EXHIBIT (P)
INTEGRITY MUTUAL FUNDS
CODE OF ETHICS
AND
STATEMENT ON INSIDER TRADING
CODE OF ETHICS
INTEGRITY MUTUAL FUNDS
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the "Act")
requires registered investment companies ("investment companies") and their
investment advisers and principal underwriters to adopt written codes of
ethics designed to prevent fraudulent trading by those persons covered under
the Rule. The Rule also makes it unlawful for certain persons, including any
officer or director of an investment company, in connection with the purchase
or sale by such person of a security held or to be acquired by an investment
company to:
(1) employ any device, scheme or artifice to defraud the investment
company;
(2) make to the investment company any untrue statement of a material
fact or omit to state to the investment company a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(3) engage in any act, practice or course of business which operates
or would operate as a fraud or deceit upon the investment company; or
(4) engage in any manipulative practice with respect to the investment
company.
The Rule also requires that each investment company and its affiliates use
reasonable diligence and institute procedures reasonably necessary to prevent
violations of its code of ethics.
In addition to the Rule, the Insider Trading and Securities Fraud Enforcement
Act of 1988 ("ITSFEA") requires that all investment advisers and broker-
dealers establish, maintain, and enforce written policies and procedures
designed to detect and prevent the misuse of material nonpublic information
by such investment adviser and/or broker-dealer. Section 204A of the
Investment Advisers Act of 1940 (the "Advisers Act") states that an investment
adviser must adopt and disseminate written policies with respect to ITSFEA,
and an investment adviser must also vigilantly review, update, and enforce
them. Section 204A provides that every person subject to Section 204 of the
Advisers Act shall be required to establish procedures to prevent insider
trading.
Attached to this Code of Ethics ("Code") as Exhibit A is a Statement on
Insider Trading. Any investment adviser who acts as such for the Fund and
any broker-dealer who acts as the principal underwriter for the Fund must
comply with the policy and procedures outlined in the Statement on Insider
Trading unless such investment adviser or principal underwriter has adopted a
similar policy and procedures with respect to insider trading which are
determined by the Fund's Board to comply with ITSFEA's requirements.
This Code is being adopted by the Fund (1) for implementation with respect to
covered persons of the Fund and (2) for implementation by any "investment
adviser" to the Fund as that term is defined in the Act (each such investment
adviser being deemed an "investment adviser" for purposes of this Code) and
for any principal underwriter for the Fund unless such investment adviser or
principal underwriter has adopted a code of ethics and plan of implementation
thereof which is determined by the Fund's Board to comply with the
requirements of the Rule and to be sufficient to effectuate the purpose and
objectives of the Rule.
STATEMENT OF GENERAL PRINCIPLES
This Code is based on the principle that the officers, directors, and
employees of the Fund and the officers, directors, and employees of the Fund's
investment adviser owe a fiduciary duty to the shareholders of the Fund and,
therefore, the Fund's and investment adviser's personnel must place the
shareholders' interests ahead of their own. The Fund's and investment
adviser's personnel must also avoid any conduct which could create a potential
conflict of interest and must ensure that their personal securities
transactions do not in any way interfere with the Fund's portfolio
transactions and that they do not take inappropriate advantage of their
positions. All persons covered by this Code must adhere to these general
principles as well as the Code's specific provisions, procedures, and
restrictions.
DEFINITIONS
For purposes of this Code:
"Access Person" means any director, officer, employee, or Advisory Person
of the Fund or those persons who have an active part in the management,
portfolio selection, or underwriting functions of the Fund, or who, in the
course of their normal duties, obtain prior information about the Fund's
purchases or sales of securities (i.e. traders and analysts).
"Advisory Person" With respect to an investment adviser, an Advisory Person
means any director, officer, general partner, or employee who, in connection
with his/her regular functions or duties, makes, participates in, or obtains
current information regarding the purchase or sale of a security by the Fund
or whose functions relate to the making of any recommendations with respect to
such purchases or sales, including any natural person in a control
relationship to the Fund who obtains current information concerning
recommendations made with regard to the purchase or sale of a security by the
Fund.
"Board" means either the Board of Directors or the Board of Trustees, as the
case may be, of the Fund.
