Exhibit (p)(4)
TSJ ADVISORY GROUP, INC.
Code of Ethics
I. DUTY OF CARE AND LOYALTY
This Code of Ethics ("Code") is based on the principle that certain
officers, directors, and employees of TSJ Advisory Group, Inc. ("TSJ"), owe a
fiduciary duty to, among others, the Clients of TSJ. The Code applies to every
director, officer, or Advisory Person of TSJ as described below and required by
SEC Rule 17j-1(a)(1) ("Access Persons"). All such Access Persons must avoid
activities, interests, relationships or conflicts of interest that might
interfere with making decisions in the best interests of the Fund and its
shareholders.
All Access Persons must at all times:
1. Place the interests of Clients first. In other words, you must
scrupulously avoid conflicts of interest in which you serve your own
personal interests to the detriment of the interests of Clients and
their shareholders.
2. Conduct all personal Securities Transactions in Accounts in full
compliance with this Code.
3. Avoid taking inappropriate advantage of your position. The receipt
of investment opportunities, perquisites, or gifts from persons
seeking business or undue influence with TSJ or its Clients could
call into question the exercise of your independent judgment in
dealing with conflicts of interest.
Questionable situations should be resolved in favor of Clients and
technical compliance with the Code's procedures will not necessarily insulate
from scrutiny any trades or other situations that indicate an abuse of your
duties.
II. ACCESS PERSON REPORTING REQUIREMENTS
Every Access Person of TSJ must provide to the Board of Directors personal
holdings disclosure reports as described below. A list of all persons required
to make reports under this section will be maintained as described in Section IX
of this Code.
A. INITIAL HOLDINGS REPORT.
-----------------------
No later than 10 days after the person becomes an Access Person,
each Access Person, must submit an Initial Holdings Report including the
title, number of shares, and principal amount of each Covered Security in
which the Access Person had any direct or indirect beneficial ownership
when the person became an Access Person. In addition, with respect to
brokerage accounts, the Initial Holdings Report must include the name of
any broker, dealer, or bank with whom the Access Person maintained an
account in which Securities were held for the direct or indirect benefit
<PAGE>
of the Access Person as of the date the person became an Access Person.
B. QUARTERLY HOLDINGS REPORT.
-------------------------
No later than 10 days after the end of a calendar quarter, each
Access Person must submit a Quarterly Holdings Report which contains the
following:
1. TRANSACTION SUMMARIES. A summary of all transactions
conducted during the quarter in Covered Securities in which
the Access Person had any direct or beneficial ownership
and indicating the status of any and all outside
directorships. The Transaction Summaries must include:
a. The nature and date of the transaction (i.e.
purchase, sale, or any other type of acquisition or
disposition);
b. The title, interest rate, maturity date, number of
shares, and principal amount of each Covered Security
involved;
c. The name of the broker, dealer or bank with or
through which the transaction was effected; and
d. The price of the Covered Security at which the
transaction was effected.
2. ACCOUNTS REPORT. In addition, with respect to brokerage
accounts, the Quarterly Holdings Report must include the name
of any broker, dealer, or bank with whom an account was
established during the quarter in which Securities were held
for the direct or indirect benefit of the Access Person and
the date such account was established.
In the event that an Access Person is required by this section to
file a Quarterly Holdings Report for a period in which he or she cannot
identify any personal holdings or transactions which would require
reporting, the Access Person will instead file a signed Certification of
Exemption, certifying that he or she is not required to report any
holdings or transactions in the said period.
C. ANNUAL HOLDINGS REPORT.
----------------------
Each Access Person must submit an Annual Holdings Report which is
current as of a date no more than 30 days before the report is submitted.
The Annual Holdings Report must include the following:
1. HOLDINGS SUMMARY. The title, number of shares, and
principal amount of each Covered Security in which the
Access Person had any direct or indirect beneficial
ownership. In addition, with respect to brokerage
accounts, the Annual Holdings Report must include the name
of any broker, dealer, or bank with whom the Access Person
2
<PAGE>
maintained an account in which Securities were held for the
direct or indirect benefit of the Access Person.
2. ANNUAL CERTIFICATION OF COMPLIANCE. Each Annual Holdings
Report will also include an Annual Certification of
Compliance, signed by the Access Person, in which the
Access Person certifies that he or she has read and
understands this Code, has complied with the requirements
of this Code, and has reported all Securities Transactions
in Accounts required to be disclosed or reported pursuant
to the requirements of this Code.
III. PROHIBITED TRANSACTIONS
All Advisory Persons and their Immediate Families are prohibited from
engaging in any of the following Securities Transactions in Accounts, although
some transactions may be engaged in with prior approval from the Board of
Directors.
