CODE OF ETHICS
THE NEW YORK STATE OPPORTUNITY FUNDS
PINNACLE ADVISORS LLC AND
PINNACLE INVESTMENTS, INC
A. INTRODUCTION
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Rule 17j-1 under the Investment Company Act of 1940 (the "Act") requires
registered investment companies and their investment advisers to adopt
codes of ethics and reporting requirements to prevent fraudulent, deceptive
and manipulative practices. The New York State Opportunity Funds (the
"Trust") is registered as an open-end management investment company under
the Act. Pinnacle Advisors LLC, ("Pinnacle") is the investment advisor of
the Trust. Pinnacle Investments, Inc. ("Underwriter") is the Trust's
principal underwriter. Except as otherwise specified herein, this Code
applies to all employees, officers, directors and trustees of Pinnacle, the
Underwriter and the Trust.
This Code of Ethics is based on the principle that the officers, directors,
trustees and employees of Pinnacle, the Underwriter and the Trust have a
fiduciary duty to place the interests of the Trust before their own
interests, to conduct all personal securities transactions consistently
with this Code of Ethics (the "Code") and to do so in a manner which does
not interfere with the portfolio transactions of the Trust, or otherwise
take unfair advantage of their relationship to the Trust. Persons covered
by this Code must adhere to this general principle as well as comply with
the specific provisions of this Code. Technical compliance with this Code
will not insulate from scrutiny trades which indicate an abuse of an
individual's fiduciary duties to the Trust.
B. DEFINITIONS
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1. "Access person" means (i) any director, officer , general partner or
Advisory person of the Trust, Pinnacle or the Underwriter (ii) any
employee of the Trust, Pinnacle or the Underwriter who, in the
ordinary course of his or her business, makes, participates in or
obtains information regarding the purchase or sale of securities for
the Trust or whose principal function or duties relate to the making
of any recommendation to the Trust regarding the purchase or sale of
securities (iii) any natural person in a control relationship to the
Trust, Pinnacle or Underwriter who obtains information concerning
recommendations made to the Trust with regard to the purchase or sale
of a security. A natural person in a control relationship or an
employee of a company in a control relationship does not become an
"access person" simply by virtue of the following:
Normally assisting in the preparation of public reports, but not
receiving information about current recommendations or trading; a
single instance of
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obtaining knowledge of current recommendations or trading activity;
or, infrequently and inadvertently obtaining such knowledge. The
Compliance Officer(s) for the Trust, Pinnacle and the Underwriter are
responsible for determining who are access persons.
2. "Advisory Person" is (i) any employee of the Fund, investment advisor
or the underwriter (or of any company in a control relationship to the
Fund, investment advisor or underwriter) who, in connection with his
or her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of Covered Securities by
the Fund, or whose functions relate to making of any recommendations
with respect to the purchases or sales; and (ii) any natural person in
a control relationship to the Fund or investment advisor who obtains
information concerning recommendations made to the Fund with regard to
the purchase or sale of Covered Securities by the Fund.
3. A security is "being considered for purchase or sale" when (i) the
security is being considered for purchase or sale by the Fund or the
Advisor, or was being so considered, within the most recent 15 days;
or (ii) the security is being purchased or sold by the Fund or was
purchased or sold by the Fund within the most recent 15 days.
4. "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all securities which an
access person has or acquires. (See Appendix A for a more complete
description.)
5. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
6. "Disinterested trustee" means a trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the Act.
7. "Equivalent security" means any security issued by the same entity as
the issuer of a subject security, including options, rights, warrants,
preferred stock, restricted stock, phantom stock, bonds and other
obligations of that company, or a security convertible into another
security.
8. "Immediate family" of an individual means any of the following persons
who reside in the same household as the individual:
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child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
step-parent father-in-law
Immediate family includes adoptive relationships and any other
relationship (whether or not recognized by law) which the Compliance
Officer determines could lead to possible conflicts of interest,
diversions of corporate opportunity, or appearances of impropriety
which this Code is intended to prevent.
9. "Investment personnel" means those employees of the Trust, Pinnacle or
Underwriter or any person in a control relationship to the Trust,
Pinnacle or the Underwriter who provide information and advice
regarding the purchase or sale of securities by the Trust.
