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EXHIBIT (p)(6)
PILGRIM GROUP FUNDS
CODE OF ETHICS
STATEMENT OF GENERAL PRINCIPLES
Each of (i) The Pilgrim Group Mutual Funds (as more particularly
described on Exhibit A, attached hereto and collectively referred to as
the "Funds"), which are registered investment companies under the
Investment Company Act of 1940 (the "1940 Act"), (ii) Pilgrim
Investments, Inc. ("PII"), a registered investment adviser under the
Investment Advisers Act of 1940, as amended, which serves as the
investment adviser for the Funds, and (iii) Lexington Management
Corporation ("LMC"), a registered investment adviser under the Investment
Advisers Act of 1940, as amended, which serves as the investment adviser
for the Funds, and (iv) Market Systems Research Advisors, Inc. ("MSRA"),
a registered investment adviser under the Investment Advisers Act of
1940, as amended, which serves as the investment adviser for the Funds,
and (v) Pilgrim Securities, Inc ("PSI"), a registered broker-dealer which
serves as the principal underwriter for the open-end Funds, and (vi)
Lexington Funds Distributors ("LFD"), hereby adopt this Code of Ethics
(hereinafter, the "Code"), pursuant to Rule 17j-1 promulgated by the
Commission under Section 17(j) of the 1940 Act.
In general, Rule 17j-1 imposes an obligation on registered investment
companies and their investment advisers and principal underwriters to
adopt written codes of ethics covering the securities activities of
certain directors, trustees, officers, and employees. This Code is
designed to ensure that those individuals who have access to information
regarding the portfolio securities activities of registered investment
company clients do not intentionally use information concerning such
clients' portfolio securities activities for his or her personal benefit
and to the detriment of such clients. For purposes of this Code, a
Sub-Adviser of the Fund shall be treated as an Adviser of the Fund unless
the Boards of the Funds have approved a separate code of ethics for that
Sub-Adviser. It is not the intention of this Code to prohibit personal
securities activities by Access Persons, but rather to prescribe rules
designed to prevent actual and apparent conflicts of interest. While it
is not possible to define and prescribe all-inclusive rules addressing
all possible situations in which conflicts may arise, this Code sets
forth the policies of the Funds, PII, PSI, LMC, LFD and MSRA regarding
conduct in those situations in which conflicts are most likely to
develop.
In discharging his or her obligations under the Code, every Access Person
should adhere to the following general fiduciary principles governing
personal investment activities:
A. Every Access Person should at all times scrupulously place the
interests of the Funds' shareholders ahead of his or her own
interests with respect to any decision relating to personal
investments.
B. No Access Person should take inappropriate advantage of his or her
position with a Fund, or with PII, PSI, LMC, LFD or MSRA as the
case may be, by using knowledge of any Fund's transactions to his
or her personal profit or advantage.
C. Every Access Person should at all times conform to the Policies
and Procedures to Control The Flow And Use Of Material Non-Public
Information In Connection With Securities Activities, copy of
which is attached and is incorporated by reference into this Code
of Ethics (that is, the policies and procedures set forth are
legally considered a part of this Code of Ethics).
142077.1.03 11/14/00 11:23 AM
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II. DEFINITIONS
This Code defines directors, officers and employees of the Funds, PII,
PSI, LMC,LFD and MSRA into several categories, and imposes varying
requirements by category appropriate to the sensitivity of the positions
included in the category. As used herein and unless otherwise indicated,
the following terms shall have the meanings set forth below:
"PORTFOLIO MANAGER": means any employee of a Fund or of PII, LMC or MSRA,
or who is entrusted with the direct responsibility and authority to make
investment decisions affecting an investment company, and who, therefore,
may be best informed about such Fund's investment plans and interests.
"INVESTMENT PERSONNEL": includes any employee of the Adviser (or of any
company in a control relationship to the Adviser) who, in connection with
his or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of Securities by the Fund
and includes the following individuals:all Finance Department staff of
the Adviser, Portfolio Managers of the Funds, the Portfolio support
staff, and traders who provide information and advice to a Portfolio
Manager of a Fund or who assist in the execution of such Portfolio
Manager's decisions.
"ACCESS PERSONS": includes:
(i) any director, trustee, officer, general partner or Advisory Person
of the Funds or the Adviser to the Funds; and
(ii) any director or officer of PSI or LFD who, in the ordinary course
of business, makes, participates in or obtains information
regarding the purchase or sale of Securities by the Funds, or
whose functions or duties in the ordinary course of business
relate to the making of any recommendation to the Funds regarding
the purchase or sale of Securities.
