CODE OF ETHICS
Aeltus Investment Management, Inc.
July 1, 2000
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CODE OF ETHICS
Aeltus Investment Management, Inc.
Introduction
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Aeltus has the privilege of being retained by our clients to manage their
assets. As investment managers, we are fiduciaries to our clients. And,
as fiduciaries, we must always put our clients' best interests first,
avoiding even the appearance of conflicts of interest with our clients.
The Code of Ethics (Code) has been adopted by Aeltus' Senior Management
and applies to all directors, officers and employees of Aeltus Investment
Management, Inc. and its subsidiaries (Aeltus). The Code covers personal
securities transactions by Aeltus directors, officers, employees, members
of their immediate families, persons who reside with them, and relatives
who are supported by them.
Administration of the Code is the responsibility of our Compliance
Officers. Enforcement of the Code is the responsibility of Senior
Management. Our Compliance Officers are responsible for reviewing and
investigating any reported or suspected violations of the Code and
reporting their findings to Senior Management. If the investigation
discloses that a violation has occurred, Senior Management will determine
appropriate actions and sanctions, which may include termination of
employment.
Senior Management believes that compliance with the Code will help
prevent actual or perceived conflicts of interest caused by personal
securities transactions. Senior Management also believes that the Code is
reasonable and that it is not overly restrictive.
From time to time, the Code may be revised. If you have any questions
regarding the Code, please contact one of our Compliance Officers.
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Definitions
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Whenever used in the Code, and unless the context indicates otherwise,
the following terms have the following meanings:
1. "Employee" means every officer or director or person employed by
Aeltus Investment Management or any of its subsidiaries.
2. "Category A Employees" include all Aeltus Employees within the equity
and fixed income investment departments, including the Chief
Executive Officer, excluding administrative personnel supporting the
CEO and administrative personnel within the investment departments.
3. "Category B Employees" generally include all Employees who are not
within Category A who participate in one of Aeltus' long-term
compensation plans (including all non-equity department pre-clearance
officers).
4. "Category C Employees" generally include all Employees not in
Category A or Category B.
5. Consultants, temporary and part-time employees are exempt from the
Code if they do not meet the definition of "access persons" under
Rule 17j-1 promulgated under the Investment Company Act of 1940, as
amended. If these individuals meet such definition, they will be
placed in Category A and will be subject to the Code.
6. "Frequent Securities Transactions" means more than thirty (30)
transactions in non-exempt securities within a calendar quarter.
7. "Pre-Clearance Officer" means those Employees designated by Senior
Management to pre-clear personal securities transactions and whose
names are shown on Appendix A.
8. "Restricted List" means the list that the investment department
provides to the Compliance Department, which includes those
securities that are being purchased or sold for client accounts and
securities that are prohibited from purchase or sale by client
accounts or Employees for various reasons (e.g., large concentrated
ownership positions or possession of material, non-public
information).
NOTE: Because of the nature of the selection process regarding a
securities being purchased or sold pursuant to a computer-determined
program trade ("Program Trade"), securities involved in a Program
Trade may not be included on the Restricted List.
9. "Security" means ALL securities EXCEPT:
o shares of registered open-end investment companies (mutual
funds);
o direct obligations of the U.S. Government (but not its
agencies or instrumentalities e.g., FNMA or GNMA, etc.);
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o bankers' acceptances;
o bank certificates of deposit;
o commercial paper;
o money market instruments, including repurchase agreements and
other high-quality short-term debt instruments.
These exceptions will hereinafter be referred to as "exempt securities".
10. "Account" means:
o an Employee's own account;
o an account in which an Employee has a beneficial interest and can
influence investment decisions o a personal account of a member of
the Employee's household; or an account over which an Employee
exercises investment discretion in a capacity other than as an
Employee.
Policy
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Parallel Investing.
Subject to the provisions of the Code, Employees may own the same
securities as those acquired by Aeltus for its clients.
Priority of Client Interests.
Every Employee must give priority to the interests of Aeltus clients over
his or her own interest in making a personal investment.