10. "Investment manager" means any employee entrusted with the direct
responsibility and authority to make investment decisions affecting
the Trust.
11. "Purchase or sale of a security" includes, without limitation, the
writing, purchase or exercise of an option to purchase or sell a
security, conversions of convertible securities and short sales.
12. "Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of unaffiliated
registered open-end investment companies, securities issued by the
Government of the United States, short-term debt securities which are
"government securities" within the meaning of Section 2(a)(16) of the
Act, bankers' acceptances, bank certificates of deposit, commercial
paper, and such other money market instruments as designated by
Pinnacle and the Board of Trustees of the Trust.
Security does not include futures contracts or options on futures
contracts (provided these instruments are not used to indirectly
acquire an interest which would be prohibited under this Code).
13. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Sections 13 or 15(d) of the Securities Exchange Act of 1934.
14. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section
4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the
Securities Act of 1933.
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C. PRE-CLEARANCE REQUIREMENTS
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All access persons shall clear in advance through the Compliance Officer
any purchase or sale, direct or indirect, of any Security in which such
access person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership interest. The Compliance Officer shall retain
written records of such clearance requests.
The applicable Compliance Officer will not grant clearance for any purchase
or sale if the Security is currently being considered for purchase or sale
or being purchased or sold by the Trust. If the Security proposed to be
purchased or sold by the access person is an option, clearance will not be
granted if the Securities subject to the option are being considered for
purchase or sale as indicated above. If the Security proposed to be
purchased or sold is a convertible security, clearance will not be granted
if either that security or the securities into which it is convertible are
being considered for purchase or sale as indicated above.
The Compliance Officer may refuse to preclear a transaction if he or she
deems the transaction to involve a conflict of interest, possible diversion
of corporate opportunity, or an appearance of impropriety.
Clearance is effective, unless earlier revoked, until the earlier of (1)
the close of business on the fifth trading day, beginning on and including
the day on which such clearance was granted, or (2) the access person
learns that the information provided to the Compliance Officer in such
access person's request for clearance is not accurate. If an access person
places an order for a transaction within the five trading days but such
order is not executed within the five trading days (e.g., a limit order),
clearance need not be reobtained unless the person who placed the original
order amends such order in any way. Clearance may be revoked at any time
and is deemed revoked if, subsequent to receipt of clearance, the access
person has knowledge that a security to which the clearance relates is
being considered for purchase or sale.
D. EXEMPTED TRANSACTIONS
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The pre-clearance requirements in Section C of this Code shall not apply
to:
1. Purchases or sales which are non-volitional on the part of either the
access person or the Trust.
2. Purchases which are part of an automatic dividend reinvestment plan.
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3. Shares of the Trust or any other investment company affiliated with
the Trust, Pinnacle or the Underwriter.
4. Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
5. Purchases or sales by a disinterested trustee or a member of his or
her immediate family.
E. PROHIBITED ACTIONS AND TRANSACTIONS
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Notwithstanding a grant of clearance under Section C hereof, the following
actions and transactions are prohibited and will result in sanctions
including but not limited to the sanctions expressly provided for in this
Section.
1. Access persons shall not execute a securities transaction on a day
during which the Trust has a pending buy or sell order in that same
security or an equivalent security until that order is executed or
withdrawn. An access person shall disgorge any profits realized on
trades within such period. This prohibition does not apply to
disinterested trustees and their immediate families.
2. An investment manager shall not buy or sell a security within seven
calendar days before or after the Trust trades in that security or an
equivalent security unless the Trust's entire position in that
security or equivalent securities has been sold prior to the
investment manager's transaction and the investment manager is also
selling the security. An investment manager shall disgorge any profits
realized on trades within such period.
3. Investment personnel and investment managers shall not profit in the
purchase and sale, or sale and purchase, of the same (or equivalent)
securities within sixty (60) calendar days. Upon review by the
applicable Compliance Officer of such short-term trading by investment
personnel and investment managers, that Compliance Officer may, in his
or her sole discretion, allow exceptions when he or she has determined
that an exception would be equitable and that no abuse is involved.