This definition includes, but is not limited to, the following
individuals: Portfolio Managers, Investment Personnel, certain employees
in Operations, Marketing employees, Finance department employees, an
Information Systems member, an Accounting/Compliance Department member,
and Executive Management support staff members, as such individuals are
defined by the Company's Human Resource Department. Where the term Access
Person is used without specifying whether such person is an Access Person
of a Fund, or of PII, PSI, LMC, LFD or MSRA, such term shall be
interpreted to include all Access Persons of each such entity.
"ADVISORY PERSON": includes each employee of the Adviser (or of any
company in a control relationship to the Adviser) who, in connection with
his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of Securities by the
Funds or whose functions relate to the making of any recommendations with
respect to the purchases or sales.
"SEGREGATED PERSON": means an Access Person who in the ordinary course of
business does not have access to information regarding the trading
activities and/or current portfolio holdings of the Funds; does not
ordinarily maintain an office on the premises utilized by Investment
Personnel or Portfolio Managers; and who, by resolution, the Boards of
the Funds have determined may be a Segregated Person because he or she
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will not be permitted access to information regarding the trading
activities and/or current portfolio holdings of the Funds.
"EXEMPT PERSON": means a person who is, or could be, an Access Person who
does not ordinarily maintain an office on the premises utilized by
Investment Personnel or Portfolio Managers, and who, by resolution, the
Boards of the Funds have determined may be an Exempt Person not subject
to the Code because his or her responsibilities are ministerial in
function and therefore the risk of violation of the Code is highly
remote.
"DISINTERESTED DIRECTOR": means a director/trustee of the Funds who is
not an "interested person" of the Funds within the meaning of Section
2(a)(19) of the 1940 Act.
"PII, LMC OR MSRA INVESTMENT ADVISER REPRESENTATIVES": means any officer
or director of the investment adviser; any employee who makes any
recommendation, who participates in the determination of which
recommendation should be made, or whose functions or duties relate to the
determination of which recommendation shall be made.These individuals are
identified on Form ADV, Schedule F, Item 6.
"BEING CONSIDERED FOR PURCHASE OR SALE": means, with respect to any
security, that a recommendation to purchase or sell such security has
been made and communicated or, with respect to the person making the
recommendation, such person seriously considers making such
recommendation.
"BENEFICIAL OWNERSHIP": An Access Person will be deemed to have
"beneficial ownership" of any Securities and commodities interests
for any account held:
(i) in the name of his or her spouse or their minor children,
(ii) in the name of another person (for example, a relative of the
Access Person or his or her spouse sharing the same home) if, by
reason of any contract, understanding, relationship or agreement
or other arrangement, he or she obtains benefits substantially
equivalent to those of ownership of the Securities,
(iii) by a partnership of which he or she is a partner,
(iv) by a corporation of which he or she is a controlling person and
which is used by him or her alone or with a small group as a
medium for investing or trading in Securities, or
(v) by a trust over which he or she has any direct or indirect
influence or control and of which he or she, or a member of his or
her immediate family (spouse, children, grandchildren or parents)
is a beneficiary.
Exceptions may be made on a case-by-case basis by the Designated Officer
where the Access Person certifies in writing (and annually re-certifies,
as applicable) that he or she has no control over the account of e.g., a
trust or estate, or of a spouse whose transactions in Securities are
subject to a code of ethics of his or her employer. In making such
exceptions, the Compliance Officer may require the Access Person to
comply with various requirements under this Code, e.g., periodic filing
of holdings or transactions reports, as the Designated Officer deems
appropriate in the circumstances.
"CONTROL": shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act.
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"DESIGNATED OFFICER": means, with respect to any Fund, or PII, PSI, LMC,
LFD or MSRA, the President of such Fund or of PII, PSI, LMC, LFD or MSRA,
or such other officer as the board of directors/trustees of such Fund, or
of PII, PSI, LMC, LFD or MSRA, as the case may be, shall designate.
"FUNDS" OR "FUND": means The Pilgrim Group of Funds, or any fund within
The Pilgrim Group of Funds, respectively, as more particularly described
on Exhibit A hereto; provided that such terms shall not include any fund
as to which PII, LMC or MSRA has appointed a sub-adviser if the Board of
Directors/Trustees of that fund has adopted the sub-adviser's code of
ethics on behalf of that fund.
"PSI": means Pilgrim Securities, Inc..
"PII": means Pilgrim Investments, Inc. and Pilgrim Advisors, Inc..
"LMC": means Lexington Management Corporation.
"LFD": means Lexington Funds Distributor.
"MSRA": means Market Systems Research Advisors, Inc..