To effect this policy:
Category A and Category B Employees may not knowingly execute a
securities transaction without complying with the "Pre-Clearance of
Investments" provision in the Procedures Section of the Code.
Portfolio managers and analysts supporting that portfolio manager are
prohibited from knowingly buying or selling a security within seven (7)
calendar days before and seven (7) calendar days after a client that he
or she manages trades in that security.
NOTE: Even though securities involved in a Program Trade may not be
listed on the Restricted List, portfolio managers and analysts supporting
that portfolio manager whose clients are buying or selling securities in
a Program Trade are prohibited from knowingly buying or selling these
securities in their personal accounts
NOTE: Because of the nature of the selection process regarding securities
being purchased or sold pursuant to a Program Trade, portfolio managers
and analysts supporting that portfolio manager whose clients purchased
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or sold securities in a Program Trade are not restricted to the seven (7)
calendar day prohibition mentioned above.
Conflict with Clients.
No Employee may knowingly buy, sell or dispose in any manner, including
by gift, a personal securities investment which would cause, or appear to
cause, a conflict with the interests of an Aeltus client.
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Responsibility to Disclose Possible Conflict Before Client Transaction.
Before an Employee recommends, directs, executes or participates in any
security transaction involving an Aeltus client, such Employee will
disclose to a Pre-Clearance Officer all relevant details concerning any
possible conflict, or appearance of conflict, between his or her personal
investments and the interests of an Aeltus client. For example, the
capitalization and trading volume of a security owned by an Employee may
be relevant in determining whether there is a possible conflict of
interest if that Employee participates in a decision to buy or sell that
security for an Aeltus client. Moreover, an Employee is expected to use
common sense and professional judgment to determine if he or she should
disclose personal information as a possible basis for conflict of
interest.
Full Disclosure of Personal Securities Investments.
In order to enable Aeltus to determine compliance with the Code, every
Employee, when requested by a Compliance Officer, will disclose all
information about his or her Accounts and personal securities
investments.
The following reports of Accounts will be required of all Employees:
o within ten (10) calendar days of their employment start date, the New
Hire Holdings Report (see Appendix B) which describes all Securities
holdings as of their employment start date at Aeltus. Employees who
fail to submit the report within ten (10) calendar days of their
employment start date will be prohibited from engaging in any
personal securities transactions;
o within ten (10) days of the end of each calendar quarter, the
Quarterly Securities Transactions Report (see Appendix C) which
describes all Securities transactions made during the previous
quarter;
o within thirty (30) days after the end of the calendar year, the
Annual Report of Holdings (see Appendix D) which lists all Securities
held as of December 31 of the year reported.
Aeltus Influence.
No Employee will use the influence of his or her position to obtain a
personal trading advantage.
Pre-Clearance of Trades.
Category A Employees are required to pre-clear all Securities
transactions.
Category B Employees are required to pre-clear all Securities
transactions only if (1) the transaction is in an amount greater than
$50,000 OR (2) the transaction involves more than 1,000 shares of a
Security. For example, pre-clearance is not required for transactions
involving 1,000 shares of a $50 stock; pre-clearance is required for
transactions involving more than
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1,000 shares of a $20 stock. Transactions in securities that are not
listed for trading on any regulated securities exchange or on NASDAQ are
required to be pre-cleared regardless of the size of the transaction
(see, "Non-Public Securities and Private Placement Securities" in this
section). Category B Employees effecting transactions in the same
Security within 5 business days of the last transaction in that Security
must obtain pre-clearance approval regardless of the size of the
transaction. In the event that a Category B Employee wishes to transact
in a Security which exceeds the $50,000 in value or 1,000 share
limitation, pre-clearance must be obtained in accordance with the
pre-clearance procedures described in the Procedures section of the Code.
Category C Employees are not required to pre-clear any securities
transactions.
Material Non-Public Information.
No Employee will trade or recommend trading in Securities on the basis of
material non-public information. Employees are subject to the provisions
of Aeltus' Policies and Procedures Governing Insider Trading Activity.
Founder's Stock.
No Employee will purchase, or otherwise acquire in any manner, founder's
stock of any corporation.
