Code Of Ethics &
Insider Trading Policies
Table Of Contents Page Reference
I. General Policy 3
II. Code Of Ethics
A. General Purpose 4
B. Employee Categories 4-5
C. Personal Dealing Restrictions 5-6
D. Pre-Clearance of Covered Securities Transactions 6-7
E. Reporting Requirements 7-9
F. Outside Business Activities 9
G. Gifts and Entertainment 9
H. Detection and Reporting of Violations 10
I. Violations of the Code Of Ethics 10
J. Confidential Treatment 10-11
K. Reports to Directors 11
L. Annual Reports 12
M. Definitions 12
III. Insider Trading Policy
A. Policy Statement 12-13
B. Applications 13
C. Insider (Definition) 13
D. Material Information (Definition) 14-15
E. Non-Public Information (Definition) 15
F. Information Provided in Confidence 15-16
G. Information Disclosed in Breach Of Duty 16
H. Identifying Material Information 16
I. Penalities for Insider Trading 17
J. Procedures to Implement Firm Policy 17-19
K. Confidentiality 19
IV. Appendices
I - Pre-Clearance Form 20
II - Account Disclosure Form 21
III - Quarterly Disclosure Form 22
IV - Holdings Report Form 23
V- Compliance Certification Form 24
VI - Outside Affiliation Form 25
I. General Policy
Friends Ivory & Sime plc is a listed company operating globally in the
financial services market place. It is therefore fundamental that the firm not
only adopts the best market practices for itself and its subsidiaries, but also
that its operational and organizational structures are such that it can clearly
demonstrate compliance with the relevant codes, rules and laws in terms of the
operation of its business and is achieving a proper standard of protection for
investors.
Friends Ivory & Sime, Inc., ("FIS"), the North American subsidiary of
Friends Ivory & Sime plc, is an investment adviser, and/or trustee of investment
companies, collective investment trusts, investment partnerships, and asset
management accounts (jointly 'Investment Vehicles'). As an investment adviser,
FIS is subject to various U.S. securities laws and regulations governing the use
of confidential information and personal securities transactions. This Code of
Ethics and Insider Trading Policy (jointly 'Code') was developed based on those
laws and regulations, and sets forth the procedures and restrictions governing
the personal securities transactions of certain FIS employees operating in U.S.
jurisdictions.
FIS has a highly ethical business culture and expects that all employees
will conduct any personal securities transactions consistent with this Policy
and in such a manner as to avoid any actual or potential conflict of interest or
abuse of a position of trust and responsibility. When an employee invests for
his or her own account, conflicts of interest may arise between a client's and
the employee's interest. Such conflicts may include using an employee's advisory
position to take advantage of available investment opportunities, taking an
investment opportunity from a client for an employee's own portfolio, or
front-running, which occurs when an employee trades in his or her personal
account before making client transactions. As a fiduciary, FIS owes a duty of
loyalty to clients which requires that an employee must always place the
interests of clients first and foremost and shall not take inappropriate
advantage of his or her position. Thus, FIS employees must conduct themselves
and their personal securities transactions in a manner that does not create
conflicts of interest with the firm's clients.
Certain employees outside the United States are subject to this Policy and
the applicable laws of the jurisdictions in which they are located. These laws
may differ substantially from U.S. law and may subject employees to additional
requirements. In addition, employees of the Advisor may be subject to policies
and procedures supplementary on to this Code, which have been created by or on
behalf of Friends Ivory & Sime plc. This Code shall not supersede any such
policies or procedures established by Friends Ivory & Sime plc. To the extent
any particular portion of the Policy is inconsistent with foreign law not
included herein or within the firm's Compliance Manual, employees should consult
their designated Compliance Officer or the Compliance Department at FIS' New
York facility.
II. Code Of Ethics
Effective December 30th,1999
A. General Purpose
This Code Of Ethics ('The Code') has been adopted by Friends Ivory & Sime,
Inc. ("FIS") and the boards of directors of the Funds managed by FIS, pursuant
to the provisions of Section 17(j) of the Investment Company Act of 1940 (the
'Company Act'), as amended, and Rule 17j-1 thereunder. Rule 17j-1 under the
'Company Act' requires that every investment company adopt a code of ethics
regarding personal investment activities of individuals having access to
information about portfolio transactions of the investment company, and Rule
204-2 under the Investment Advisers Act of 1940 (the 'Advisor's Act') requires
that investment advisers keep certain records, which must be available for
inspection by representatives of the Securities and Exchange Commission (the
'SEC'), regarding personal activities of advisory personnel.
