaction by the Fund, or participate in any investment decision
concerning particular Securities, without having disclosed his or her interest,
if any, in such Securities or the issuer thereof, including without limitation
(i) his or her direct or indirect Beneficial Ownership of any Securities of such
issuer, (ii) any contemplated transaction by such Access Person in such
Securities, (iii) any position with such issuer or its affiliates, or (iv) any
present or proposed business relationship between such issuer or its affiliates,
on the one hand, and such Access Person or any party in which such Access Person
has a significant interest, on the other; provided, however, that, in the event
the interest of such Access Person in such Securities or issuer is not material
to his or her personal net worth and any contemplated transaction by such Access
Person in such Securities cannot reasonably be expected to have a material
adverse effect on any such transaction by the Fund or on the market for the
Securities generally, such Access Person shall not be required to disclose his
or her interest in the Securities or issuer thereof in connection with any such
recommendation or participation.
(g) No Investment Personnel of the Fund shall receive any gift or other
thing of more than de minim is value from any person or entity that does
business with or on behalf of the Fund.
(h) No Investment Personnel shall serve on the board of directors of
publicly traded companies, absent prior authorization from the Compliance
Officer based upon a determination that the board service would be consistent
with the interests of the Fund and its shareholders. In the event board service
is authorized, Investment Personnel serving as directors shall be isolated from
those making investment decisions through "Chinese Wall" or other appropriate
procedures.
(i) Any exceptions granted by the Compliance Officer shall be reported
by such Officer to the Board of Trustees at their next regularly scheduled
meeting, together with an explanation of the exception granted and the reasons
therefor.
4. Preclearance of Securities Transactions.
No Access Person, other than trustees and officers of the Fund who are
not employees of the Adviser, shall purchase or sell, directly or indirectly,
any Security or derivative thereof in which he or she has, or by reason of such
transaction acquires, any direct or indirect Beneficial Ownership. This
prohibition shall not apply to:
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(a) purchases or sales affected in any account over which the Access
Person has no direct or indirect influence or Control;
(b) purchases or sales of Securities of an issuer, none of whose
Securities are eligible for purchase or sale by any Portfolio of the Fund;
(c) purchases or sales which are nonvolitional on the part of either
the Access Person or the Fund;
(d) purchases which are part of an automatic dividend reinvestment
plan;
(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; or
(f) purchases or sales which receive the prior approval of the
Compliance Officer because they are only remotely potentially harmful to the
Fund, because they would be very unlikely to affect a highly institutional
market, or because they clearly are not related economically to the Securities
to be purchased, held or sold by the Fund.
5. Reporting.
(a) Except as set forth in Section 5(b) hereof, every Access Person
shall report to the Compliance Officer the information described in Section 5(c)
of this Code and as reflected on Exhibit A hereto 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 including, but not limited to, transactions regarding which clearance
has been obtained pursuant to Section 4 above ("Transaction Report"); provided,
however, that an Access Person shall not be required to make a Transaction
Report with respect to transactions effected for any account over which such
Access Person does not have direct or indirect influence or Control.
(b) A Disinterested Director of the Fund need only report a transaction
in a Security if such Director, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a trustee of the
Fund, should have known that, during the fifteen (15) day period immediately
preceding or after the date of the transaction by the Disinterested Director,
such Securities were going to be purchased or sold by the Fund or such purchase
or sale was going to be considered by the Fund or the Adviser for purchase or
sale of the Fund.
(c) Every Transaction Report shall be made not later than ten (10) days
after the end of the calendar quarter in which the transaction to which the
report relates was affected, 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);
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(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or through whom the
transaction was effected.
(d) All Investment Personnel Access Persons shall disclose to the
Compliance Officer, in writing, all personal Securities holdings within sixty
(60) ten (10) days after commencement of employment ("Initial Holdings Report"),
and thereafter on an annual basis no later than February 28 of each year
("Annual Holdings Report").
(e) An Access Person may satisfy his or her requirements hereunder for
the Transaction Reports by having his or her brokerage firm send contemporaneous
duplicate copies of all statements and confirmations to the Compliance Officer.
(f) Any such report required by 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) All Access Persons under a duty to file a quarterly the reports
required by this Section 5 shall be informed of such duty by the Compliance
Officer of the Fund. Once informed of his or her duty to file a quarterly the
reports required by this Section 5, the Access Person shall file all required
reports in a timely manner, until notified otherwise. Information supplied on
the reports is available for inspection by the Securities and Exchange
Commission at any time during the five (5) year period following the end of the
fiscal year in which the report was made.
(h) Investment Personnel who have been authorized to acquire Securities
in a Limited Offering private placement are required to disclose that investment
when they play a part in the Fund's subsequent consideration of an investment in
the issuer. In such circumstances, the Fund's decision to purchase Securities of
the issuer should be subject to an independent review by Investment Personnel
with no personal interest in the issuer.
6. Review of Reports.
The Compliance Officer shall compare the reported personal Securities
transactions of Access Persons with Transaction Reports, Initial Holdings
Reports and Annual Holdings Reports with completed transactions of the Fund and
with any transactions contemplated to be effected for the Fund by any Adviser to
determine whether a violation of this Code may have occurred. Before making any
determination that a violation has or may have been committed by any person, the
Compliance Officer shall give such person an opportunity to supply additional
explanatory material. If the Compliance Officer determines that a violation of
this Code has or may have occurred, he shall submit a written determination,
together with any appropriate supporting documentation and any additional
explanatory material provided by the individual, to the President of the Fund.
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No person shall participate in a determination of whether he or she has
committed a violation of the Code or in a determination of the sanction to be
imposed on him or her as a result of such violation. If a Securities transaction
of the President is under review, the Disinterested Directors shall follow the
procedures required herein in lieu of the President.
By no later than the Board of Trustees meeting next following the
expiration of thirty (30) days after the end of each calendar quarter, the
Compliance Officer and the President shall provide a report to the Fund's Board
of Trustees informing them of any violations of this Code of Ethics that have or
may have been committed.
7. Sanctions.
Upon discovering a violation of this Code, the Board of Trustees of the
Fund may impose such sanctions as a majority thereof deems appropriate,
including, inter alia, a letter of censure or suspension or termination of the
employment of the violator if an employee of the Fund.
8. Annual Code of Ethics Review. (a) All Access Persons shall certify
in writing to the Compliance Officer annually that they have read and understand
this Code of Ethics and recognize that they are subject thereto. Further, Access
Persons shall certify in writing to the Compliance Officer annually that they
have complied with the requirements of this Code of Ethics and that they have
disclosed or reported all transactions required to be disclosed or reported
pursuant to this Code of Ethics.
(b) The Fund's Compliance Officer shall prepare an annual report to the
Fund's Trustees that (i) summarizes existing procedures concerning personal
investing and any changes in the procedures made during the past year; (ii)
identifies any violations requiring significant remedial action during the past
year; and (iii) identities any recommended changes in existing restrictions or
procedures based upon the Fund's experience under this Code of Ethics, evolving
industry practices, or developments in applicable laws or regulations; and, (iv)
certifies that the Fund has adopted procedures reasonably necessary to prevent
violation of the Code of Ethics by Access Persons.
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ACKNOWLEDGMENT OF RECEIPT
OF CODE OF ETHICS
I acknowledge receipt of the Code of Ethics for First Funds, as adopted December
6, 1995 August 23, 2000, and understand that my personal securities transactions
are subject to its terms. I certify that to the best of my knowledge I have
complied with the terms of the Code of Ethics during the last year.
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