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Title: |
Code of Ethics |
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Date: |
2001 |
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$58 |
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{CAPTION}
Page(s)
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{S} {C} {C}
1. STATEMENT OF GENERAL PRINCIPLES
1.1 Adherence to Ethical Standards of Vontobel Group 1
1.2 Compliance with Applicable U.S. Legislation 1
1.3 General Principles 2
2. DEFINITIONS 2-3
3. PRINCIPLES FOR DOING BUSINESS 3
3.1 Confidentiality 3
3.2 Conflicts of Interest 4
3.3 Service as a Director 4
3.4 Personal Fiduciary Appointments 4
3.5 Service on Civic and Charitable Organizations 4
3.6 Fees to Consultants and Agents 4
3.7 Personal Benefits 4
3.8 Personal Fees and Commissions 5
3.9 Dealings with Suppliers 5
3.10 Borrowing 5
3.11 Political Contributions 5
3.12 Duty to Report Violations or Potential Conflicts of Interest 5
3.13 Full Disclosure 5
4. PERSONAL SECURITIES TRANSACTIONS
4.1 Summary 5-6
4.2 Prohibited and Restricted Transactions 6
4.3 Blackout Period 7
4.4 Short-Term Trading 7
4.5 Prior Written Clearance of Personal Securities Trades 8-9
and Full Disclosure of Securities Holdings
5. INSIDER TRADING 9
5.1 Policy Statement 10
5.2 Elements of Insider Trading 10-11
5.3 Penalties for Insider Trading 11
5.4 Procedures 11-12
5.5 Supervision 12-14
{/TABLE}
Appendix A Company Charter of the Vontobel Group
Appendix B Excerpts from cited SEC legislation
Appendix C Officers authorized to approve trades
Appendix D Personal securities trading authorization form
Appendix E Initial, quarterly and annual report forms
{PAGE} 3
VONTOBEL USA INC.
CODE OF ETHICS
1. STATEMENT OF GENERAL PRINCIPLES
1.1 Adherence to Ethical Standards of Vontobel Group
The emphasis placed on the observance of the highest ethical standards
by the Vontobel Group's management is well known to the Swiss financial
marketplace. The cornerstones of its standing in the financial
community are its integrity and, as a predominantly family-controlled
organization, its independence from commercial considerations that
could lead it to place its own interest before that of its clients. As
a subsidiary of Vontobel Holding, Vontobel USA is held to the same
standards of ethical conduct that govern the business activities of the
Vontobel Group. The Company Charter of the Vontobel Group is attached
hereto as APPENDIX A and incorporated herein by reference.
1.2 Compliance with Applicable US Legislation
As an investment adviser registered with the US Securities and Exchange
Commission (SEC), Vontobel USA is subject to the provisions of the
Investment Advisers Act of 1940 (the "Advisers Act"). Section 206 of
the Advisers Act provides that it shall be unlawful for any investment
adviser:
(1) to employ any device, scheme, or artifice to defraud any
client or prospective client;
(2) to engage in any transaction, practice, or course of business
which operates as a fraud or deceit upon any client or
prospective client;
(3) acting as principal for his own account, knowingly to sell any
security to or purchase any security from a client, or acting
as broker for a person other than such client, knowingly to
effect any sale or purchase of any security for the account of
such client, without disclosing to such client in writing
before the completion of such transaction the capacity in
which he is acting and obtaining the consent of the client to
such transaction;
(4) to engage in any act, practice, or course of business which is
fraudulent, deceptive, or manipulative.
Vontobel USA is also subject to certain provisions of the Investment
Company Act of 1940 with respect to fraudulent trading, as discussed in
Section 4 hereunder, and the Insider Trading and Securities Fraud
Enforcement Act of 1988, as discussed in Section 5 hereunder.
Vontobel Personnel shall at all times comply with these and all other
laws and regulations that may be applicable to Vontobel USA's business.
In some instances, where such laws and regulations may be ambiguous and
difficult to interpret, Vontobel
{PAGE} 4
Personnel shall seek the advice of Vontobel USA's management, who shall
obtain the advice of outside counsel as is necessary to comply with
this policy of observance of all applicable laws and regulations.