Those provisions of the US Securities laws were adopted to prevent persons
who are actively engaged in the management, portfolio selection or underwriting
of registered investment companies from participating in fraudulent, deceptive
or manipulative acts, practices or courses of conduct in connection with the
purchase or sale of securities held or to be acquired by such companies.
Employees, as covered in the following categories, will be subject to
pre-clearance and reporting requirements based on their responsibilities within
FIS and accessibility to certain information:
B. Employee Categories
ACCESS PERSON Any director, officer or employee of FIS who, in connection
with his/her ongoing responsibilities, makes, participates in, or obtains any
information regarding the purchase or sale of securities for Advisory clients.
DISINTERESTED DIRECTOR Any Director of a Fund listed on Schedule A who is
not an 'interested' person of such Fund within the meaning of Section 2(a)(19)
of the Investment Company Act. An interested person is in the position to
influence the operations of an Advisory Client.
INVESTMENT PERSON Any director, officer or employee of FIS who directly
oversees the performance of any FIS Investment Vehicles for which FIS acts as
investment advisor or sub-advisor, who executes or helps execute portfolio
transactions for any such Investment Vehicle, or who obtains any information
regarding the purchase or sale of an Investment Vehicle's securities.
PORTFOLIO MANAGER (PM) Any director, officer or employee entrusted with
direct responsibility and authority to make investment decisions affecting one
or more client portfolios.
REGISTERED REPRESENTATIVE (RR) Any director, officer or employee who is
registered with the National Association of Securities Dealers as a registered
representative (Series 6, 7 or 63), a registered principal (Series 24 or 26) or
an investment representative (Series 65), regardless of job title or
responsibilities.
NON-ACCESS PERSON Any director, officer or employee who does not fall
within the definitions above as deemed by the Compliance Officer.
C. Personal Dealing Restrictions
When buying or selling securities, FIS employees may not employ any device,
scheme or artifice to defraud, mislead, or manipulate any fund or investment
client.
Access Persons, Investment Persons, PMs, and RRs:
1. may not purchase or sell, directly or indirectly, any Covered Security
within 7 days before or after the time that the same (or a related) Security is
being purchased or sold by any Investment Vehicle for which FIS is acting for on
behalf of Advisory clients. In addition, FIS will consider an additional
prohibition on purchase or sale of a security within so-called 'blackout' period
where appropriate. Transactions in the securities of certain large companies
(market capitalization of $1 Billion or larger) and exchange-traded index
options will be approved under normal circumstances;
2. may not profit from the purchase & sale or sale & purchase of a Covered
Security within 30 days of acquiring or disposing of Beneficial Ownership of
that Covered Security. This prohibition does not apply to transaction resulting
in a loss, or to futures or options on futures on broad-based securities indexes
or U.S. government securities;
3. may not sell short, nor purchase where there are insufficient funds for
settlement;
4. may not deal in futures, options or contracts for differences, including
spread betting on financial indices. (In exceptional circumstances, Rules 2, 3,
and 4 may be waived in writing by the Chief Executive);
5. may not participate in Initial Public Offerings (IPOs);
6. may not purchase, sell, or recommend the purchase or sale of any Covered
Security if he or she has previously acquired an interest in securities issued
by an issuer in a private placement transaction. Investment Persons must receive
prior written approval from the Compliance Department before acquiring
securities in a private placement;
7. may not receive any gift of more than de minimus value (currently
$100.00 per year) from any person or entity that does business with or on behalf
of any Investment Vehicle. Notwithstanding, FIS employees may attend business
meals, sporting events and other entertainment events at the expense of a giver
so long as the expense is reasonable. A cash payment of any kind is prohibited.
8. may not serve on the board of directors of any publicly traded company.
D. Pre-Clearance of Personal Covered Securities Transactions
1. Access Persons, Investment Persons, PMs, and RRs:
o must pre-clear each proposed Covered Securities transaction with
Compliance or the designated Compliance Officer for Accounts held in their names
or in the names of others in which they hold a Beneficial Ownership interest.
o No Covered Securities transactions may be effected without the prior
written approval of Compliance or the designated Compliance Officer.
2. Dis-Interested Directors and Non-Access Persons:
o must pre-clear transactions only if the Associate knows or should know at
the time of the transaction that, during the period immediately preceding or
following the transaction, the Covered Security was purchased or sold or was
being considered for purchase or sale by any Investment Vehicle.
