RAINIER INVESTMENT MANAGEMENT
CODE OF ETHICS
I. INSIDER TRADING POLICY STATEMENTS AND COMPLIANCE PROCEDURES
A. BACKGROUND
Federal and state laws prohibit Rainier Investment Management (the
"Adviser"), its principals and its employees from purchasing or selling any
publicly-traded stock, bond, option or other security on the basis of material,
nonpublic information (i.e., insider trading). In addition, the Adviser, its
principals and its employees have a fiduciary obligation to the Adviser's
clients to protect the confidentiality of all proprietary, sensitive or other
confidential information communicated to the Adviser or such persons by the
Adviser's clients. Finally, because the Adviser, its principals and its
employees are fiduciaries to the Adviser's clients, the Adviser and such persons
must also maintain the highest ethical standards and refrain from engaging in
activities that may create actual or apparent conflicts of interest between the
interests of the Adviser or such persons and the interests of the Adviser's
clients. To ensure that insider trading laws are not violated, that client
confidences are maintained, and that conflicts of interest are avoided, the
Adviser has adopted the policies and procedures set forth in this Section I and
in Section II.
B. INSIDER TRADING DEFINED
The term "insider trading" is generally used to refer to (i) a
person's use of material, nonpublic information in connection with transactions
in securities and (ii) certain communications of material, nonpublic
information.
The laws concerning insider trading generally prohibit:
* The purchase or sale of securities by an insider, on the basis of
material, nonpublic information;
* The purchase or sale of securities by a non-insider, on the basis
of material, nonpublic information where the information was
disclosed to the non-insider in violation of an insider's duty to
keep the information confidential or was misappropriated; or
* The communication of material, nonpublic information in violation
of a confidentiality obligation where the information leads to a
purchase or sale of securities.
2. WHO IS AN INSIDER? The concept of "insider" is broad. It includes
officers, directors, employees and majority shareholders of a company or other
entity. In addition, a person can be considered a "temporary insider" of a
company or other entity if he or she enters into a confidential relationship in
the conduct of the company's or entity's affairs and, as a result, is given
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access to information that is intended to be used solely for such company's or
entity's purposes. A temporary insider can include, among others, an entity's
attorneys, accountants, consultants, investment bankers, commercial bankers and
the employees of such organizations.
3. WHAT IS MATERIAL INFORMATION? Trading on inside information is not
a basis for liability unless the information is "material." "Material"
information is generally defined as information that a reasonable investor would
likely consider important in making his or her investment decision, or
information that is reasonably certain to have a substantial effect on the price
of a company's securities. Information that should be considered 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, liquidity problems and extraordinary
management developments. Material information does not have to relate to a
company's business, it can be significant market information. For example, a
reporter for The Wall Street Journal was found criminally liable for disclosing
to others the dates on which reports on various companies would appear in The
Wall Street Journal and whether or not those reports would be favorable.
4. WHAT IS NONPUBLIC INFORMATION? Information is nonpublic unless it
has been effectively communicated to the market place. For information to be
considered public, one must be able to point to some fact to show that the
information has been generally disseminated to the 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 another publication of
general circulation is considered public. Market rumors are not considered
public information.
C. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material, nonpublic
information are severe, both for the individuals involved in the unlawful
conduct and for their employers. A person can be subject to some or all of the
penalties set forth below even if he or she does not personally benefit from the
violation. Penalties include:
* civil injunctions;
* disgorgement of profits;
* jail sentences;
* fines for the person who committed the violation of up to three
times the profit gained or loss avoided (per violation, or
illegal trade), whether or not the person actually benefited from
the violation; and
* fines for the employer or other controlling person of the person
who committed the violation of up to the greater of $1,000,000 or
three times the amount of the profit gained or loss avoided (per
violation, or illegal trade).
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In addition, any violation of the procedures set forth in this
Compliance Manual can be expected to result in serious sanctions by the Adviser,
including dismissal of the persons involved.
D. POLICY STATEMENT REGARDING INSIDER TRADING
The Adviser expects that each of the principals and employees of the
Adviser will obey the law and not trade on the basis of material, nonpublic
information. In addition, the Adviser discourages the principals and employees
of the Adviser from seeking or knowingly obtaining material nonpublic
information. The Adviser also prohibits each of its principals and employees
from serving as an officer or director of a company having Publicly-Traded
Securities (as hereinafter defined).
E. PROCEDURES TO PREVENT INSIDER TRADING
Because the Adviser does not have an investment banking division or
affiliate and because the Adviser prohibits its principals and employees from
serving as officers or directors of a company having Publicly-Traded Securities,
the Adviser does not anticipate the principals or employees of the Adviser
routinely being in receipt of material, nonpublic information. However, such
persons may from time to time receive such information. If any such person
receives any information which may constitute such material, nonpublic
information, such person (i) should not buy or sell any securities (including
options or other securities convertible into or exchangeable for such
securities) for a personal account or a client account and (ii) should not
communicate such information to any other person (other than the Compliance
Officer). UNDER NO CIRCUMSTANCES SHOULD SUCH INFORMATION BE SHARED WITH ANY
PERSONS NOT EMPLOYED BY THE ADVISER, INCLUDING FAMILY MEMBERS AND FRIENDS. Each
principal and employee of the Adviser contacting an issuer or analyst should
identify himself as associated with the Adviser and identify the Adviser as an
investment management firm, and, after the conversation, make a memorandum
memorializing the conversation with the issuer or analyst (including the
beginning of the conversation where such person identified himself as associated
with the Adviser).