"PERSONAL SECURITIES HOLDINGS" OR "PERSONAL SECURITIES TRANSACTIONS":
means, with respect to any person, any Security Beneficially Owned, or
any Security purchased or otherwise acquired, or sold or otherwise
disposed of by such person, including any Security in which such person
has, or by reason of such transaction acquires or disposes of, any direct
or indirect Beneficial Ownership in such Security and any account over
which such person has discretion; provided, however, that such terms
shall not include any holding or transaction in a Security held in or
effectuated for an account over which such person does not have any
direct or indirect influence and has certified such fact to the
appropriate Designated Officer. Personal Securities Transactions shall
include all Securities or commodity interests regardless of the dollar
amount of the transaction or whether the sale is in response to a tender
offer.
"SECURITY": includes any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas or other mineral rights, any
put, call, straddle, option, or privilege on any security (including a
certificate of deposit) or on any group or index of securities, or any
put, call, straddle, option or privilege entered into on a national
securities exchange relating to foreign currency. Securities also
includes shares of closed-end investment companies, various derivative
instruments such as ELKs, LEAPs and PERCs, limited partnership interests
and private placement common or preferred stocks or debt instruments.
Commodity interests, which includes futures contracts, and options on
futures, relating to any stock or bond, stock or bond index, interest
rate or currency shall also be included in this Code's definition of
Security. Commodity interests in agricultural or industrial commodities,
such as agricultural products or precious metals, are not covered under
this Code.
Security does not include shares of registered open-end investment
companies, securities issued by the government of the United States and
any options or futures thereon, bankers' acceptances, bank certificates
of deposit and time deposits, commercial paper, repurchase agreements,
and such other money market
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instruments as designated by the board of directors/trustees of such
Fund, and shares of ReliaStar Financial Corporation.
"SECURITY HELD OR TO BE ACQUIRED" by a Fund: means: any Security which,
within the most recent fifteen (15) days,
(i) is or has been held by such Fund, or
(ii) is being or has been considered by such Fund for purchase for such
Fund.
"AUTOMATIC DISGORGEMENT": Where a violation results from a transaction
which can be reversed prior to settlement, such transaction should be
reversed, with the cost of the reversal being borne by the covered
person; or if reversal is impractical or impossible, then any profit
realized on such short-term investment, net of brokerage commissions but
before tax effect, shall be disgorged to the appropriate Fund, or if no
fund is involved then to a charity designated by PII, LMC or MSRA.
III. GOVERNING LAWS, REGULATIONS AND PROCEDURES
All employees shall have and maintain knowledge of and shall comply
strictly with all applicable Federal and State laws and all rules and
regulations of any governmental agency or self-regulatory organization
governing his or her activities.
Each employee will be given a copy of the Code of Ethics at the time of
his or her employment and each Access Person is required to submit a
statement at least annually that he or she has reviewed the Code of
Ethics.
Each employee shall comply with all laws and regulations relating to the
use of material non-public information.Trading on "inside information" of
any sort, whether obtained in the course of research activities, through
a client relationship or otherwise, is strictly prohibited. All employees
shall comply strictly with procedures established by the Funds to ensure
compliance with applicable Federal and State laws and regulations of
governmental agencies and self-regulatory organizations.The employees
shall not knowingly participate in, assist, or condone any acts in
violation of any statute or regulation governing securities matters, nor
any act which would violate any provision of this Code of Ethics, or any
rules adopted thereunder.
Each employee having supervisory responsibility shall exercise reasonable
supervision over employees subject to his or her control with a view to
preventing any violation by such of the provisions of the Code of Ethics.
Any employee encountering evidence that acts in violation of applicable
statutes or regulations or provisions of the Code of Ethics have occurred
shall report such evidence to the Designated Officer or the Board of
Directors/Trustees of each fund.
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IV. CONFIDENTIALITY OF TRANSACTIONS
Information relating to each Fund's portfolio and research and studies
activity is confidential until publicly available. Whenever statistical
information or research is supplied to or requested by the Fund, such
information must not be disclosed to any persons other than persons
designated by the Designated Officer or the Board of Directors/Trustees
of the Fund. If the Fund is considering a particular purchase or sale of
a security, this must not be disclosed except to such duly authorized
persons.
Any employee authorized to place orders for the purchase or sale of
Securities on behalf of a Fund shall take all steps reasonably necessary
to provide that all brokerage orders for the purchase and sale of
Securities for the account of the Fund will be so executed as to ensure
that the nature of the transactions shall be kept confidential until the
information is reported to the Securities and Exchange Commission or each
Fund's shareholders in the normal course of business.
If any employee of the Fund or Access Person should obtain information
concerning the Fund's portfolio (including, the consideration by the Fund
of acquiring, or recommending any security for the Fund's portfolio),
whether in the course of such person's duties or otherwise, such person
shall respect the confidential nature of this information and shall not
divulge it to anyone unless it is properly part of such person's services
to the Fund to do so or such person is specifically authorized to do so
by the Designated Officier of the Fund.