"Fund" means any mutual fund or series of any mutual fund in the Integrity
Mutual Funds group, whether one or more funds or series of a fund are involved.
"Investment Personnel" means any securities analyst, Portfolio Manager, or a
member of an investment committee who is directly involved in the decision
making process as to whether or not to purchase or sell a portfolio security
and those persons who provide information and advice to a Portfolio Manager or
who help execute a Portfolio Manager's decisions.
"Fund Personnel" means an Access Person, Advisory Person, and/or Investment
Personnel.
"Non-Access Fund Personnel" are all other employees of Integrity Mutual Funds
not covered under any of the aforementioned classifications of personnel and
will only be required to file quarterly and annual reports for personal
transactions in reportable securities unless otherwise required by this Code.
"Portfolio Manager" means an employee of an investment adviser entrusted with
the direct responsibility and authority to make investment decisions affecting
the Fund.
"Beneficial Ownership" is as defined in Section 16 of the Securities Exchange
Act of 1934 and the rules and regulations thereunder which, generally
speaking, encompass 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. This includes:
(i) 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;
(ii) securities held in the name of a member of his or her immediate
family sharing the same household;
(iii) securities held by a trustee, executor, administrator, custodian,
or broker;
(iv) 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;
(v) securities held by a corporation which can be regarded as a personal
holding company of a person; and
(vi) securities recently purchased by a person and awaiting transfer into
his or her name.
"Security" has the meaning set forth in Section 2(a) (36) of the Act, except
that it does not include shares of registered open-end investment companies,
securities issued by the Government of the United States or by Federal
agencies which are direct obligations of the United States, bankers'
acceptances, bank certificates of deposits, and commercial paper. A future
or an option on a future is deemed to be a security subject to this Code.
"Reportable Security" means any personal transaction in a security that must
be reported to the Compliance Officer after execution of a trade (see
Exhibit E for examples).
"Security Requiring Pre-clearance" means any personal transaction in a
reportable security that must be pre-cleared by the Compliance Officer
prior to execution of a trade (see Exhibit E for examples).
"Purchase or sale of a security" includes 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 has been
made by an investment adviser and such determination has been communicated
to the Fund. With respect to the investment adviser making the
recommendation, a security is being considered for purchase or sale when an
officer, director, or employee of such investment adviser seriously considers
making such a recommendation.
Solely for purposes of this Code, any agent of the Fund charged with arranging
the execution of a transaction is subject to the reporting requirements of
this Code as to any such security as and from the time the security is
identified to such agent as though such agent were an investment adviser
hereunder.
Note: An officer or employee of the Fund or an investment adviser whose
duties do not include the advisory functions described above, who does not
have access to the advisory information contemplated above, and whose
assigned place of employment is at a location where no investment advisory
services are performed for the Fund is not an "Advisory Person" or an
"Access Person" unless actual advance knowledge of a covered transaction
is furnished to such person. Such personnel will be considered "Non-Access
Fund Personnel" and will be subject to the requirements of this Code as such.
PROHIBITED TRANSACTIONS
Fund personnel shall not engage in any act, practice, or course of conduct
which would violate the provisions of the Rule set forth above. No Access
Person or Advisory Person shall purchase or sell, directly or indirectly,
any security in which he/she has, or by reason of such transaction acquires,
any direct or indirect 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 by the Fund, or (ii) is being purchased or sold by the Fund;
except that the prohibitions of this section shall not apply to:
(1) purchases or sales effected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control;
(2) purchases or sales which are nonvolitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
(4) other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code;
(5) 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; and purchases or sales that are pre-cleared in writing
and approved by the Compliance Officer as (a) clearly not
economically related to securities to be purchased or sold or held
by the Fund and (b) not representing any danger of the abuses
proscribed by Rule 17j-1 of the Act, but only after the prospective
purchaser has identified to the Compliance Officer all relevant
factors of which he/she is aware of regarding any potential conflict
between his/her transaction and securities held or to be held by the
Fund.
PROHIBITED TRANSACTIONS BY INVESTMENT PERSONNEL
No Investment Personnel shall:
(a) acquire any securities in an initial public offering; or
(b) acquire securities in a private placement without prior written
approval of the Fund's Compliance Officer or other officer
designated by the Board.