A. Any transaction in a Covered Security while in possession of
material nonpublic information regarding the Covered Security or
the issuer of the Covered Security. This prohibition applies to
all Access Persons;
B. Transactions intended to raise, lower, or maintain the price of
any Covered Security or to create a false appearance of active
trading. This prohibition applies to all Access Persons;
C. Purchases or sales of Covered Securities, or writing an option to
purchase or sell a Covered Security, at a time when the Person
has knowledge of an intention to purchase or sell that Covered
Security (or an Equivalent Security) on behalf of Clients. This
prohibition applies whether the Securities Transaction is in the
same (two purchases) or the opposite (a purchase and sale)
direction of the transaction on behalf of a Client. This
prohibition applies to all Access Persons;
D. Any purchase or sale of Covered Securities, including writing an
option to purchase or sell a Covered Security, on any day during
which TSJ, on behalf of a Client has a pending "buy" or "sell"
order in the same Covered Security (or Equivalent Security) until
that order is executed or withdrawn, unless an explanation of why
the trade is necessary is provided and provision is made for the
Client trade to take precedence, in terms of price, over the
trade in question.
E. Any acquisition of Securities in an Initial Public Offering (other
than a new offering of a registered open-end investment company). A
record of any approval granted under this paragraph and the reasons
for such approval will be maintained as described in Section IX of
this Code;
F. Any acquisition of Covered Securities in a Limited Offering or
private placement. Permission may be given after considering,
among other factors, whether the investment opportunity should be
3
<PAGE>
reserved for Clients and whether the opportunity is being offered
to the Advisory Person by virtue of his or her position. In the
event any Advisory Person is authorized to acquire and has
acquired Covered Securities in a Limited Offering, he or she is
required to disclose that investment if the investment plays a
part in any subsequent consideration of an investment in the
issuer by a Client. A record of any approval granted under this
paragraph and the reasons for such approval will be maintained as
described in Section IX of this Code;
G. Purchases of a Portfolio Security within 60 days of a sale of the
Portfolio Security, and sales of a Portfolio Security within 60
days of a purchase of the Portfolio Security absent an agreement
to give up all profits of the transaction; and
H. Purchases or sales of Covered Securities, or writing an option to
purchase or sell a Covered Security, within seven calendar days of a
purchase or sale of the same Covered Securities (or Equivalent
Securities) by a Client.
IV. EXEMPTIONS
The following Securities Transactions are exempt from the prohibitions set
forth in Section III, except as further explained below:
A. MUTUAL FUNDS. Securities issued by any registered open-end
investment companies (including but not limited to the Fund);
B. NO KNOWLEDGE. Securities Transactions where neither the Access
Person nor an Immediate Family member knows of the transaction
before it is completed (for example, Securities Transactions
effected for an Access Person by a trustee of a blind trust or
discretionary trades involving an investment partnership or
investment club in which the Access Person is neither consulted nor
advised of the trade before it is executed);
C. CERTAIN CORPORATE ACTIONS. Any acquisition of Securities through
stock dividends, dividend reinvestments, stock splits, reverse
stock splits, mergers, consolidations, spin-offs, or other
similar corporate reorganizations or distributions generally
applicable to all holders of the same class of Securities;
D. EXERCISE OF RIGHTS. Any acquisition of Securities through the
exercise of rights issued by an issuer pro rata to all holders of
--------
a class of its Securities, to the extent the rights were acquired
in the issue;
E. COMMODITIES, FUTURES AND OPTIONS ON FUTURES. Commodities,
futures (including currency futures) and options on futures are
not subject to preclearance, nor to the seven-day blackout,
60-day profit disgorgement, and prohibited transaction provisions
of Section III, but are subject to transaction reporting;
4
<PAGE>
F. GIFTS AND BEQUESTS. Receipt of Securities as gifts and
bequests and the making of personal or charitable gifts and
bequests of Securities; and
G. MISCELLANEOUS. Any transaction in the following: (1) bankers
acceptances, (2) bank certificates of deposits, (3) commercial
paper, (4) repurchase agreements, (5) Securities that are direct
obligations of the U.S. Government, (6) other Securities which
may from time to time be exempted in writing by the Securities
and Exchange Commission.
V. CONFIDENTIALITY; CONFLICT OF INTEREST
ALL ACCESS PERSONS ARE PROHIBITED FROM REVEALING (except to the extent
necessary in the normal course of the fulfillment of required duties on behalf
of the Fund), OR ACTING UPON FOR PERSONAL BENEFIT, ANY INFORMATION RELATING TO
THE INVESTMENT INTENTIONS, ACTIVITIES OR PORTFOLIO HOLDINGS OF TSJ OR ITS
CLIENTS.