3. Transactions NOT requiring pre-clearance
o Transactions in non-affiliated open-end mutual funds;
o Acquisitions of Covered Securities through gifts or bequests;
o Purchases which are part of an automatic dividend reinvestment plan or
automatic employee stock purchase plans;
o Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its Covered Securities, to the extent such
rights were acquired from such issuer;
o Purchases or sales over which the Access, Investment Person, PM or RR has
no direct or indirect influence or control;
o Purchases, sales or other acquisitions of Covered Securities which are
not directed by the Access, Investment or Portfolio Person, or any Investment
Vehicle, such as Discretionary Account trades made by purchases or sales
resulting from exercise of puts or calls written by the Access, Investment or
Portfolio Person, sales from a margin account pursuant to a bona fide margin
call, stock dividends, stock splits, mergers, consolidations, spin-offs, or
other similar corporate reorganizations or distributions.
4. Pre-Clearance Procedures:
o All requests for pre-clearance of Covered Securities transactions must be
submitted to Compliance or the designated Compliance Officer by completing the
Personal Dealing Form (attached as Appendix I). In addition, detailed E-Mail and
telephone requests can be submitted, however, a Personal Dealing Form must
ultimately be completed by the employee.
o Compliance or the designated Compliance Officer will notify the employee
whether the request is approved or denied in person, by telephone or email. A
signed copy of each Personal Dealing form will be maintained by the Compliance
Officer.
o Pre-clearance authorization is valid for 7 days. Transactions, which are
not completed within this period, must be resubmitted with an explanation why
the previous pre-cleared transaction was not completed.
o Compliance or the designated Compliance Officer will maintain personal
dealing records for 6 years.
E. Reporting Requirements
1. Duplicate Brokerage Statements [All Employees]
o All Employees are required to instruct their broker/dealers to send
duplicate brokerage confirmations/statements to the following address:
Compliance Department
Friends Ivory & Sime, Inc.
One World Trade Center
Suite 2101
NYC 10048-0080.
o Statements must be filed for all Accounts (including those in which
employees have a Beneficial Ownership interest), except those that trade
exclusively in non-affiliated, open-ended mutual funds, and/or government
securities (see Appendix II - Account Disclosure);
o Failure of a broker-dealer to send duplicate statements will not excuse
an Employee's violation of this Section, unless the Employee demonstrates that
he or she took every reasonable step to monitor the broker-dealer's compliance.
If no such duplicate statement can be supplied, the Employee can obtain a
special report form from Compliance or the designated Compliance Officer.
2. Quarterly Report of Covered Securities Transactions [All Employees]
All employees must submit quarterly reports that indicate the purchases
and/or sales of securities in which such persons have a direct or Beneficial
Ownership interest (See Appendix III - Quarterly Transaction Report). The report
will be provided to all employees before the end of each quarter by Compliance
or the designated Compliance Officer and must be completed and returned no later
than 10 days after the end of each calendar quarter.
The following information must be provided on the report:
o Transaction date, name and ticker symbol of security;
o Designation of purchase, sale or other acquisition or disposition;
o Share amount, transaction price; principal amount of each transaction;
o The name and account number of the broker, dealer or bank through whom
the transaction was effected.
o Indication if there were any material gifts received or new brokerage
accounts opened during the period (Broker Name and Account Opening date
required).
3. Initial/Annual Report of Securities Holdings [All Employees]
o Within 10 days of receipt of this Code and on an annual basis thereafter,
Investment and Portfolio Persons must submit to Compliance or the designated
Compliance Officer a list of all securities subject to this Code in which they
presently have any direct or indirect Beneficial Ownership interest (See
Appendix IV - Covered Securities Holdings Report).
The following information must be included:
-Security Name
-Share Amount
-Principal Amount
o Annual reports must be returned to Compliance or the designated
Compliance Officer within 30 days after the end of the calendar year.
4. Annual Certification of Compliance [All Employees]
All employees will be required to certify annually that they:
o have read the Code of Ethics;
o understand the Code of Ethics,
o complied with the Code of Ethics.
Compliance or the designated Compliance Officer will send out forms
(attached as Appendix V - Compliance Certification) to all employees which must
be completed and returned within 30 days after the end of the calendar-year.
F. Outside Business Activities (Inc. Service as a Director of a Publicly
Traded Entity)
Unless you are a Dis-Interested Director or Non-Access Person, all outside
business activities, including service as a partner, officer, director, owner or
trustee, must receive the prior written approval of your Regional Compliance
Officer by completing the form attached as Appendix VI - Outside Affiliations .
NOTE: Service as a partner, officer, director, owner or trustee of a non-profit
organization as a volunteer and without compensation, for example, on the board
of a school, hospital or social organization, does not require approval if there
are no points of conflict.
If you are, at minimum an Investment Person, you are prohibited from
serving on the board of directors or other governing board of a publicly traded
entity, except with prior written authorization from your Regional Compliance
Officer. In considering such authorization, the Regional Compliance Officer
should consult with the Compliance Director concerning the imposition of
appropriate procedures to prevent the misuse of material non-public information
which may be acquired through board service, and other procedures or investment
restrictions which may be required to prevent actual or potential conflicts of
interest.