Excerpts from the securities legislation cited above are provided in
APPENDIX B.
1.3 General Principles
This Code of Ethics is based on the following principles:
(a) The officers, directors and employees of Vontobel USA owe a
fiduciary duty to all Vontobel Clients and, therefore, must at
all times place the interests of Vontobel Clients ahead of
their own.
(b) Vontobel Personnel shall avoid any conduct that could create
any actual or potential conflict of interest, and must ensure
that their personal securities transactions do not in any way
interfere with, or appear to take advantage of, the portfolio
transactions undertaken on behalf of Vontobel Clients.
(c) Vontobel Personnel shall not take inappropriate advantage of
their positions with Vontobel USA to secure personal benefits
that would otherwise be unavailable to them.
It is imperative that all Vontobel Personnel avoid any situation that
might compromise, or call into question, the exercise of fully
independent judgment in the interests of Vontobel Clients. All Vontobel
Personnel are expected to adhere to these general principles in the
conduct of the firm's business, even in situations that are not
specifically addressed in this Code's provisions, procedures and
restrictions. Serious and/or repeated violations of this Code may
constitute grounds for dismissal.
2. Definitions
For purposes of this Code:
"Beneficial Ownership" and "Beneficial Owner(s)" shall be as defined in
Section 16 of the Securities Exchange Act of 1934, which, generally
speaking, encompasses those situations where the Beneficial Owner has
the right to enjoy some economic benefits which are substantially
equivalent to ownership regardless of who is the registered owner (see
APPENDIX B). This would include:
(a) securities which a person holds for his or her own benefit
either in bearer form, registered in his or her own name or
otherwise, regardless of whether the securities are owned
individually or jointly;
(b) securities held in the name of a member of his or her
immediate family or any adult living in the same household;
(c) securities held by a trustee, executor, administrator,
custodian or broker;
(d) securities owned by a general partnership of which the person
is a member or a limited partnership of which such person is a
general partner;
(e) securities held by a corporation which can be regarded as a
personal holding company of a person; and
2
{PAGE} 5
(f) securities recently purchased by a person and awaiting
transfer into his or her name.
The "Corporation" shall mean Vontobel USA Inc.
"Security" shall have the meaning set forth in Section 202(a)(18)of the
Investment Advisers Act of 1940 (see APPENDIX B), irrespective of
whether the issuer is a US or non-US entity and whether the security is
being held by a US or non-US custodian or, directly or indirectly, in
personal custody; except that it shall not include:
- shares of registered open-end investment companies
(mutual funds),
- shares of an investment club account
- securities issued by the US Government or US federal
agencies that are direct obligations of the US
- bankers' acceptances, bank certificates of deposits
and commercial paper.
The following are expressly deemed to be securities subject to this
Code:
- securities issued by any foreign government or agency
thereof
- futures or options on futures
- corporate bonds
- closed-end investment funds.
"Purchase or sale of a security" shall include the writing of an option
to purchase or sell a security.
A security is "being considered for purchase or sale" or is "being
purchased or sold" when a recommendation to purchase or sell
the security by a Vontobel USA portfolio manager is under
serious consideration or has already been made and the
transaction executed.
"Vontobel Client(s)" shall mean both individual and institutional
clients (including corporations, investment companies, trusts,
endowments, foundations and other legal entities), whether resident or
non-US-resident, for whom Vontobel USA provides investment supervisory
services (discretionary management) or manages investment advisory
accounts not involving investment supervisory services
(non-discretionary management).
"Vontobel Employee(s)" shall include officers and employees of the
Corporation.
"Vontobel Personnel" shall include officers, employees and directors of
the Corporation.
3. PRINCIPLES FOR DOING BUSINESS
3.1 Confidentiality
Confidentiality is a fundamental principle of the investment management
business. Vontobel Employees must maintain the confidential
relationship between the Corporation and each of its Clients.