Initial Public Offerings.
No Employee will purchase any Security in an initial public offering.
Non-Public Securities and Private Placement Securities.
Personal investments by Employees in non-public securities or securities
obtained pursuant to a private placement offering are subject to the same
rules as personal investments in Securities, including the Pre-Clearance
process described in the Procedures section of the Code.
In the event that an Employee is granted permission to make a personal
investment in a non-public security or securities obtained pursuant to a
private placement, that Employee will not participate in the
consideration of whether clients should invest in that issuer's public or
non-public securities. Such consideration will be subject to independent
review by investment personnel with no personal investment in that
issuer.
Pre-Clearance of Gifts.
Category A Employees will not dispose non-exempt securities by gift
without having obtained pre-clearance in accordance with the
pre-clearance procedures described in the Procedures section of the Code.
Category B Employees may dispose of Securities by gift without having
obtained pre-clearance provided such gift does not exceed $50,000 in
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value or 1,000 shares. If such gift exceeds $50,000 in value or 1,000
shares, pre-clearance must be obtained in accordance with the
pre-clearance procedures described in the Procedures section of the Code.
Category C Employees may dispose of Securities by gift without having
obtained pre-clearance.
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Receipt of Gifts.
No Employee may receive any gift or other thing of more than de minimus
value from any person or entity that does business with Aeltus. Employees
who receive a gift or other thing of more than de minimus value from any
person or entity that does business with Aeltus should immediately
contact a Compliance Officer to determine the proper disposition of such
gift.
Short-Term Trading.
Employees should focus their energy toward providing Aeltus and its
clients with their maximum attention and effort. Senior Management
believes that if Employees were to systematically engage in a pattern of
short-term trading (i.e., effecting Frequent Securities Transactions )
for their Accounts, they would be doing so at the expense of Aeltus and
its clients as these Employees' attention would be diverted from their
responsibility to Aeltus and its clients to their own personal needs.
Accordingly, Employees should not effect Frequent Securities Transactions
for their Accounts
In addition, Senior Management believes that Category A Employees should
not profit in the purchase and sale, or sale and purchase of the same
Security within 60 calendar days. While Senior Management recognizes that
short term trading strategies are generally well within the parameters of
existing legal requirements, a general prohibition on short term trading
profits (i.e., the purchase and sale, or sale and purchase of the same or
equivalent Securities within 60 calendar days) can serve as an important
prophylactic device against allegations of conflicts of interest (e.g.,
front running client transactions). Accordingly, the prohibition against
short term trading profits is designed to minimize the possibility that
Category A Employees will capitalize inappropriately on the market impact
of trades involving client transactions to which they may be privy.
Senior Management believes that this policy will help to reduce
allegations of conflicts of interest. In certain circumstances, and as
determined on a case-by-case basis, exceptions may be allowed when no
abuse is involved and the fairness of the situation strongly supports an
exemption.
Employees who breach the above policies may be subject to certain
sanctions including, but not limited to, reprimand, disgorgement of
profits, suspension and terminations.
NOTE: Short-term trading profits obtained in an Account from the exercise
of employee stock options and the subsequent sale of the underlying stock
are exempt from this prohibition and are, instead, viewed as a form of
employee compensation.
Service as a Director or Officer.
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Absent prior approval of Senior Management, Employees may not serve as
directors or officers of unaffiliated public or private companies.
Aetna Inc. Code of Conduct.
All Employees are subject to the Aetna Inc. Code of Conduct and must
abide by all its requirements, including its requirements pertaining to
transactions in Securities issued by Aetna.
Aetna Inc. Securities
All Employees, unless required, may transact in Aetna Inc. securities
without pre-clearance and compliance with the prohibition against short
term trading profits. All Employees must report transactions in Aetna
Inc. securities on their Quarterly Securities Transactions Report and
holdings of Aetna Inc. securities on their Annual Report of Holdings.
This provision does not replace or amend any of Aetna Inc.'s restrictions
or procedures regarding insider trading.
Procedures
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Absence of Conflict of Interest.