ALL ACCESS PERSONS ARE PROHIBITED FROM TAKING PERSONAL ADVANTAGE OF ANY
INVESTMENT OPPORTUNITY PROPERLY BELONGING TO THE TSJ OR ITS CLIENTS.
VI. GIFTS
A. ACCEPTING GIFTS
---------------
On occasion, because of their position with TSJ Advisory Persons may
be offered, or may receive without notice, gifts from clients, outside
vendors, or other persons who do business or are seeking to do business
with TSJ. Solicitation of such gifts or gratuities is unprofessional and
is strictly prohibited. This provision shall not apply to gifts received
from immediate family members who give any such gifts in that capacity.
Acceptance of extraordinary or extravagant gifts is not permissible.
Any such gifts must be declined or returned in order to protect the
reputation and integrity of TSJ. Gifts of a nominal value (i.e., gifts
with a reasonable value of no more $100 a year) and customary business
lunches, dinners, entertainment (e.g., sporting events), and promotional
items (e.g., pens, mugs, T-shirts) may be accepted.
If any gift is received that might be prohibited under this Code,
the Advisory Person involved must immediately inform TSJ.
B. GIVING GIFTS
------------
Advisory Persons may not give any gift with a value in excess of
$100 per year to persons associated with securities or financial
organizations, other member organization, including exchanges, commodity
firms, news media, or clients of TSJ. This provision shall not apply to
gifts to immediate family members given in that capacity.
5
<PAGE>
VII. UNDUE INFLUENCE
NO PERSON MAY CAUSE OR ATTEMPT TO CAUSE THE FUND TO PURCHASE, SELL OR HOLD
ANY SECURITY IN A MANNER CALCULATED TO CREATE ANY PERSONAL BENEFIT TO SUCH
PERSON.
If an Access Person or any member of his or her Immediate Family or any
Affiliate of TSJ stand to materially benefit from an investment decision for a
Client that he or she is recommending or participating in, that interest must be
disclosed. Based on the information given, a decision will be made on whether or
not to restrict the Access Person's participation in causing the Client to
purchase or sell a Covered Security in which he or she has an interest.
The Access Person must disclose any Beneficial Interest that he or she, or
his or her Immediate Family, or any Affiliates of TSJ, has in that Covered
Security or an Equivalent Security, or in the issuer thereof, where the decision
could create a material benefit to the Access Person or the Affiliate of TSJ, or
to his or her Immediate Family, or create the appearance of impropriety. TSJ
will determine whether or not investment actions can be taken.
VIII. REMEDIES
A. SANCTIONS
---------
If TSJ determines that any Access Person has committed a violation
of this Code, it may recommend the imposition of such sanctions, subject
to review as set forth below, as it deems appropriate, including reversal
of the transaction(s) in question and forfeiture of any profit or
absorption of any loss derived therefrom, a letter of censure, or
suspension or termination of the employment of the violator for cause.
B. REVIEW
------
Whenever TSJ determines that any Access Person has committed a
violation of this Code that merits remedial action, it will report to its
clients information relating to the investigation of the violation,
including any recommended sanctions.
IX. RECORDKEEPING
A copy of all of the following information, supplied pursuant to this
Code, will be retained at the principal place of business of TSJ for at least
five years after the end of the fiscal year in which the report is submitted:
A. A copy of the current Code of Ethics, in addition to a copy of
any Code of Ethics in effect at any time within the past five
years;
B. A list of all persons, currently or within the last five years,
who are or were required to make Personal Holdings Reports.
6
<PAGE>
C. Personal Holdings Reports (including Initial Holdings Reports,
Quarterly Holdings Reports, and Annual Holdings Reports) or
Certifications of Exemption submitted by Access Persons (as
described in Section II);
D. A record of any approval granted for acquisition of Securities in an
Initial Public Offering or Limited Offering and the reasons for such
approval (as described in Sections III.E and III.F).
E. A copy of any violation of the code of ethics, and any action
taken as a result of the violation; and
F. A copy of the Annual Report furnished to the Board of any
registered investment company that TSJ advises that (1) describes
any issues arising under the code of ethics or procedures since
the last report to the Board, including, but not limited to,
information about material violations of the code or procedures
and sanctions imposed in response thereto; and (2) certifies that
TSJ has adopted procedures reasonably necessary to prevent Access
Persons from violating the Code.
All such reports and information will be made available for reasonable
periodic or any other special inspection by the clients of TSJ, Affiliates of
TSJ, any party to which any investigation is referred by any of the foregoing,
the Securities and Exchange Commission, any self-regulatory organization, and
any state securities commission.
7
<PAGE>
TSJ ADVISORY GROUP, INC.