G. Gifts and Entertainment
Unless you are a Disinterested Director, you are not allowed to accept any
opportunity, gift, gratuity or other thing of more than de-minimus value
(currently$100) that was either received from or given to any person or entity
that does business, or desires to do business with the Adviser directly or on
behalf of an Advisory Client. Notwithstanding, you may attend business meals,
sporting events and other entertainment events at the expense of a giver so long
as the expense is reasonable. A cash payment in any amount is prohibited.
H. Detection and Reporting of Code Violations
The Compliance Department or the designated Compliance Officer will regularly:
o review the trading activity reports or duplicate statements filed by
Employees, focusing on patterns of personal trading-, o review the trading
activity of Investment Vehicles;
o prepare a written quarterly report to FIS management and/or the Board of
Directors of the Investment Vehicles outlining any violations of the Code
together with recommendations for the appropriate penalties.
I. Violations of the Code of Ethics
1. Penalties:
Employees who violate the Code of Ethics may be subject to serious
penalties that can include:
o written warning;
o reversal of securities transaction;
o restriction on trading privileges;
o disgorgement of trading profits;
o fine;
o suspension or termination of employment and/or referral to regulatory or
law enforcement agencies.
2. Penalty Factors:
Factors which may be considered in determining an appropriate penalty
include, but are not limited to:
o damage to clients;
o the frequency of occurrence;
o the degree of personal benefit to the employee; - the degree of conflict
of interest; - the extent of unjust enrichment,
o evidence of fraud, violation of law, or reckless disregard of a
regulatory requirement
o the level of accurate, honest and timely cooperation from the employee.
J. Confidential Treatment
Compliance or the designated Compliance Officer will use their best efforts
to assure that all requests for pre-clearance, all personal securities
transaction reports and all reports for securities holding are treated as
"Personal and Confidential." However, such documents will be available for
inspection by appropriate regulatory agencies and other parties within and
outside FIS as are necessary to evaluate compliance with or sanctions under this
Code.
K. Reports to Directors
The directors of the Adviser and the directors of the Friends Ivory Funds
will be informed on a timely basis of each significant remedial action taken in
response to a violation of this Code. For this purpose, a significant remedial
action will include any action that has a significant financial effect on the
violator, such as disgorgement of profits, imposition of a substantial fine,
demotion, suspension or termination.
L. Annual Reports
Management of the Adviser will report annually to the directors of the
Adviser and the directors of each Fund listed on Schedule A with regard to
efforts to ensure compliance by the directors, officers and employees of the
Adviser with their fiduciary obligations to our Advisory Clients.
The annual report will, at a minimum:
o Summarize existing procedures regarding personal Securities transactions,
and any changes in such procedures during the prior year;
o Summarize the violations of this Code, if any, which resulted in
significant remedial action during the prior year; and
o Describe any recommended changes in existing procedures or restrictions
based upon experience with this Code, evolving industry practices, or
developments in applicable laws or regulations.
M. Definitions
1. Account - a securities trading account held by an Employee and by any
such person's spouse, minor children and adults residing in his or her household
(each such person, an "immediate family member"); any trust for which the person
is a trustee of from which the Employee benefits directly or indirectly; any
partnership (general, limited or otherwise) of which the Employee is a general
partner or a principal of the 'general partner; and any other account over which
the Employee exercises investment discretion.
2. Beneficial Ownership - Security ownership in which a person has a direct
or indirect pecuniary interest. Generally, an employee will be regarded as a
beneficial owner of Securities that are held in the name of-
o a spouse or domestic partner;
o a minor child;
o a relative who resides in the employee's household;
o any other person IF: (a) the employee obtains from the securities
benefits substantially similar to those of ownership (for example, income from
securities that are held by a spouse); or (b) the employee can obtain title to
the securities now or in the future.
3. Initial Public Offering (IPO) - an offering of securities for which a
registration statement has not been previously filed with the U.S. SEC and for
which there is no active public market in the shares.
4. Purchase or sale of a Covered Security - includes the writing of an
option to purchase of sell a covered security.
5. Covered Security - includes notes, bonds, stocks (including closed-end
funds), convertibles, preferreds, options on securities, warrants and rights.
The following are NOT designated a 'Covered Security":
o U.S. Government Issues or any Government Agency Issues;
o Bankers' acceptances;
o Bank certificates of deposit;
o Commercial paper;
o Non-affiliated, open-end mutual funds.