In considering a request to invest in a private placement, the Fund's
Compliance Officer will take into account, among other factors, whether the
investment opportunity should be reserved for the Fund and whether the
opportunity is being offered to Investment Personnel by virtue of their/his/
her position with the Fund. Should Investment Personnel be authorized to
acquire securities through a private placement, they/he/she shall, in
addition to reporting the transaction on the quarterly report to the Fund,
disclose the interest in that investment to other Investment Personnel
participating in that investment decision if and when they/he/she plays a part
in the Fund's subsequent consideration of an investment in that issuer. In
such a case, the Fund's decision to purchase securities of that issuer will
be subject to an independent review by Investment Personnel who have no
personal interest in the issuer.
BLACKOUT PERIODS
No Access Person or Advisory Person shall execute a securities transaction on
a day during which the Fund has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn. In addition, a Portfolio
Manager is expressly prohibited from purchasing or selling a security within
seven (7) calendar days before or after the Fund that he/she manages trades
in that security.
The foregoing prohibition of personal transactions during the seven-day period
following the execution of a transaction for the Fund shall not apply with
respect to a security when the Portfolio Manager certifies in writing to the
Compliance Officer that the Fund's trading program in that security is
complete. Each transaction authorized by the Compliance Officer pursuant to
this provision shall be reported to the Board by the Compliance Officer at the
Board's next regular meeting.
Should Fund Personnel trade within the proscribed period, such trade should be
canceled if possible. If it is not possible to cancel the trade, all profits
from the trade must be disgorged, and the profits will be paid to a charity
selected by the Fund Personnel and approved by the officers of the Fund.
The prohibitions of this section shall not apply to:
(1) purchases or sales effected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control if the person making the investment decision with respect
to such account has no actual knowledge about the Fund's pending
"buy" or "sell" order;
(2) purchases or sales which are nonvolitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code; and
(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 that are pre-cleared in writing by the Compliance
Officer as (a) clearly not economically related to securities to be
purchased or sold or held by the Fund and (b) not representing any
danger of the abuses proscribed by Rule 17j-1 of the Act, but only
after the prospective purchaser has identified to the Compliance
Officer all relevant factors of which he/she is aware of regarding
any potential conflict between his/her transaction and securities
held or to be held by the Fund.
SHORT-TERM TRADING
No Investment Personnel shall profit from the purchase and sale or sale and
purchase of the same (or equivalent) securities which are owned by the Fund
or which are of a type suitable for purchase by the Fund within sixty (60)
calendar days. Any profits realized on such short-term trades must be
disgorged, and the profits will be paid to a charity selected by the Investment
Personnel and approved by the officers of the Fund. The Compliance Officer or
other officer designated by the Board may permit in writing exemptions to the
prohibition of this section on a case-by-case basis when no abuse is involved
and the equities of the circumstances support an exemption.
GIFTS
No Investment Personnel shall accept a gift or other thing of more than de
minimus value ("gift") from any person or entity that does business with or on
behalf of the Fund if such gift is in relation to the business of the employer
of the recipient of the gift. In addition, any Investment Personnel who
receive an unsolicited gift or a gift of an unclear status under this section
shall promptly notify the Compliance Officer and accept the gift only
upon written approval of the Compliance Officer.
SERVICE AS A DIRECTOR
No Investment Personnel shall serve as a director of a publicly-traded company
absent prior written authorization from the Board based upon a determination
that such board service would not be inconsistent with the interests of the
Fund and its shareholders.
COMPLIANCE PROCEDURES
1. All Fund Personnel shall pre-clear their personal securities transactions
in securities requiring prior approval before executing an order. A
request, must be submitted to the Fund's Compliance Officer, and the
Compliance Officer must give his/her authorization prior to Fund Personnel
placing a purchase or sell order with a broker. Should the Compliance Officer
deny the request, he/she will give a reason for the denial. Approval of a
request will remain valid for two (2) business days from the date of the
approval.*
* The Board has determined that placement of a limit order constitutes a
transaction requiring approval, and the limit order must be placed within two
days from the date of approval. Implementation of a limit order in accordance
with its approved terms is a ministerial act, which occurs in the future by
the terms of the limit order and does not require approval. A change of terms
in, or withdrawal of, a standing limit order is an investment decision for
which clearance must be obtained.