CODE OF ETHICS
PROCEDURES AND DEFINITIONS
I. Definitions
-----------
ACCESS PERSON is defined as any director or officer, or Advisory Person of
TSJ.
ADVISORY PERSON is defined as any employee of TSJ 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 TSJ,
or whose functions relate to the making of any recommendations with
respect to purchases or sales, or any person in a control relationship to
TSJ who obtains information concerning recommendations made to TSJ with
regard to the purchase or sale of Covered Securities by TSJ.
AFFILIATES is defined as an "affiliated person" is defined in Section
2(a)(3) of the 1940 Act.
ACCOUNT is defined as the following Securities accounts: any personal
account; any joint or tenant-in-common account in which the person has an
interest or is a participant; any account for which the person acts as
trustee, executor, or custodian; any account over which the person has
investment discretion or otherwise can exercise control (other than
non-related clients' accounts over which the person has investment
discretion), including the accounts of entities controlled directly or
indirectly by the person; any other account in which the person has a
direct or indirect Beneficial Interest and any account in which an
Immediate Family member has a Beneficial Interest; provided, however that
Account shall not include any Securities Account over which the Person has
no investment discretion and cannot exercise control over any investment
decisions; including any blind trusts.
BENEFICIAL OWNERSHIP/INTEREST means a direct or indirect "pecuniary
interest" (as defined in subparagraph (a)(2) of Rule 16a-1 under the
Securities Exchange Act of 1934) that is held or shared by a person
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise, in a security. The term "pecuniary interest,"
as it is defined under the 1934 Act, is generally understood to mean
having the opportunity to share, directly or indirectly, in any profit or
loss on a transaction in Securities, including but not limited to all
joint accounts, partnerships and trusts. An Access Person is presumed to
have Beneficial Ownership of any family member's account.
COVERED SECURITY is defined as a security as defined in section 2(a)(36)
of the Investment Company Act of 1940 ("1940 Act"), except that it does
not include direct obligations of the United States government, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments, repurchase agreements, or shares issued by
open-end funds.
8
<PAGE>
CLIENTS include the following: TSJ serves as the sub-advisor to Morgan
Keegan Select Financial Fund, a series of the Morgan Keegan Select Fund,
Inc.. W. James Stokes, an officer of TSJ, serves as the Portfolio Manager
for the Morgan Keegan Select Financial Fund.
EQUIVALENT SECURITY is defined as any Securities issued by the same entity
as the issuer or a security, including options, rights, warrants,
preferred stock, restricted stock, bonds, and other obligations of that
issuer.
IMMEDIATE FAMILY is defined as a person's spouse, a person's minor child,
any adult residing in the same household as the person, any relative
dependant on the person for financial support, and any other person
designated by the Board of Directors.
INITIAL PUBLIC OFFERING is defined as 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.
LIMITED OFFERING is defined as an offering that is exempt from
registration under the Securities Act of 1933 pursuant to section 4(2) or
section 4(6) or 77d(6)) or pursuant to rule 504, rule 505, or rule 506
under the Securities Act of 1933.
PORTFOLIO SECURITIES is defined as stocks, notes, bonds, debentures, or
other evidences of indebtedness, and all derivative investments, such as
options and warrants, being held by the Fund, or presently being
contemplated for purchase by the Fund.
SECURITIES TRANSACTION is defined as a purchase or sale of Securities, or
writing an option to purchase or sell a Covered Security.
SELECT FINANCIAL INSTITUTIONS include the following: Florida Banks,
Inc., Jacksonville, Florida and NetBank, Inc., Alpharetta, Georgia
II. Officers, Directors and Employees of TSJ Subject to the Code of Ethics
----------------------------------------------------------------------
T. Stephen Johnson, Chairman
W. James Stokes, President and Managing Director
III. Compliance Procedures
---------------------
A. General
-------
1. All Access Person Account statements provided pursuant to
Section II of the Code shall be compared with completed
transactions of the Fund to monitor for possible violations.
The basis of this comparison shall be the trading activity
reported versus a daily report of securities transactions for
the Clients.
9
<PAGE>
B. Acknowledgment
--------------
Signed acknowledgments are to be obtained from the persons listed in
Section II of these Procedures and Definitions as follows:
1. A signed acknowledgment stating that the individual has read,
understood and complied with the Code and that no transactions
have been effected in conflict with the Code is to be obtained
from all Access Persons.
2. A signed acknowledgment stating that the individual has no
access to transactions or contemplated transactions prior to
public disclosure is to be obtained from all Access Persons.
3. A signed acknowledgment stating that all personal transactions
have been reported as required is to be obtained from all
Access Persons.
10