III. Insider Trading Policy and Procedures
A. Policy Statement on Insider Trading
Friends Ivory & Sime, Inc. forbids any of their officers, directors or
employees from trading, either personally or on behalf of others (such as,
mutual funds and private accounts managed by the Company) on the basis of
material non-public information or communicating material non-public information
to others in violation of the law. This conduct is frequently referred to as
'insider trading'.
The term 'insider trading' is not defined in the securities laws, but
generally is used to refer to the use of material non-public information to
trade in securities or to communications of material non-public information to
others in breach of a fiduciary duty.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
o trading by an insider, while in possession of material non-public
information;
o trading by a non-insider, while in possession of material non-public
information, where the information was misappropriated or disclosed to the
non-insider in violation of an insider's duty to keep it confidential; or
o communicating material non-public information to others in breach of a
fiduciary duty.
This Policy applies to every such officer, director and employee and
extends to activities within and outside their duties at the Company. Every
officer, director and employee must read and retain this policy statement, and
acknowledge its receipt by signing the attached Acknowledgment Form.
The remainder of this memorandum discusses in detail the elements of
insider trading, the penalties for such unlawful conduct and the procedures
adopted by the Company to implement its policy against insider trading.
B. To Whom Does This Policy Apply?
This Policy applies to all employees, officers and directors of the Company
('Covered Persons'), as well as to any transactions in any securities
participated in by family members, trusts or corporations controlled by such
persons. In particular, this policy applies to securities transactions by:
o the Covered Person's spouse or common-law partner;
o the Covered Person's minor children;
o any other relatives living in the Covered Person's household;
o a trust in which the Covered Person has a beneficial interest, unless
such person has no direct or indirect control over the trust;
o a trust as to which the Covered Person is a trustee;
o a revocable trust as to which the Covered Person is a settler;
o a corporation of which the Covered Person is an officer, director or 10%
or greater stockholder; or
o a partnership of which the Covered Person is a partner (including most
investment clubs) unless the Covered Person has no direct or indirect control
over the partnership.
C. Who is an Insider?
The Concept of 'insider' is broad. It includes officers 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, and the employees of such
organizations. In addition, FIS, Inc. may become a temporary insider of a
company it advises or for which it performs other services. 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.
D. 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.
Although there is no precise generally accepted definition of materiality,
information is likely to be 'material' if it relates to significant changes
affecting such matters as:
o dividend or earnings expectations;
o write-downs or write-offs of assets;
o additions to reserves for bad debts or contingent liabilities;
o expansion or curtailment of company or major division operations;
o proposals or agreements involving a joint venture, merger, acquisition,
divestiture or leveraged buy-out;
o new products or services;
o exploratory, discovery or research developments;
o criminal indictments, civil litigation or government investigations;
o disputes with major suppliers or customers or significant changes in
the relationships with such parties;
o labor disputes including strikes or lockouts;
o substantial changes in accounting methods;
o major litigation developments;
o major personnel changes;
o debt service or liquidity problems;
o bankruptcy or insolvency;
o extraordinary management developments;
o public offerings or private sales of debt or equity securities;
o calls, redemptions or purchases of a company's own stock;
o issuer tender offers; or
o recapitalizations.
Note: The above list of examples is non exhaustive. If in question as to
whether information is 'material', the Regional Compliance Officer should be
consulted.
Information provided by a company could be material because of its expected
effect on a particular class of the company's securities, all of the company's
securities, the securities of another company, or the securities of several
companies. Moreover, the resulting prohibition against the misuses of 'material'
information reaches all types of securities (whether stock or other equity
interests, corporate debt, government or municipal obligations, or commercial
paper) as well as any option related to that security (such as a put, call or
index security).
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S. 108 U.S. 316 (1987), the Supreme Court consider 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 reporter for The Wall Street Journal 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.
E. What is Non-Public Information?
In order for issues concerning insider trading to arise, information must
not only be 'material,' it must be 'non-public.' 'Non-public' information is
information which has generally not been made available to investors.
Information received in circumstances indicating that it is not yet in general
circulation or where the recipient knows or should know that the information
could only have been provided by an 'insider' is also deemed 'non-public'
information.
At such time as material, non-public information has been effectively
distributed to the investing public, it is no longer subject to insider trading
restrictions. However, for 'non-public' information to become public
information, it must be disseminated through recognized channels of distribution
designed to reach the securities marketplace.
To show that 'material' information is public, you should be able to point
to some fact verifying that the information has become generally available, for
example, disclosure in a national business and financial wire service (Dow Jones
or Reuters), a national news service (AP or UPI), a national newspaper (The Wall
Street Journal or the New York Times) or a publicly disseminated disclosure
document (a proxy statement or prospectus). The circulation of rumors, even if
accurate, widespread and reported in the media, does not constitute the
requisite public disclosure. The information must not only be publicly
disclosed, there must also be adequate time for the market as a whole to digest
the information. Although timing may vary depending upon the circumstances, a
good rule of thumb is that information is considered non-public until 24 hours
after public disclosure.