Confidential information such as the identity of Vontobel Clients and
the extent of their account relationship, must be held inviolate by
those to whom it is entrusted and must never be discussed outside the
normal and necessary course of the Corporation's business. To the
extent possible, all information concerning Vontobel Clients and their
accounts shall be shared among Vontobel Employees on a strictly
need-to-know basis. In this regard, Vontobel Employees shall be careful
not to divulge to
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{PAGE} 6
their colleagues or any third party any information concerning a
Vontobel Client that could be considered "inside information", as that
term is defined in Section 5 hereof.
3.2 Conflicts of Interest
It shall be the first obligation of every Vontobel Employee to fulfill
his or her fiduciary duty to Vontobel Clients. No Vontobel Employee
shall undertake any outside employment, or engage in any personal
business interest, that would interfere with the performance of this
fiduciary duty. No Vontobel Employee may act on behalf of the
Corporation in any transaction involving persons or organizations with
whom he or she, or his or her family, have any significant connection
or financial interest. In any closely held enterprise, even a modest
financial interest held by the Vontobel Employee, or any member of his
or her family, should be viewed as significant.
3.3 Service as an Outside Director
No Vontobel Employee shall become a director or any official of a
business organized for profit without first obtaining written approval
from the Board of Directors of the Corporation based upon its
determination that such board service would not be inconsistent with
the interests of the Corporation and its Clients.
3.4 Personal Fiduciary Appointments
No Vontobel Employee shall accept a personal fiduciary appointment
without first obtaining the written approval of the Board of Directors
of the Corporation, unless such appointment results from a close family
relationship.
3.5 Service on Civic and Charitable Organizations
The Corporation encourages its employees to participate in local civic
and charitable activities. In some cases, however, it may be improper
for a Vontobel Employee to serve as a member, director, officer or
employee of a municipal corporation, agency, school board, or library
board. Such service is appropriate when adequate assurances, in
writing, are first given to the Corporation that business relationships
between the Corporation and such entities would not be prohibited or
limited because of statutory or administrative requirements regarding
conflicts of interest.
3.6 Fees to Consultants and Agents
Any and all fees and payments, direct or indirect, to consultants,
agents, solicitors and other third-party providers of professional
services must be approved by the Chief Executive Officer prior to
conclusion of any formal arrangements for services. No remuneration or
consideration of any type shall be given by any Vontobel Employee to
any person or organization outside of a contractual relationship that
has received the prior approval of the Chief Executive Officer.
3.7 Personal Benefits
No Vontobel Employee, or member of his or her family, may accept a
personal gift, benefit, service, form of entertainment or anything of
more than de minimis value ("gift") from Vontobel Clients, suppliers,
service providers, brokers and all other parties with whom the
Corporation has contractual or other business arrangements if such gift
is made because of the recipient's affiliation with the Corporation or
with a Vontobel Employee. Any Vontobel Employee who receives a gift of
more than de minimis value, or a gift with an unclear status under this
Section 3.7, shall promptly notify the Compliance
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{PAGE} 7
Officer and may accept the gift only upon the latter's written
approval. The Compliance Officer shall determine whether the gift shall
be retained by the Vontobel Employee or member of his or her family,
returned to the donor, or donated without tax deduction to a charitable
organization selected by the Compliance Officer, subject to the
approval of the Chief Executive Officer.
3.8 Personal Fees and Commissions
No Vontobel Employee shall accept personal fees, commissions or any
other form of remuneration in connection with any transactions on
behalf of the Corporation or any of its Clients.
3.9 Dealings with Suppliers
Vontobel Employees shall award orders or contracts to outside suppliers
on behalf of the Corporation solely on the basis of merit and
competitive pricing, without regard to favoritism or nepotism.
3.10 Borrowing
No Vontobel Employee, or member of his or her family, may borrow money
from any Vontobel Client or any of the Corporation's suppliers, service
providers, brokers and all other parties with whom the Corporation has
contractual or other business arrangements under any circumstances.
3.11 Political Contributions
Vontobel USA shall make no contributions to political parties or
candidates for public office.