Before buying or selling a security in his or her Account, an Employee
should ask the following questions:
o "Will the investment cause my economic interest to conflict, or
appear to conflict, with the interests of an Aeltus client either now
or at some later time?"
o "Would I be embarrassed if The Wall Street Journal had an article
regarding my personal investment?"
o "Would I be embarrassed to discuss the matter with my mother or
father?"
Unless the answer is a confident "NO", the investment should not be made.
Pre-Clearance of Investments.
Category A Employees must obtain approval from a Pre-Clearance Officer
prior to entering an order to buy, sell or transfer by gift all
Securities in an Account, except exempt securities.
Category B Employees are not required to obtain approval from a
Pre-Clearance Officer prior to entering an order to buy, sell or transfer
by gift all Securities in an Account, unless where such transaction is
greater than $50,000 in value OR greater than 1,000 shares. Transactions
in Securities that are not listed for trading on any regulated securities
exchange or on NASDAQ are required to be pre-cleared regardless of the
size of the transaction. Pre-clearance is required of Category B
Employees
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who would like to effect transactions in the same Security within 5
business days of the last transaction, without regard to the size of the
transaction.
Category C Employees are not required to obtain approval from a
Pre-Clearance Officer prior to entering an order to buy, sell or transfer
by gift Securities in an Account.
NOTE: Category A Employees in the Equity Department must pre-clear their
equity transactions through Pre-Clearance Officers listed under "For
Equity Department Employees" on Appendix A.
NOTE: In order to avoid any appearance of impropriety where an Employee
is asked to pre-clear a personal securities transaction submitted by his
or her supervisor, persons occupying the following offices will pre-clear
as follows:
(1) Chief Executive Officer through an Equity Department Pre-Clearance
Officer and countersigned by a Compliance Department Pre-Clearance
Officer;
(2) Chief Operating Officer through an Equity Department Pre-Clearance
Officer and countersigned by a Compliance Department Pre-Clearance
Officer;
(3) Head of Equity Department through an Equity Department Pre-Clearance
Officer (except himself or herself) and countersigned by a Compliance
Department Pre-Clearance Officer;
(4) Head Equity Trader through Head of Equity Department;
(5) Chief Compliance Officer through an Equity Department Pre-Clearance
Officer.
Exceptions to Preclearance Requirements for Category A and Category B
Employees.
It is not necessary to obtain pre-clearance for investments which are
made by an independent fiduciary (i.e., a discretionary account) for an
Account, securities purchased through an automatic payroll deduction
program where the timing of purchases is controlled by someone other than
the Employee, purchases which are part of an automatic dividend
reinvestment plan, and 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. Sales of
Securities obtained as a result of the exercise of such rights, however,
must be pre-cleared as required.
Evaluation of Request for Pre-Clearance.
A Pre-Clearance Officer will evaluate a request for pre-clearance and
consider whether the transaction would violate any provisions of the
Code. It is expected that in making such determination, a Pre-Clearance
Officer may consider the following information:
o The information regarding the transaction;
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o Previously submitted requests for pre-clearance of personal trades;
o Information from the portfolio managers regarding Securities
currently under consideration for purchase or sale by Aeltus'
clients;
o The Aeltus electronic trading system as to all Securities owned by
Aeltus' clients;
o The Restricted List; and
o Other appropriate sources.
Response to Request for Pre-Clearance.
A Pre-Clearance Officer's response to the request for pre-clearance will
include:
o Making a telephone call to the Employee requesting pre-clearance, to
either approve or deny the request, and
o Filing a copy of the Pre-Clearance form with the Compliance
Department (a sample copy of which is included as Appendix E).
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Time for Which A Transaction is Approved.
An Employee who is required to obtain pre-clearance may authorize his or
her broker to execute a transaction only on the day on which approval for
that transaction is given. If the transaction is not completed on that
day, the Employee must again obtain pre-clearance for the transaction on
each day that the Employee would like to effect the transaction.
Post Execution Reporting.