2. All Fund Personnel and Non-Access Fund Personnel shall instruct their
brokers to supply the Compliance Officer, on a timely basis, with duplicate
copies of confirmations of all personal securities transactions and copies
of all periodic statements for all securities accounts. These documents will
be utilized to monitor and maintain compliance with this Code.
3. Fund Personnel and Non-Access Fund Personnel, other than directors and
officers required to report their personal securities transactions to a
registered investment adviser pursuant to Rule 204-2(a)(12) or (13) under the
Advisers Act, shall submit reports showing all transactions in reportable
securities as defined herein in which the person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership.
4. Each director who is not an "interested person" of the Fund as defined
in the Act shall pre-clear and submit reports as required under subparagraph
3 above, but only for transactions in reportable securities where at the time
of the transaction the director knew, or in the ordinary course of fulfilling
his/her official duties as a director should have know, that during the seven
(7)-day period immediately preceding the date of the transaction by the
director such security was purchased or sold by the Fund or was being
considered for purchase or sale by the Fund.
5. Every report required to be made under subparagraphs 3 and 4 above shall
be made not later than ten (10) days after the end of the calendar quarter in
which the transaction to which the report relates was effected. The report
shall contain the following information concerning any transaction required
to be reported therein:
(a) the date of the transaction;
(b) the title and number of shares;
(c) the principal amount involved;
(d) the nature of the transaction (i.e. purchase, sale, or other type of
acquisition or disposition);
(e) the price at which the transaction was effected; and
(f) the name of the broker, dealer, or bank with or through whom the
transaction was effected.
6. The Compliance Officer shall identify all Fund Personnel and Non-Access
Fund Personnel who have a duty to make the reports required hereunder, shall
inform each such person of such duty, and shall receive and review all reports
required hereunder.
7. The Compliance Officer shall promptly report to the Fund's Board (a) any
apparent violation of the prohibitions contained in this Code and (b) any
reported transactions in a security which was purchased or sold by the Fund
within seven (7) days before or after the date of the reported transaction.
8. The Fund's Board or a committee of directors created by the Board for
that purpose shall consider reports made to the Board hereunder and shall
determine whether or not this Code has been violated and what sanctions,
if any, should be imposed.
9. This Code, a list of all persons required to make reports hereunder from
time to time, a copy of each report made by Fund Personnel and Non-Access Fund
Personnel, each memorandum made by the Compliance Officer hereunder, and a
record of any violation hereof and any action taken as a result of such
violation shall be maintained by the Fund as required under the Rule.
Upon the commencement of employment of a person who would be deemed to fall
within the definition of "Fund Personnel" or "Non-Access Fund Personnel,"
that person must disclose all personal securities holdings to the Compliance
Officer.
All Fund Personnel and Non-Access Fund Personnel must report, on an annual
basis, all personal securities holdings.
At least annually, all Fund Personnel and Non-Access Fund Personnel will be
required to certify that they (a) have read and understand the Code; (b)
recognize that they are subject to the requirements outlined therein; (c)
have complied with the requirements of the Code; (d) have disclosed and
reported all personal securities transactions involving reportable securities
required to be disclosed; and (e) have disclosed all personal securities
holdings.
The Fund's Compliance Officer shall prepare an annual report to the Fund's
Board. Such report shall (a) include a copy of the Fund's Code; (b) summarize
existing procedures concerning personal investing and any changes in the
Code's policies or procedures during the past year; (c) identify any
violations of the Code; and (d) identify any recommended changes in existing
restrictions, policies, or procedures based upon the Fund's experience under
the Code, any evolving industry practices, or developments in applicable laws
or regulations.
Exhibit A
STATEMENT ON INSIDER TRADING
The Insider Trading and Securities Fraud Enforcement Act of 1988 ( "ITSFEA")
requires that all investment advisers and broker-dealers establish, maintain,
and enforce written policies and procedures designed to detect and prevent
the misuse of material nonpublic information by such investment adviser and/or
broker-dealer or any person associated with the investment adviser and/or
broker-dealer.
Section 204A of the Investment Advisers Act of 1940 (the "Advisers Act")
states that an investment adviser must adopt and disseminate written policies
with respect to ITSFEA, and an investment adviser must also vigilantly review,
update, and enforce them. Section 204A provides that every person subject to
Section 204 of the Advisers Act shall be required to establish procedures to
prevent insider trading.