Investment personnel and investment managers profiting from a
transaction for which the applicable Compliance Officer has not
granted an exception shall disgorge any profits realized on such
transaction.
4. Investment personnel and investment managers shall not accept from any
person or entity that does or proposes to do business with or on
behalf of the Trust a gift or other thing of more than de minimis
value or any other form of advantage. The
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solicitation or giving of such gifts by investment personnel and
investment managers is also prohibited. For purposes of this
subparagraph, "de minimis" means $100 or less if received in the
normal course of business.
5. Investment personnel and investment managers shall not serve on the
board of trustees of publicly traded companies, absent prior
authorization from the Compliance Officer provided, however, that any
trusteeships held by such investment personnel or investment managers
as of the date of the adoption of this Code of Ethics shall be deemed
to be authorized. The Compliance Officer will grant authorization only
if it is determined that the board service would be consistent with
the interests of the Trust. In the event board service is authorized,
such individuals serving as trustees shall be isolated from those
making investment decisions through procedures designed to safeguard
against potential conflicts of interest, such as a Chinese Wall policy
or investment restrictions.
6. Investment Personnel and Investment Managers shall not acquire a
security in a Limited Offering or an Initial Public Offering, absent
prior authorization from the applicable Compliance Officer. The
applicable Compliance Officer will not grant clearance for the
acquisition of a Security in a Limited Offering or Initial Public
Offering if it is determined that the investment opportunity should be
reserved for the Trust or that the opportunity to acquire the Security
is being offered to the individual requesting clearance by virtue of
such individual's position with the Advisor or the Trust (as
applicable). An individual who has been granted clearance to acquire
Securities in a Limited Offering or an Initial Public Offering shall
disclose such investment when participating in a subsequent
consideration by the Trust of an investment in the issuer. A
subsequent decision by the Trust to purchase such a Security shall be
subject to independent review by Investment Personnel with no personal
interest in the issuer.
7. Investment personnel and investment managers shall not purchase during
the underwriting of the security any security which, due to its public
demand in relation to the amount offered, is likely to increase in
value.
8. Investment personnel and investment managers shall not engage in short
sales or margin trades of securities.
9. An access person shall not execute a securities transaction while in
possession of material non-public information regarding the security
or its issuer.
10. An access person shall not execute a securities transaction which is
intended to raise, lower, or maintain the price of any security or to
create false appearance of active trading (anti-market manipulation).
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11. An access person shall not execute a securities transaction involving
the purchase or sale of a security at a time when such access person
intends, or knows of another's intention, to purchase or sell that
security (or an equivalent security) on behalf of the Trust. This
prohibition would apply whether the transaction is in the same (e.g.,
two purchases) or the opposite (a purchase and sale) direction as the
transaction of the Trust.
12. An access person shall not cause or attempt to cause the Trust to
purchase, sell, or hold any security in a manner calculated to create
any personal benefit to such access person or his or her immediate
family. If an access person or his or her immediate family stands to
materially benefit from an investment decision for the Trust that the
access person is recommending or in which the access person is
participating, the access person shall disclose to the persons with
authority to make investment decisions for the Trust, any beneficial
ownership interest that the access person or his or her immediate
family has in such security or an equivalent security, or in the
issuer thereof, where the decision could create a material benefit to
the access person or his or her immediate family or the appearance of
impropriety.
F. REPORTING
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1. Each access person, except a disinterested trustee, shall arrange for
the applicable Compliance Officer to receive directly from the
broker-dealer effecting a transaction in any security in which such
access person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership interest, duplicate copies of
each confirmation for each securities transaction and periodic account
statements for each brokerage account in which such access person has
any beneficial ownership interest, unless such information is provided
pursuant to paragraph 2 of this Section.
2. In the event an access person, other than a disinterested trustee,
does not arrange for the provision of information by broker-dealers as
required in the preceding paragraph 1, the access person shall report
to the applicable Compliance Officer no later than 10 days after the
end of each calendar quarter the information described below with
respect to transactions in any security in which such access person
has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership interest in the security; provided, however, that
an access person shall not be required to make a report with respect
to transactions effected for any account over which such access person
does not have any direct or indirect influence:
a. The date of the transaction and the name of the security;
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b. The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition); and
c. The name of the broker, dealer or bank with or through whom the
transaction was effected.
Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he or
she has any direct or indirect beneficial ownership in the security to
which the report relates.
3. Each access person, except a disinterested trustee, shall upon
commencement of employment and annually thereafter verify in writing
that all transactions in any security in which such access person has,
or by reason of such transaction has acquired, any direct or indirect
beneficial ownership in the security have been reported to the
applicable Compliance Officer. If an access person had no transactions
during the year, such access person shall so advise the applicable
Compliance Officer.
4. Each access person, except a disinterested trustee, shall upon
commencement of employment, and annually thereafter, disclose to the
Compliance Officer in writing his or her current personal Securities
holdings. The Holdings Report shall contain information current as of
a date no more than 30 days before the Report is submitted.
5. A disinterested trustee need only report a transaction in a security
if such trustee, at the time of that transaction, knew or, in the
ordinary course of fulfilling his or her official duties as a trustee,
should have known that, during the 15-day period immediately preceding
the date of the transaction by the trustee, such security was
purchased or sold by the Trust or was being considered for purchase or
sale by the Trust.
6. Pinnacle, the Underwriter or the Trust may, in its discretion, require
an access person to disclose in connection with a report,
recommendation or decision of such access person to purchase or sell a
security any direct or indirect beneficial ownership by such person of
such security.
G. CONFIDENTIALITY OF TRANSACTIONS AND INFORMATION
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1. Every access person shall treat as confidential information the fact
that a security is being considered for purchase or sale by the Trust,
the contents of any research report, recommendation or decision,
whether at the preliminary or final level, and the holdings of the
Trust and shall not disclose any such confidential information
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without prior consent from the applicable Compliance Officer.
Notwithstanding the foregoing, the holdings of the Trust shall not be
considered confidential after such holdings by the Trust have been
disclosed in a public report to shareholders or to the Securities and
Exchange Commission.
2. Access persons shall not disclose any such confidential information to
any person except those employees and trustees who need such
information to carry out the duties of their position with Pinnacle or
the Trust (as applicable).
H. SANCTIONS
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Upon discovering a violation of this Code, Pinnacle, the Underwriter or the
Board of Trustees of the Trust (as applicable) may impose such sanctions as
it deems appropriate, including, without limitation, a letter of censure or
suspension or termination of the employment of the violator. All material
violations of this Code and any sanctions imposed with respect thereto
shall be reported periodically to the Board of Trustees of the Trust.
I. CERTIFICATION OF COMPLIANCE
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Each access person, except a disinterested trustee, shall annually certify
that he or she has read and understands this Code and recognizes that he or
she is subject hereto.
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APPENDIX A TO THE CODE OF ETHICS
"BENEFICIAL OWNERSHIP"
For purposes of this Code, "beneficial ownership" is interpreted in the same
manner as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder, except that the determination of direct or indirect
beneficial ownership applies to all securities which an access person has or
acquires. Pinnacle, the Underwriter and the Trust will interpret beneficial
ownership in a broad sense.
The existence of beneficial ownership is clear in certain situations, such as:
securities held in street name by brokers for an access person's account, bearer
securities held by an access person, securities held by custodians, pledged
securities, and securities held by relatives or others for an access person. An
access person is also considered the beneficial owner of securities held by
certain family members. The SEC has indicated that an individual is considered
the beneficial owner of securities owned by such individual's immediate family.
The relative's ownership of the securities may be direct (i.e., in the name of
the relative) or indirect.
An access person is deemed to have beneficial ownership of securities owned by a
trust of which the access person is the settlor, trustee or beneficiary,
securities owned by an estate of which the access person is the executor or
administrator, legatee or beneficiary, and securities owned by a partnership of
which the access person is a partner.
An access person must comply with the provisions of this Code with respect to
all securities in which such access person has a beneficial ownership interest.
If an access person is in doubt as to whether she or he has a beneficial
ownership interest in a security, the access person should report the ownership
interest to the applicable Compliance Officer. An access person may disclaim
beneficial ownership as to any security on required reports.
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