Material non-pubic information is not made public by selective
dissemination. Material information improperly disclosed only to institutional
investors or to a fund analyst or a favored group of analysts retains its status
as 'non-public' information which must not be disclosed or otherwise misused. So
long as any material component of the 'inside' information possessed by the
Company has yet to be publicly disclosed, the information is deemed 'non-public'
and may not be misused.
F. Information Provided in Confidence. Occasionally, one or more directors,
officers, or employees of the Company may become temporary 'insiders' because of
a fiduciary (i.e. a person or entity to whom property is entrusted for the
benefit of another) or commercial relationship.
As an 'insider,' the Company has a fiduciary responsibility not to breach
trust of the party that has communicated the 'material non-public' information
by misusing that information. This fiduciary duty arises because the Company has
entered or has been invited to enter into a commercial relationship with the
client or prospective client and has been given access to confidential
information solely for the corporate purposes of that client or prospective
client. This obligation remains whether or not the Company ultimately
participates in the transaction.
G. Information Disclosed in Breach of Duty. Analysts and portfolio managers
at the Company must be especially wary of 'material non-public' information
disclosed in breach of a corporate insider's fiduciary duty. Even where there is
no expectation of confidentiality, a person may become an 'insider' upon
receiving material, non-public information in circumstances where a person
knows, or should know, that a corporate insider is disclosing information in
breach of the fiduciary duty he or she owes the corporation and its
shareholders. Whether the disclosure is an improper 'tip' that renders the
recipient a 'tippee' depends on whether the corporate insider expects to benefit
personally, either directly or indirectly, from the disclosure. In the context
of an improper disclosure by a corporate insider, the requisite 'personal
benefit' may not be limited to a present or future monetary gain. Rather, a
prohibited personal benefit could include a reputational benefit, an expectation
of a quid pro quo from the recipient or the recipient's employer by a gift of
the 'inside' information.
A person may, depending on the circumstances, also become an 'insider' or
'tippee' when he or she obtains apparently material, non-public information by
happenstance, including information derived from social institutions, business
gatherings, overheard conversations, misplaced documents, and 'tips' from
insiders or other third parties.
H. Identifying Material Information?
Before trading for yourself or others, including investment companies or
private accounts managed by the Company, in the securities of a company about
which you may have potential material, non-public information, ask yourself the
following questions:
(i) Is the information that an investor could consider important in making
his or her investment decision? Is this information that could substantially
affect the market price of the securities if generally disclosed?
(ii) 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?
Given the potentially severe regulatory, civil and criminal sanctions to
which you and the Company and its personnel could be subject, any director,
officer and employee uncertain as to whether the information he or she possesses
is 'material non-public' information should immediately take the following
steps:
(i) Report the matter immediately to the Director of Compliance or the
Regional Compliance Officer;
(ii) Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by the
Company; and
(iii) Do not communicate the information inside or outside the Company,
other than to the Director of Compliance or the Regional Compliance Officer.
After the Director of Compliance or the Regional Compliance Officer has
reviewed the issue, you will be instructed to continue the prohibitions against
trading and communication or will be allowed to trade and communicate the
information.
I. Penalties for Insider Trading
Penalties for trading on or communicating material non-public information
are severe, both for individuals involved in such unlawful conduct and their
employers. A person can be subject to severe penalties even if he or she does
not personally benefit from the violation. Some penalties which may be imposed
include:
o civil injunctions;
o treble damages;
o disgorgement of profits;
o prison sentences;
o fines for the persons who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person actually
benefited; and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained or loss
avoided.
In addition, any violation of this policy statement can be expected to
result in serious sanctions by the Company, including dismissal of the persons
involved.
J. Procedures to Implement Firm Policy
1. Procedures to Implement the Policy Against Insider Trading
The following procedures have been established to aid the officers,
directors and employees of the Company in avoiding insider trading, and to aid
the Company in preventing, detecting and imposing sanctions against insider
trading. Every officer, director and employee of the Company must follow these
procedures or risk serious sanctions, including dismissal, substantial personal
liability and criminal penalties.