Each investment adviser which acts as such for the Fund and each broker-dealer
which acts as principal underwriter for the Fund has adopted the following
policy, procedures, and supervisory procedures in addition the Fund's Code of
Ethics. Throughout this document the investment advisers and principal
underwriters collectively are called the "Providers."
SECTION 1. POLICY
The purpose of this Section 1 is to familiarize the officers, directors, and
employees of the Providers with issues concerning insider trading and to
assist them in putting into context the policy and procedures on insider
trading.
Policy Statement:
No person to whom this Statement on Insider Trading applies, including
officers, directors, and employees, may trade, either personally or on behalf
of others (such as mutual funds and private accounts managed by a Provider)
while in the possession of material nonpublic information; nor may any
officer, director, or employee of a Provider communicate material nonpublic
information to others in violation of the law. This conduct is frequently
referred to as "insider trading." This policy applies to every officer,
director, and employee of a Provider and extends to activities within and
outside their duties as a Provider. It covers not only personal transactions
of covered persons, but also indirect trading by family, friends, and others
or the nonpublic distribution of inside information from you to others.
Every officer, director, and employee must read and retain a copy of this
policy statement. Any questions regarding the policy and procedures should
be referred to the compliance officer.
The term "insider trading" is not defined in the Federal securities laws but
generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider") or the
communications of material nonpublic information to others who may then seek
to benefit from such information.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(a) trading by an insider, while in possession of material nonpublic
information, or
(b) trading by a non-insider, while in the possession of material
nonpublic information, where the information either was disclosed
to the non-insider in violation of an insider's duty to keep it con
fidential or was misappropriated; or
(c) communicating material nonpublic information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below.
1. Who is an insider? The concept of "insider" is broad. It includes
officers, directors, 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,
an investment adviser 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.
2. What is material information? Trading on inside information can be the
basis for liability when the information is material. In general, information
is "material" when 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. Information that officers, directors, and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings
estimates, significant merger or acquisition proposals or agreements, major
litigation, liquidation problems, and extraordinary management developments.
3. What is nonpublic information? Information is nonpublic until it has been
effectively communicated to the marketplace. One must be able to point to
some fact to show that the information is generally public. For example,
information found in a report filed with the SEC, or appearing in Dow Jones,
Reuters Economic Services, The Wall Street Journal, or other publications of
general circulation would be considered public. (Depending on the nature of
the information and the type and timing of the filing or other public
release, it may be appropriate to allow for adequate time for the information
to be "effectively" disseminated.)
4. Reason for liability. (a) Fiduciary duty theory. In 1980 the Supreme
Court found that there is no general duty to disclose before trading on
material nonpublic information but that such a duty arises only where there
is a direct or indirect fiduciary relationship with the issuer or its agents.
That is, there must be a relationship between the parties to the transaction
such that one party has a right to expect that the other party will disclose
any material nonpublic information or refrain from trading. (b)
Misappropriation theory. Another basis for insider trading liability is the
"misappropriation" theory, where liability is established when trading occurs
on material nonpublic information that was stolen or misappropriated from any
other person.
5. Penalties for insider trading. Penalties for trading on or communicating
material nonpublic information are severe, both for individuals and their
employers. A person can be subject to some or all of the penalties below even
if he or she does not personally benefit from the violation. Penalties
include:
* civil injunctions
* treble damages
* disgorgement of profits
* jail sentences
* fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited
* fines for the employer or other controlling person of up to the
greater of $1 million or three times 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 a Provider, including dismissal of the persons involved.
SECTION II. PROCEDURES
The following procedures have been established to aid the officers, directors,
and employees of a Provider in avoiding insider trading and to aid in
preventing, detecting, and imposing sanctions against insider trading. Every
officer, director, and employee of a Provider must follow these procedures or
risk serious sanctions including dismissal, substantial personal liability,
and/or criminal penalties. If you have any questions about these procedures,
you should consult the compliance officer.
1. Identifying inside information. Before trading for yourself or others,
including investment companies or private accounts managed by a Provider, in
the securities of a company about which you may have potential inside
information, ask yourself the following questions:
(i.) Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially affect the market
price of the securities if generally disclosed?