F. DEFINITION OF PUBLICLY-TRADED SECURITIES.
"Publicly-Traded Securities" means any (a) equity or debt instrument
traded on an exchange, through the Nasdaq Market or through the "pink sheets,"
(b) options to purchase or sell such equity or debt instrument, (c) index stock
or bond group options that include such equity or debt instrument, (d) futures
contracts on stock or bond groups that include such equity or debt instrument,
and (e) any option on such futures contracts; provided that Publicly-Traded
Securities shall not include (1) equity securities issued by mutual funds (other
than mutual funds for which the Adviser acts as an adviser or sub-adviser), and
(2) certificates of deposit, U.S. Treasury bills and other U.S.
Government-issued debt instruments.
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II. PERSONAL TRADING POLICY STATEMENTS AND PROCEDURES
A. FIDUCIARY DUTY TO AVOID CONFLICTS OF INTEREST BETWEEN CLIENT ACCOUNTS
AND PERSONAL ACCOUNTS.
As noted above, because the Adviser and each of its principals and
employees is a fiduciary to the Adviser's clients, such persons must avoid
actual and apparent conflicts of interest with the Adviser's clients. In any
situation where the potential for conflict exists, the client's interest must
take precedence over personal interests. If there is any doubt, resolve the
matter in the client's favor.
If both a principal or an employee of the Adviser and a client of the
Adviser are engaging in transactions involving a Publicly-Traded Security an
actual or apparent conflict of interest could arise. In those cases,
transactions for client accounts must take precedence over transactions for
Personal Accounts (as hereinafter defined).
B. PERSONAL ACCOUNT DEFINED.
The "Personal Account" of a principal or an employee of the Adviser
shall include each and every account (other than an account for the benefit of
any of the Adviser's clients) for which such person influences or controls
investment decisions. An account for the benefit of any of the following will be
presumed to be a "personal account" unless the Adviser agrees in writing with
such person otherwise.
* An employee or principal of the Adviser;
* The spouse of an employee or principal;
* Any child under the age of 22 of an employee or principal,
whether or not residing with the employee or principal;
* Any other dependent of an employee or principal residing in the
same household with the employee or principal; and
* Any other account in which an employee or principal has a
beneficial interest. For example, an account for a trust, estate,
partnership or closely held corporation in which the employee or
principal has a beneficial interest.
C. POLICY STATEMENT REGARDING TRADING FOR PERSONAL ACCOUNTS .
The Adviser recognizes that the personal investment transactions of
the principals and employees of the Adviser demand the application of a high
code of ethics. Consequently, the Adviser requires that all personal investment
transactions be carried out in a manner that does not endanger the interest of
any client or create any apparent or actual conflict of interest between the
Adviser or its principals or employees, on the one hand, and the client, on the
other hand. At the same the Adviser believes that if investment goals are
similar for clients, principals and employees, it is logical and even desirable
that there be a common ownership of some securities.
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1. TRADING PROCEDURES. In order to implement the policy of the Adviser
regarding trading by principals and employees for their Personal Accounts, the
Adviser has established procedures which adopt one or more of the following
approaches (depending on its management style):
* Prohibition of trading by a principal or employee of the Adviser
of securities appearing on any "restricted list" maintained by
the Adviser;
* Prohibition of trading by a principal or employee of the Adviser
of securities unless the prior written approval of the Adviser is
obtained; or
* Prohibition of trading by a principal or employee of the Adviser
of certain securities during specified periods, including the
periods during which the Adviser is trading such securities for
clients (and a period of time immediately thereafter). See
Section IV of the Code of Ethics for Rainier Investment
Management Mutual Funds for a description of prohibited purchases
and sales.
2. PROHIBITION ON "HOT" NEW ISSUES PURCHASES. Principals and employees
of the Adviser are prohibited from buying "hot" new issues. "Hot" new issues are
defined as initial public offerings of securities, which later sell at a premium
in the secondary market. This prohibition does not apply to purchases of "hot"
new issues after they begin trading in the secondary market.
3. REPORTS OF PERSONAL TRANSACTIONS. In order for the Adviser to
monitor compliance with its insider trading and conflict of interest policies
and procedures, each principal and employee of the Adviser shall submit a
"Quarterly Personal Transaction Report" in the form attached as Appendix 1 for
each of his or her Personal Accounts. The report shall be submitted to the
Adviser within ten days following the end of each calendar quarter regardless of
whether any trading activity took place in that account during the quarter.
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APPENDIX 1
QUARTERLY REPORT OF SECURITIES TRANSACTIONS FORM
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FORM OF QUARTERLY PERSONAL TRANSACTION REPORT
Date ____________________
Employee Name _______________________________
Account Name _________________ Relationship _________________
Account Number _______________ Brokerage Firm _______________
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Reviewed by
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Initials of Date
Reviewer