Trading Restrictions and Reporting Requirements
o No employee, officer or director of the Company who possesses material
non-public information relating to the Company or any of its affiliates or
subsidiaries, may buy or sell any securities of the Company or engage in any
other action to take advantage of, or pass on to others, such material
non-public information.
o No employee, officer or director of the Company who obtains material
non-public information which relates to any other company or entity in
circumstances in which such person is deemed to be an insider or is otherwise
subject to restrictions under the securities laws may buy or sell securities of
that company or otherwise take advantage of, or pass on to others, such material
non-public information.
o No Associated Person (as such term is defined in the Company's Code of
Ethics shall engage in a securities transaction with respect to any securities
of any other company, except in accordance with the specific procedures set
forth in the Company's Code of Ethics.
o Associated Persons shall submit reports concerning each securities
transaction in accordance with the terms of the Code of Ethics and verify their
personal ownership of securities in accordance with the procedures set forth in
the Code of Ethics.
o Because even inadvertent disclosure of material non-public information to
others can lead to significant legal difficulties, officers, directors, and
employees of the Company should not discuss any potentially material non-public
information concerning the Company or other companies, including other officers,
employees and directors, except as specifically required in the performance of
their duties.
2. FireWall Procedures
Surveillance and Restricted Lists. The Regional Compliance Officer shall
maintain a Surveillance List of the issuers as to which personnel of the Adviser
or its affiliated entities possess material confidential information. The
Director of Compliance and your Regional Compliance Officer will scrutinize all
securities trading with respect to the issuers on the list, including, in
particular, any matter as to which the FireWall has not prevented the passing of
confidential information from one entity to another. Any unusual trading that
suggests a possible breach in the FireWall or violation of the Code of Ethics or
Insider Trading Policy and Procedures will be investigated further and discussed
with the Legal department. Moreover, the Company, upon direction of the Director
of Compliance or the Legal Department, may determine that a particular trade
should be canceled or reversed, even where there has been no violation, if the
transaction could nonetheless raise a possible appearance of impropriety.It is
your duty to notify the Regional Compliance Officer or Director of Compliance if
and when a financial, insurance, or other matter on which you are working, that
is material to an issuer, becomes the subject of a public announcement. At that
point, if the Company or an affiliated entity possesses, or would reasonably be
perceived to possess, other material information that remains confidential, the
Regional Compliance Officer will place the issuer on the Restricted List.
The placement of an issuer on the Restricted List generally restricts all
trading in the securities of such issuer unless an exception is granted by the
Director of Compliance. You are responsible for determining whether a security
is on the Restricted List before you purchase or sell the security for your own
account or the account of the Company or any of its clients. Good-till-canceled
orders and limit orders for a security whose issuer is subsequently placed on
the Restricted List should be canceled. If you are regularly engaged in
purchasing and selling securities for the Company or its clients you will
receive a copy of the Restricted List whenever it is revised. If you are
employed in some other capacity with the Company, you must check with the
Director of Compliance or your Regional Compliance Officer before making a
purchase or sale to determine if the issuer of the security is on the Restricted
List.
The fact that an issuer is on the Restricted List is confidential
information and may not be communicated to anyone outside the Company. You may
not attempt to learn why an issuer has been placed on the Restricted List.
K. Confidentiality
Care should be taken so that such information is secure. You should refrain
from looking at documents containing confidential information while they are in
public places. You should not see a confidential memorandum or other
confidential internal document unless you have a need to know the information it
contains. All such memos should be clearly labeled 'Confidential' and circulated
only in a sealed envelope with instructions saying that the envelope is to be
opened only by the addressee. Xeroxing should be restricted: only when truly
necessary, only as many copies as are truly necessary, and with care that no
copies are left sitting in out trays, mail carts, copying machines, etc. You
must also ensure that such documents are kept in locked drawers or file cabinets
when they are not being used, and in manila folders when it is necessary to keep
them on desks or in other places to which other Company personnel may readily
obtain access. Special precautions need to be taken with personal computers and
information systems: do not leave your station with confidential information
showing on the screen, log off your PC when leaving the work space, use
passwords where appropriate, and store disks in a locked container. Access to
computer files containing confidential information must be restricted. Such
computer files should generally be maintained in locked cabinets or desks.
Whenever possible, code names should be assigned to all actual and
potential participants in any transaction in connection with which Company
personnel possess or are likely to acquire confidential information. If you are
working on such a transaction, you must, to the extent practicable, use these
code names on all drafts, documents, and internal memoranda pertaining to the
transaction, as well as in all discussions concerning the transaction that could
be overheard.
L. Resolving Issues Concerning Insider Trading
The securities laws, including the laws governing insider trading, are
complex. If you have any doubts or questions as to the materiality or non-public
nature of information in your possession or as to the propriety of any action,
you should contact the Director of Compliance or Regional Compliance Officer.
Until advised to the contrary by the Director of Compliance or Regional
Compliance Officer, you should assume that the information is material and
non-public and you should not trade in the securities or disclose this
information to anyone.