(ii.) Is the information nonpublic? 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?
If, after consideration of the above, you believe that the information is
material and nonpublic or if you have questions as to whether the information
is material and nonpublic, you should take the following steps:
(a) Report the matter immediately to the compliance officer.
(b) Do not purchase or sell the security on behalf of yourself or others,
including investment companies or private accounts managed by a
Provider.
(c) Do not communicate the information to anybody, other than the
compliance officer.
(d) After the compliance officer has reviewed the issue, you will be
instructed to either continue the prohibitions against trading and
communication or you will be allowed to communicate the information
and then trade.
2. Personal security trading. All officers, directors, and employees of a
Provider (other than officers, directors, and employees who are required to
report their securities transactions to a registered investment company in
accordance with a Code of Ethics) shall submit to the compliance officer, on
a quarterly basis or at such lesser intervals as may be required from time to
time, a report of every securities transaction in which they, their families
(including the spouse, minor children, and adults living in the same household
as the officer, director, or employee), and trusts of which they are trustees
or in which they have a beneficial interest have participated. The report
shall include the name of the security, date of the transaction, quantity,
price, and broker-dealer through which the transaction was effected. All
officers, directors, and employees must also instruct their brokers to supply
the compliance officer, on a timely basis, with duplicate copies of
confirmations of all personal securities transactions and copies of all
periodic statements for all securities accounts.
3. Restricting access to material nonpublic information. Any information in
your possession that you identify as material and nonpublic may not be
communicated other than in the course of performing your duties to anyone,
including persons within your company, except as provided in paragraph 1
above. In addition, care should be taken so that such information is
secure. For example, files containing material nonpublic information should
be sealed; access to computer files containing material nonpublic information
should be restricted.
4. Resolving issues concerning insider trading. If, after consideration of
the items set forth in paragraph 1, doubt remains as to whether information is
material or nonpublic, or if there is any unresolved question as to the
applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, it must be discussed with the compliance office
before trading or communicating the information to anyone.
SECTION III. SUPERVISION
The role of the compliance officer is critical to the implementation and
maintenance of this Statement on Insider Trading. These supervisory procedures
can be divided into two classifications: (1) the prevention of insider
trading, and (2) the detection of insider trading.
1. Prevention of insider trading:
To prevent insider trading, the compliance officer should:
(a) answer promptly any questions regarding the Statement on Insider
Trading;
(b) resolve issues of whether information received by an officer,
director, or employee is material and nonpublic;
(c) review and ensure that officers, directors, and employees review,
at least annually, and update as necessary, the Statement on Insider
Trading; and
(d) when it has been determined that an officer, director, or employee
has material nonpublic information,
(i) implement measures to prevent dissemination of such information,
and
(ii) if necessary, restrict officers, directors, and employees from
trading the securities.
2. Detection of insider trading:
To detect insider trading, the compliance officer should:
(a) review the trading activity reports filed by each officer, director,
and employee to ensure no trading took place in securities in
which the Provider has material nonpublic information;
(b) review the trading activity of the mutual funds managed by the
investment adviser and the mutual funds for which the broker-dealer
acts as principal underwriter; and
(c) coordinate, if necessary, the review of such reports with other
appropriate officers, directors, or employees of a Provider and the
Fund.
3. Special reports to management:
Promptly upon learning of a potential violation of the Statement on Insider
Trading, the compliance officer must prepare a written report to management of
the Provider and provide a copy of such report to the Board providing full
details and recommendations for further action.
4. Annual reports:
On an annual basis, the compliance officer of each Provider will prepare a
written report to the management of the Provider and provide a copy of such
report to the Board setting forth the following:
(a) a summary of the existing procedures to detect and prevent insider
trading;
(b) full details of any investigation, either internal or by a
regulatory agency, of any suspected insider trading and the
results of such investigation; and
(c) an evaluation of the current procedures and any recommendations
for improvement.
Exhibit B
INTEGRITY MUTUAL FUNDS
CODE OF ETHICS
INITIAL REPORT
To the Compliance Officer of Integrity Mutual Funds:
1. I hereby acknowledge receipt of a copy of the Code of Ethics for
Integrity Mutual Funds.
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Fund Personnel."