At the close of each calendar quarter, the Compliance Department will
forward a copy of the Personal Securities Transactions Quarterly Report
(see Appendix C) to every Employee. Within ten (10) calendar days of the
end of each calendar quarter, every Employee must complete and return to
the Compliance Department the Quarterly Report, which describes all
Securities transactions of personal investments executed during the
preceding three months.
At the close of each calendar year, the Compliance Department will
forward a copy of the Annual Securities Holdings Report (see Appendix D)
to every Employee. Within thirty (30) calendar days of the end of each
calendar year, every Employee must complete and return to the Compliance
Department the Annual Report, which describes all Securities then held in
the Employee's account(s) as of December 31 of the year reported.
Confidentiality.
All information submitted to the Aeltus Compliance Department pursuant to
pre-clearance and post execution reporting procedures will be treated as
confidential information. It may, however, be made available to
governmental and securities industry self-regulatory agencies with
regulatory authority over Aeltus as well as to Aeltus' auditors and legal
advisors, if appropriate.
Supervisory Procedures
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Exceptions to Policy and Procedures.
Because all fact situations cannot be contemplated, Aeltus' Chief
Compliance Officer and Senior Management retain the authority to permit
exceptions to the above policies and procedures when to do so is
consistent with the interests of Aeltus and its clients.
Administration of the Code.
In order to ensure observance of these policies and procedures relating
to personal investments, the Aeltus Chief Compliance Officer will:
o Distribute the Code to all Employees;
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o Provide educational programs to familiarize Employees with relevant
policies and procedures;
o Reconcile pre-clearance approvals with Quarterly Report and Annual
forms (the Chief Compliance Officer's transactions will be reviewed
by the Chief Operating Officer);
o Take appropriate actions to ensure compliance with the policies and
procedures of the Code; and
o Maintain and review records related to personal securities
transactions.
Furthermore, Senior Management will:
o Set an example by their personal actions of compliance with the
letter and spirit of Aeltus' policies and procedures;
o Require observance of Aeltus' policies and procedures and, if such
policies and procedures are violated, determine the appropriate
sanction for the offender, which may include termination of
employment;
o Review the Code on a regular basis and update as necessary.
Each Employee will be required annually to certify that they have read
and understood the policies and procedures contained in the Code (see
Appendix F).
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APPENDIX A
Pre-Clearance Officers
William Bartol (860) 275 - 2266
Marlene Brigham (860) 275 - 2110
Patricia Carabino (860) 275 - 4069
Brian Kawakami (860) 275 - 3599
For Equity Department Employees
Heather Bentley (860) 275 - 2436
James Chiecko (860) 275 - 3746
Neil Kochen (860) 275 - 2423
Sara Pihl (860) 275 - 3747
Kristen Pinchera (860) 275 - 2445
Nancy Postel (860) 275 - 2434
Peter Walsh (860) 275 - 3749
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APPENDIX B
NEW HIRE HOLDINGS REPORT
Date of Hire: ____________, 200_
Information required in this report must be as of your employment date of hire.
You must file this report within ten (10) days of your association with Aeltus.
Please note that you do not have to report holdings of Exempt Securities (as
defined in the Code of Ethics).
[ ] No Holdings To Report (Check if applicable)
Print Name ______________________________________________
<TABLE>
<CAPTION>
Title of Number of Principal Broker
Security* Shares Amount or Bank *Disclaimer
--------- ------ ------ ------------- ----------
<S> <C> <C> <C> <C> <C>
(Check if applicable, give reasons)
</TABLE>
* The undersigned declares that the recording of the holding checked in
this column shall not be construed as an admission that he/she had any
direct or indirect ownership in the security described.
IF YOU WISH, YOU MAY ATTACH A COPY OF YOUR MOST RECENT ACCOUNT STATEMENT(S) AS
PROVIDED TO YOU BY YOUR BROKER, BANK, OR CUSTODIAN. IF YOU HAVE ANY QUESTIONS OR
CONCERNS RELATED TO THIS FORM, PLEASE FEEL FREE TO CONTACT ONE OF THE FIRM'S
COMPLIANCE OFFICERS.
Date: _______________________________
Signature: ________________________________________
PLEASE FORWARD TO THE CHIEF COMPLIANCE OFFICER, SH11.