3.12 Duty to Report Violations or Potential Conflicts of Interest
The Corporation's management and Board of Directors must be informed at
all times of matters that may constitute violations of this Code of
Ethics, or that may be considered of fraudulent or illegal nature, or
potentially injurious to the good reputation of the Corporation or the
Vontobel Group. Vontobel Employees shall have a duty to report such
events immediately to the Compliance Officer or the Chief Executive
Officer or, if such events concern the Corporation's management, they
should be reported to the Chairman.
3.13 Full Disclosure
In responding to requests for information concerning the Corporation's
business practices from the Corporation's internal or independent
accountants and auditors, counsel, regulatory agencies or other third
parties, Vontobel Employees shall be truthful in their communications
and shall make full disclosure at all times.
4. PERSONAL SECURITIES TRANSACTIONS
4.1 Summary
This Section 4 of the Code of Ethics is based on the recommendations of
the Advisory Group on Personal Investing of the Investment Company
Institute in its May 1994 report. The key provisions of this Code with
respect to personal trading are summarized as follows:
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{PAGE} 8
- Prohibition on investing in initial public offerings
- Restrictions on investing in private placements
- Prior written clearance of personal trades
- Seven-day blackout period
- Sixty-day ban on short-term trading profits of
securities held, or likely to be held, in portfolios
of Vontobel Clients
- Full disclosure of all securities trades and
securities holdings
4.2 Prohibited and Restricted Transactions
4.2.1 In addition to the prohibitions of Section 206 of the Advisers Act
cited in Section 1.2 above, Vontobel USA is subject to the provisions
of Rule 17j-1 under the Investment Company Act of 1940 (the "Company
Act"). Rule 17j-1 requires investment advisers to investment companies
to adopt written codes of ethics designed to prevent fraudulent trading
and, further, to use reasonable diligence and institute procedures
reasonably necessary to prevent violations of their code of ethics.
Vontobel Employees shall not engage in any act, practice or course of
conduct that would violate the provisions of Rule 17j-1.
All Vontobel Employees are considered "access persons" as that term is
defined under Rule 17j-1 of the Company Act. As may be required by the
investment companies for which it acts as adviser or subadviser,
Vontobel shall provide periodic reports with respect to the personal
securities transactions of its access persons, as well as an annual
compliance report.
No Vontobel Employee shall purchase or sell, directly or indirectly,
any security in which he/she has, or by reason of such transaction
acquires, Beneficial Ownership and which, to his/her actual knowledge
at the time of such purchase or sale, (i) is being considered for
purchase or sale on behalf of a Vontobel Client; or (ii) is being
purchased or sold by a Vontobel Client; except that the prohibitions of
this section shall not apply to:
(a) purchases or sales which are nonvolitional on the part of any
Vontobel Employee;
(b) purchases which are part of an automatic dividend reinvestment
or other plan established by any Vontobel Employee prior to
the time the security involved came within the purview of this
Code; and
(c) purchases effected upon the rights issued by an issuer pro
rata to all holders of a class of its securities, to the
extent such rights were acquired from such issuer, and sales
of such rights so acquired.
4.2.2 No Vontobel Employee shall acquire any securities in an initial public
offering.
4.2.3 No Vontobel Employee shall acquire securities in a private placement
without the prior written approval of the Compliance Officer or other
officer designated by the Chief Executive Officer. In considering a
request to invest in a private placement, the Compliance Officer will
take into account, among other factors, whether the investment
opportunity should be reserved for a Vontobel Client, and whether the
opportunity is being offered to a Vontobel Employee by virtue of his or
her position with the Corporation.
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{PAGE} 9
4.3 Blackout Period*
4.3.1 No Vontobel Employee shall execute a securities transaction on a day
during which Vontobel USA has a pending "buy" or "sell" order in that
same security for a Vontobel Client or its own account until that order
is executed or withdrawn.
4.3.2 Vontobel Employees are prohibited from purchasing or selling a security
within seven (7) calendar days before or after the date on which a
transaction in the same security is effected for a Vontobel Client.
Should any Vontobel Employee make an authorized personal trade within
such blackout period, the Compliance Officer (or, in his absence, any
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