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EXHIBIT 99(b) (q)(ii)
FROLEY, REVY INVESTMENT COMPANY, INC.
CODE OF ETHICS
Effective Date: July 1, 2000
I. PREAMBLE
This Code of Ethics is being adopted to effectuate the purposes and objectives
of Section 204A and Section 206 of the Investment Advisers Act of 1940 (the
"Advisers Act"), Rule 204-2 under the Advisers Act and Rule 17j-1 under the
Investment Company Act of 1940 (the "Company Act"). Section 204A of the Advisers
Act requires the establishment and enforcement of policies and procedures
reasonably designed to prevent the misuse of material, non-public information by
investment advisers, including Froley, Revy Investment Company, Inc. ("FRIC").
Rule 204-2 imposes record keeping requirements with respect to personal
securities transactions of certain persons employed by investment advisers.
Section 206 of the Advisers Act makes it unlawful, among other things, for FRIC
and its employees in connection with the purchase or sale by such person of a
security held or to be acquired by FRIC for a client:
(1) To employ any device, scheme or artifice to defraud any client or
prospective clients;
(2) To make any untrue statement of a material fact or omit to state to a
client or prospective client a material fact necessary in order to
make the statements made, in light of the circumstances in which
they are made, not misleading;
(3) To engage in any transaction, practice or course of business which
operates or would operate as a fraud or deceit upon any client or
prospective client; or
(4) To engage in any act, practice, or course of business which is
fraudulent, deceptive or manipulative.
Rule 17j-1 requires an adviser to an investment company to adopt a written code
of ethics containing provisions reasonably necessary to prevent persons from
violating the above standard and to prevent violations of its code of ethics.
This Code contains provisions reasonably necessary to prevent persons from
engaging in acts in violation of the above standard and to assure that FRIC's
clients' interests are considered first. This Code also establishes procedures
reasonably necessary to prevent violations of this Code.
FRIC recognizes that the personal investment transactions of its employees,
which include all officers, demand the application of a high code of ethics.
Consequently, FRIC requires that all transactions for employee accounts as
defined herein be carried out in a manner that does not endanger the interest of
any client or create any apparent or real conflict of interest between the
employee and the client. At the same time, FRIC believes that if investment
goals are similar for clients and FRIC employees, it is logical and even
desirable that there be
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a common ownership of some securities.
Conflicts of interest might arise in several ways. An example would be the
purchase or sale of a security in an Employee Account in a manner that would
compete with FRIC's clients in their own purchase or sale of securities.
Therefore, it is FRIC's policy to permit its employees and their families and
accounts they control other than client accounts to own, for investment
purposes, securities identical to those recommended to FRIC clients. WHILE
RECOGNIZING THIS RIGHT TO INVEST IN SECURITIES, EMPLOYEES MUST BE COGNIZANT THAT
THEY ARE BOUND, BOTH ETHICALLY AND LEGALLY, TO AVOID ACTIONS THAT MIGHT
REPRESENT A CONFLICT OF INTEREST WITH FRIC'S CLIENTS.
It is the desire of FRIC that the Code of Ethics be conscientiously followed and
effectively enforced. The prime responsibility for following it rests with each
employee. While FRIC will oversee compliance with the Code of Ethics, a
conscientious and professional attitude on the part of each employee will ensure
that FRIC fulfills the highest ethical standards.
II. PERSONAL TRADING POLICY.
The general intent of these rules is that, in any situation where the potential
for a conflict exists, transactions for clients must take precedence over
personal transactions. Should any situation arise not specifically governed by
these rules, this general intent shall govern the resolution of the matter.
A. Definitions.
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1. "Employee Account" refers to an account for any of
the following persons:
a) the employee;
b) the employee's spouse, (with certain
exceptions to the preclearance requirements
approved in writing in advance by the
Compliance Officer;
c) the employee's minor child or children;
d) any other relative of the employee or the
employee's spouse sharing the same home as
the employee; and
e) any other person whose account is managed,
controlled, influenced or traded by the
employee, or to whom the employee gives
advice with regard to the acquisition or
disposition of securities other than a FRIC
client. Examples of such accounts are
accounts where the employee is acting as
trustee, executor, pledgee, or agent, or in
any similar capacity.
f) any other account in which the employee has
a beneficial ownership interest. The
definition of beneficial ownership is as
promulgated under Rule 16a-1(a)(2) of the
Exchange
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Act, and is available from the Compliance
Officer. Such beneficial interest may arise
where an employee has a beneficial interest
in securities under a trust, will,
partnership or other arrangement, or through
a closely held corporation.
Global Growth Opportunities Fund LLC is not
considered an "Employee Account."
2. The term "security" or "securities" excludes any
securities issued by the U.S. government and any
open-end mutual funds and includes not only the
security that FRIC may be buying or selling for
client accounts, but also related securities such as
common stock, warrants, convertible bonds and
preferred stock, puts or calls.