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APPENDIX C
QUARTERLY SECURITIES TRANSACTIONS REPORT
For Quarter Ending _________________
Filing of Report is required whether or not transactions occurred. Please note
that you do not have to report transactions in Exempt Securities. If you have
opened a new account this quarter, please check and complete below. This form
must be filed within ten (10) days of the end of the calendar quarter.
[ ] No Transactions To Report (Check if applicable)
[ ] I opened a new account this quarter. Name of Broker or Bank ___________
________________________________ Date Opened _______________________
Print Name
<TABLE>
<CAPTION>
Trade (including interest rate and
maturity date, if applicable) ** Quantity ** Quantity
Principal Broker
<S> <C> <C> <C> <C>
Date Title of Security* Purchased Sold Price
---- ------------------ --------- ------------ -----
Amount or Bank *** Disclaimer
------ ------- --------------
</TABLE>
* The undersigned declares that the recording of the transaction checked in
this column shall not be construed as an admission that he/she had any
direct or indirect ownership in the security described in the
transaction.
** If you have acquired or disposed of a security in a transaction other
than a purchase or sale (e.g., by gift), please describe the nature of
the transaction.
*** The undersigned declares that the recording of the transaction listed in
this column shall not be construed as an admission that he/she has or had
any direct or indirect ownership in the security described in the
transaction.
IF YOU WISH, YOU MAY ATTACH A COPY OF YOUR ACCOUNT STATEMENTS AS PROVIDED TO YOU
BY YOUR BROKER, BANK, OR CUSTODIAN.
Date: ___________________ Signature: __________________________________
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APPENDIX D
Aeltus Investment Management, Inc.
ANNUAL REPORT OF PERSONAL SECURITIES HOLDINGS
Filing of Report is required within thirty (30) days of calendar year-end.
Please note that you do not have to report holdings of Exempt Securities.
[ ] No Holdings To Report (Check if applicable)
Print Name
<TABLE>
<CAPTION>
Title of Quantity Principal Broker
Security Held Amount or Bank * Disclaimer
-------- ---- ------ ------- ----------
<S> <C> <C> <C> <C>
(Check if applicable, give reasons)
</TABLE>
* The undersigned declares that the recording of the transaction listed
in this column shall not be construed as an admission that he/she has
or had any direct or indirect ownership in the security described in
the transaction.
PLEASE FORWARD TO THE CHIEF COMPLIANCE OFFICER, SH11.
IF YOU WISH, YOU MAY ATTACH A COPY OF YOUR ACCOUNT STATEMENTS AS PROVIDED TO YOU
BY YOUR BROKER, BANK, OR CUSTODIAN.
Date: _____________________
Signature: ________________________
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APPENDIX E
Aeltus Investment Management, Inc.
REQUEST FOR PERSONAL SECURITIES TRANSACTION
PRE-CLEARANCE FORM
Name: _________________________________________________________________________
Department: ___________________________________________________________________
Date: _________________________________________________________________________
Time: _________________________________________________________________________
Security: _____________________________________________________________________
Type of Account
Individual _______ Joint ______ Spousal _____ Other: ___________________
Type of Transaction
Purchase ____________ Sale _____ Gift ___________ Other/Describe __________
Have you bought/sold the same or an equivalent security within the past 60 days?
Yes __ No __
If yes, please discuss this transaction with the Compliance Department prior to
entering into the transaction.
Transaction is: Approved ______ Denied ______
If Approved, approval valid for TRADE DATE:____________________________________
PLEASE FORWARD TO THE CHIEF COMPLIANCE OFFICER, SH11.
Pre-Clearance Officer: _______________________________________________________
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APPENDIX F
Aeltus Investment Management, Inc.
EMPLOYEE CERTIFICATION
Aeltus Code of Ethics
I certify that I have read and understood the Aeltus Code of Ethics, and
acknowledge that I am subject to the policies and procedures contained therein.
Please sign and return this certification to the attention of the Chief
Compliance Officer, SH11, as soon as possible.
Print Name: _______________________________
Signature: _______________________________
Date: _______________________________
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