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
Integrity Mutual Funds, such as any economic relationship between my
transactions and securities held or to be acquired by Integrity Mutual Funds.
As of the date below, I had a direct or indirect beneficial ownership in the
following securities:
Type of Interest
Name of Security Number of Shares (Direct or Indirect)
---------------- ---------------- --------------------
Date:_________________ Signature:__________________________________
Print Name:_________________________________
Exhibit C
INTEGRITY MUTUAL FUNDS
CODE OF ETHICS
ANNUAL REPORT
1. To the Compliance Officer of Integrity Mutual Funds:
2. I have read and understand the Code of Ethics and recognize that I am
subject thereto in the capacity of "Fund Personnel." I hereby certify that
during the year ended December 31, 1999, I have complied with requirements
of the Code, and I have reported all securities transactions required to be
reported pursuant to the Code.
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
Integrity Mutual Funds, such as any economic relationship between my
transactions and securities held or to be acquired by Integrity Mutual Funds.
As of December 31, 1999, I had a direct or indirect beneficial ownership in
the following securities:
Type of Interest
Name of Security Number of Shares (Direct or Indirect)
---------------- ---------------- --------------------
Date:______________ Signature:__________________________________
Print Name:_________________________________
Exhibit D
INTEGRITY MUTUAL FUNDS
Securities Transactions Report
For the Calendar Quarter Ended: March 31, 2000
To the Compliance Officer of Integrity Mutual Funds:
During the quarter referred to above, the following transactions were effected
in securities of which I had, or by reason of such transactions acquired,
direct or indirect beneficial ownership, and which are required to be reported
pursuant to the Code of Ethics adopted by Integrity Mutual Funds.
<TABLE>
<CAPTION>
Security Date of No. of Dollar Amount Nature of Price Broker/Dealer
Transaction Shares of Transaction Transaction Or Bank
Through Whom
(buy, sell, Effected
etc.)
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) other transactions not required to be
reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that I
have no knowledge of the existence of any personal conflict of interest
relationship which may involve Integrity Mutual Funds, such as the existence
of any economic relationship between my transactions and securities held or to
be acquired by Integrity Mutual Funds.
Date: ________________ Signature: _______________________________________
Print Name:________________________________________
Exhibit E
REPORTABLE SECURITIES AND SECURITIES REQUIRING PRE-CLEARANCE
The following table is provided to illustrate the types of securities that are
considered to be "reportable securities" and/or "securities requiring pre-
clearance." This table is not to be considered an all inclusive list of the
types of transactions that are required to be reported and/or pre-cleared and
any questions should be directed to the Compliance Officer or (his/her
designee) when clarification is necessary.
<TABLE>
<CAPTION>
Types of Securities Reportable Securities Requiring
Securities Pre-Clearance
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------
Municipal bonds, notes and debentures Yes Yes
------------------------------------------------------------------------------------------------------------------
Corporate bonds, notes and debentures Yes Yes
------------------------------------------------------------------------------------------------------------------
Securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities No No
------------------------------------------------------------------------------------------------------------------
Money market instruments (bankers' acceptances, CD's
or repurchase agreements) No No
------------------------------------------------------------------------------------------------------------------
Securities issued by open-end investment companies and UIT's No No
------------------------------------------------------------------------------------------------------------------
Securities issued by closed-end investment companies No No
------------------------------------------------------------------------------------------------------------------
Securities and stock options issued by ND Holdings, Inc.
or its subsidiaries, if any Yes No
------------------------------------------------------------------------------------------------------------------
Options on a stock market index, foreign currency, etc. Yes No
------------------------------------------------------------------------------------------------------------------
Unregistered or private placement securities Yes Yes
------------------------------------------------------------------------------------------------------------------
Variable annuities issued by insurance company
separate accounts No No
------------------------------------------------------------------------------------------------------------------
Securities issued or guaranteed by any foreign government,
its agencies or instrumentalities No No
------------------------------------------------------------------------------------------------------------------
All securities not previously mentioned, including
but not limited to:
-equity stock (common, preferred and options)
-foreign securities
-limited partnership interests
-rights and warrants
-securities acquired through exercise of rights,
warrants and options
-securities acquired upon mergers, recapitalizations or
non-volitional transactions Yes No
------------------------------------------------------------------------------------------------------------------
</TABLE>