3. "Investment Professional" means an employee serving
in a portfolio management, research analyst or
trading function.
B. Procedures.
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1. BEFORE PURCHASING OR SELLING ANY SECURITY FOR AN
EMPLOYEE ACCOUNT, YOU MUST OBTAIN WRITTEN
PRE-CLEARANCE OF THE TRANSACTION FROM THE HEAD
TRADER, ASSISTANT TRADER, THE COMPLIANCE OFFICER OR
THE PRESIDENT OF FRIC. The pre-clearance is good only
for the day it is given. If you are unable to
complete the transaction on the day the pre-clearance
is given or if you place a limit order for a
transaction and the order is not completed on the day
the pre-clearance is given, then you must request
pre-clearance again on the next day, and so on, until
you complete the transaction or determine not to
engage in the transaction.
2. Employees cannot purchase or sell for any Employee
Account a security which FRIC is buying or selling
for its clients or a related security, until three
days after all such buying or selling is completed or
canceled. Pre-clearance will not be given until three
days after all client transactions have been
completed. However, if Froley, Revy has completely
liquidated a position in client accounts,
pre-clearance may be granted immediately.
3. ORDERS FOR EMPLOYEE ACCOUNTS MAY NOT BE COMBINED WITH
ORDERS FOR CLIENTS' ACCOUNTS IN A BLOCK TRADE.
4. Employees cannot purchase or sell for any Employee
Account: 1) a security (or related security) that the
employee knows is under active consideration for
purchase or sale by FRIC, or 2) a security (or
related
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security) that the employee intends to recommend for
purchase or sale by clients.
5. A security which the firm has purchased for and is
holding for client accounts based on firm policy
cannot be sold by Investment Professionals except
with prior written permission of the President of
FRIC or the Compliance Officer. In the absence of the
President and the Compliance Officer, a Managing
Director may approve the sale.
6. Froley Revy Employees are prohibited from buying new
issues, except in very limited circumstances, and
then only with the WRITTEN PRE-APPROVAL of the
Compliance Officer or the President of FRIC.
7. Short sales are permitted, however, any person
selling short should remember that if client accounts
were subsequently to buy the securities of the
company sold short, the employee must wait until the
clients' transactions are completed before covering
the short position.
8. Employees are prohibited from purchasing or selling
any security in a private placement unless the
Compliance Officer has approved the private placement
transaction in writing and given a written
justification for his decision including a written
explanation of why the transaction is not appropriate
for any client account.
C. Employee Reporting Requirements.
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The following reports will be treated confidentially, but are subject to review
by staff of the Securities and Exchange Commission as well as FRIC officers and
counsel.
Transactions in securities that are direct obligations of the United States and
open-end mutual funds are exempted from the following reporting requirements.
1. Initial and Annual Holdings Report. Upon employment
at FRIC, and within thirty days of the end of each
calendar year thereafter, each employee shall report
in writing to the Compliance Officer:
(a) all securities held by Employee Accounts,
including any security in which the employee
has a beneficial ownership interest as that
term is defined in Rule 16a-1(a)(2) under
the Securities Exchange Act of 1934
("Beneficial Ownership Security"), and
including any privately held securities such
as limited partnership or limited liability
company interests) (if the Employee has an
interest in Global Growth, Global Growth
will be considered a Beneficial Ownership
Security and the Employee must report the
holdings of Global Growth in his Initial
Holdings Report,
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Personal Securities Transactions Quarterly
Report and Annual Holdings Report), and
(b) the names of each broker, dealer and/or bank
at which an Employee Account is maintained,
and the title on each such account.
See Exhibit 1 for a copy of this report. New
employees are also asked to disclose any outside
business ventures.
2. Personal Securities Transaction Quarterly Report. All
employees shall report within ten (10) calendar days
after the end of each quarter:
(a) the particulars of all securities
transactions (purchases, sales, or other
acquisitions or dispositions) that were,
during the preceding quarter, effected by or
on behalf of any Employee Account, and
(b) any new securities account at a bank, broker
or dealer that was opened during the
preceding quarter for an Employee Account.
These reports are to be made to FRIC on the form
attached as Exhibit 2, which is available from the
Compliance Officer, and must be returned to the
Compliance Officer.
Reports are required from all employees each quarter
whether or not securities transactions have occurred
or new securities accounts for Employee Accounts have
been opened.