Each employee subject to this Policy must read and retain a copy and agree
to abide by its terms as evidenced by completion of the attached acknowledgement
form - (See Appendix V - Compliance Certification). Failure to comply with the
provisions of this Policy may result in the imposition of serious sanctions,
including, but not limited to disgorging of profits, dismissal, substantial
personal liability and/or referral to regulatory or law enforcement agencies.
Section IV. - Appendices
Pre-Clearance Form Appendix I
Employee Name (Print): ________________________________ Date:____________
To ensure full disclosure in compliance with SEC Rule 17j-1, please check
Yes or No and provide a complete explanation, where appropriate, in an
attachment to the Report:
Is Compliance set up to receive confirmations/statements for the brokerage
accounts listed above?
Yes No
Are any of the securities listed above "Private Placement" transactions?
Yes No
Employee Signature _______________________ Date _____________
"FOR COMPLIANCE DEPARTMENT USE ONLY"
Firm Activity Yes No Comments_________________________________
Signature ___________________________________ Date _____________
Compliance Officer
Note: Any transactions in US Treasuries, US Agencies, Banker's Acceptances,
Repos, Commercial Paper, Bank C..D. s, and Non-Affiliated, Open-ended Mutual
Funds are NOT APPLICABLE.
Account Disclosure Form Appendix II
Employee Name (Print): _____________________________ Date: ______________
Yes No I presently maintain an investment account (s) registered in one or
more of the following (If Yes, check all applicable boxes and list accounts
below):
my name or in a joint arrangement with another individual;
the name of my spouse;
the name of a minor child;
any other immediate family member;
I presently have a beneficial interest, share in the profits, or exercise
discretionary authority for an investment account (s).
(If Yes, list accounts below)
Note: Accounts in affiliated funds/collective investment schemes are
required to be reported.
Has each broker been instructed to provide the firm with duplicate
confirmations and statements?
I do not maintain any brokerage relationships reportable under this Code.
Employee Signature _________________________________ Date _______________
Quarterly Transaction Report Appendix III
Employee Name (Print): _________________________ Date: _________ Q 1 2 3 4
To ensure full disclosure in compliance with SEC Rule 17j-1, please check
Yes or No and provide a complete explanation of all "Yes" answers in an
attachment to the Report:
Yes Have you opened any new brokerage accounts during the previous quarter?
No Broker Name______________________ Date Opened______________
Yes Have you purchased or received as a gift, any Securities from a friend or
No relative during the previous quarter which are not described above?
Yes Did you receive any gift of more than de minimus value ($100) during the
No previous quarter?
DUE DATE: No Later than 10 CALENDAR DAYS after the end of the quarter.
Employee Signature: ________________________________ Date: _________
Note: Any transactions in US Treasuries, US Agencies, Banker's Acceptances,
Repos, Commercial Paper, Bank C..D. s, and Non-Affiliated, Open-ended Mutual
Funds are NOT APPLICABLE.
Securities Holdings Report Appendix IV
Employee Name (Print): _________________________________ Date : _________
Note: In lieu of listing all securities holdings, copies of brokerage
statements may be submitted in an attachment to this Report.
Please check one of the following selections:
Initial listing of securities holdings.
DUE DATE: No Later Than 10 CALENDAR DAYS After Receipt of Code.
Annual listing of securities holdings.
DUE DATE: No Later Than 30 CALENDAR DAYS After Year-End.
Employee Signature: ________________________________ Date: __________
Note: Any holdings in US Treasuries, US Agencies, Banker's Acceptances,
Repos, Commercial Paper, Bank C..D. s, and Non-Affiliated, Open-ended Mutual
Funds are NOT APPLICABLE.
Compliance Certification Appendix V
Employee Name (Print): _________________________________ Date : _________
Please check one of the following selections:
Initial Compliance Certification.
DUE DATE: NO Later Than 10 CALENDAR DAYS After Receipt of Code.
Annual Compliance Certification.
DUE DATE: NO Later Than 30 CALENDAR DAYS After Year- End.
Employee Signature: _______________________________ Date: __________
Outside Business Activity Appendix VI
Employee Name (Print): ____________________________ Date: ______________
Name of Organization
Title
Description of Service
Time Required
Description of
Relationship
With Advisor
(if any):
Compensation Yes No
Compensation Amount _______________________
Employee Signature _________________________ Date ________________
"FOR COMPLIANCE DEPARTMENT USE ONLY"
Signature ______________________________ Date ________________
Compliance Officer
NOTE: Volunteer service (without compensation) as a partner, officer,
director, owner or trustee of a non-profit organization, i.e., on the board of a
school, hospital or social organization, does not require approval if there are
no points of conflict.