3. Certification of Compliance. Upon adoption of this
Code of Ethics by FRIC, and annually thereafter, each
employee shall certify that: (a)he has received this
Code of Ethics: (b)he has read and understands this
Code of Ethics and recognizes he is subject thereto;
(c)he has reported all personal securities
transactions required to be reported pursuant to the
requirements of the Code of Ethics; (d)he has
reported the names of each broker, dealer and/or bank
where the employee and any Employee Account has a
securities account; and (e) other than as disclosed
on the initial certification, he has no knowledge of
the existence of any personal conflict of interest
which may involve client accounts, such as any
economic relationship between his transactions and
securities held or to be acquired by client accounts.
The form of certification is included as Exhibit 3
hereto.
D. Reporting violations.
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Any employee who becomes aware of any apparent violation of the Code of Ethics
shall
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promptly report such apparent violation to the Compliance Officer or the
President of FRIC.
E. Review of reports and pre-clearance forms.
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The Compliance Officer shall be responsible for reviewing all preclearance
forms, confirmations of transactions for all Employee Accounts, Annual Holdings
Reports, Certification of Compliance forms, Personal Securities Transaction
Quarterly Reports and any other documents deemed necessary to assure compliance
with this Code of Ethics. The Compliance Officer or his designee shall review
these documents on a prompt basis.
The Compliance Officer shall prepare a written report each quarter to FRIC's
President that describes any issues that arose during the previous quarter under
this policy.
F. Sanctions.
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The sanctions for violation of the Code of Ethics may include any or all of the
following: (1) a letter of censure, (2) a fine, (3) temporary or permanent
suspension of trading for any Employee Accounts, (4) temporary suspension of
employment, (5) termination of employment, (6) disgorgement of any ill-gotten
profits or avoidance of losses, (7) and/or any other sanction deemed appropriate
by the Compliance Officer and the President of FRIC
G. Retention of Records.
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This Code of Ethics and a copy of each report made by an employee hereunder
shall be maintained by FRIC.
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EXHIBIT 1
FROLEY, REVY INVESTMENT COMPANY, INC.
CODE OF ETHICS ANNUAL HOLDINGS REPORT
TO THE COMPLIANCE OFFICER OF FROLEY, REVY INVESTMENT CO., INC.
1. I agree that the terms used in this Report shall have the same meaning as
they do in the Code of Ethics dated 7/01/00.
2. As of the date below, the following are the names of each broker, dealer
and/or bank where I, or my Employee-Related Accounts have a securities
account (you may attach a list instead of completing the information on
this form):
Title of Account Broker/Dealer or Bank Relationship to Employee
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3. As of the date below, the list below includes all securities which I, or my
Employee-Related Accounts hold (you may attach a list instead of completing
the information on this form):
Number of Name of
Name of Security Shares Account Holder
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NOTE: DO NOT REPORT OWNERSHIP OF U.S. GOVERNMENT OBLIGATIONS AND REGISTERED
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OPEN-END MUTUAL FUNDS.
Date: __________
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Signature: ___________________________________
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Print Name: __________________________________
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EXHIBIT 2
QUARTERLY PERSONAL SECURITIES TRADING REPORT
Date: _____________
Employee Name: ___________________
|_| I have done no personal securities trading during the months of January 1,
2000 through March 31, 2000, and did not establish any brokerage accounts
during the quarter.
|_| I have done personal securities trading during the months of January 1,
2000 through March 31, 2000. I have completed the summary below, or
attached a similar report detailing all transactions executed.
<TABLE>
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Trade Date Trans. Quantity Security Description Price Broker
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<S> <C> <C> <C> <C> <C>
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</TABLE>
|_| I have established the following securities accounts during the months
of January 1, 2000 through March 31, 2000.
Title of Account Broker/Dealer or Bank Relationship to Employee
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I hereby certify that this report reflects all personal securities transactions
and all new securities accounts established at a broker, dealer or bank during
the above-referenced quarter for me and all of my Employee-Related Accounts.
Signature: ___________________________________
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EXHIBIT 3
FROLEY, REVY INVESTMENT COMPANY, INC.
CODE OF ETHICS CERTIFICATION OF COMPLIANCE
TO THE COMPLIANCE OFFICER OF FROLEY, REVY INVESTMENT CO, INC.
1. I have read and understand the Code of Ethics dated 7/01/00 for Froley,
Revy Investment Company, Inc. (the "Code") and recognize that I am
subject thereto as an employee of Froley, Revy Investment Company, Inc.
("Froley, Revy").
2. I hereby certify that, during the year ended December 31, , I have
complied with the requirements of the Code.
3. I hereby certify that, during the year ended December 31, , I have
reported to Froley, Revy all securities transactions required to be
reported pursuant to the Code.
4. Except as noted below, I hereby certify that, during the year ended
December 31, , I have reported to Froley, Revy the names of each broker,
dealer and/or bank required to be reported pursuant to the Code.
5. 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 client accounts, such as any economic relationship between my
transactions and securities held or to be acquired by client accounts.
Date: __________
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Signature: ___________________________________
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Print Name: __________________________________
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