V. ETHICAL STANDARDS
A. INVESTMENT ACTIVITIES RELATED TO THE FUNDS. All Access Persons, in
making any investment recommendations or in taking any investment
action, shall exercise diligence and thoroughness, and shall have
a reasonable and adequate basis for any such recommendations or
actions.
B. CONFLICTS. All Access Persons shall conduct themselves in a manner
consistent with the highest ethical standards. They shall avoid
any action, whether for personal profit or otherwise, that results
in an actual or potential conflict of interest, with a Fund or
which may otherwise be detrimental to the interest of a Fund.
Therefore, no Access Person shall undertake independent practice
for compensation in competition with the Fund.
Every employee or Access Person of the Funds who owns
beneficially, directly or indirectly, 1/2% or more of the stock of
any corporation is required to report such holdings to the
President of the Funds.
C. OBLIGATION TO COMPLY WITH LAWS AND REGULATIONS. Every Access
Person shall acquire and maintain knowledge of, and shall comply
strictly with, all applicable federal and state laws and all rules
and regulations of any governmental agency or self-regulatory
organization governing such Access Person's activities. In
addition, every Access Person shall comply strictly with all
procedures established by the Funds, or by PII, PSI, LMC, LFD or
MSRA, to ensure compliance with such laws and regulations. Access
Persons shall not knowingly participate in, assist or condone any
acts in violation of any law or regulation governing Securities
transactions, nor any act which would violate any provision of
this Code.
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D. SELECTION OF BROKER-DEALERS. Any employee having discretion as to
the election of broker-dealers to execute transactions in
Securities for the Funds shall select broker-dealers solely on the
basis of the services provided directly or indirectly by such
broker-dealers as provided in the registration statements for the
Funds. An employee shall not directly or indirectly, receive a fee
or commission from any source in connection with the sale or
purchase of any security for a Fund.
In addition, the Funds shall take all actions reasonably
calculated to ensure that they engage broker-dealers to transact
business with each Fund whose partners, officers and employees,
and their respective affiliates, will conduct themselves in a
manner consistent with the provisions of Section V.
E. SUPERVISORY RESPONSIBILITY. Every Access Person having supervisory
responsibility shall exercise reasonable supervision over
employees subject to his or her control in order to prevent any
violation by such persons of applicable laws and regulations,
procedures established by the Funds, or PII, PSI, LMC, LFD or MSRA
as the case may be, or the provisions of this Code.
F. ACCOUNTABILITY. Any Access Person encountering evidence of any
action in violation of applicable laws or regulations, or of Fund
procedures or the provisions of this Code shall report such
evidence to the appropriate Designated Officer or the Board of
Directors of each Fund.
G. INABILITY TO COMPLY WITH CODE. If, as a result of fiduciary
obligations to other persons or entities, an Access Person
believes that he or she, is unable to comply with certain
provisions of this Code, such Access Person shall so advise the
Designated Officer of any Fund for which such person is an Access
Person in writing and shall set forth with reasonably specificity
the nature of his or her fiduciary obligations and the reasons why
such Access Person believes that he or she cannot comply with the
provisions of the Code.
VI. EXEMPTED TRANSACTIONS
The provisions of Article VII of this Code shall not apply as follows:
A. To purchases or sales effected in any account over which such
Access Person has no direct or indirect influence or control;
B. To purchases or sales of Securities which are not eligible for
purchase or sale by any Fund e.g. municipal securities.
C. To purchases or sales which are non-volitional on the part of
either the Access Person or a Fund; Purchases which are part of an
automatic dividend reinvestment plan or employee stock purchase
plan;
D. To 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
E. To purchases or sales of Securities which receive the prior
approval of the appropriate Designated Officer because they
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(i) are only remotely potentially harmful to each Fund,
(ii) would be very unlikely to affect a highly institutional
market, or
(iii) clearly are not related economically to the Securities to be
purchased, sold or held by each Fund.
F. To future elections into an employer sponsored 401(k) plan, in an
amount not exceeding $1,000 in any calendar month and any other
transfers to an open end fund. However, an exchange of a current
account balance into or from one of the closed end funds in an
amount greater than $1,000 would still need pre-clearance and be
reportable at the end of the quarter on the quarterly transaction
reports.
G. The provisions of Article VII A, B and D of this Code shall not
apply to any Segregated Person except with respect to transactions
in Securities where such Segregated Person knew, or in the
ordinary course of fulfilling his or her duties, should have known
that such Security was being purchased or sold by the Funds or
that a purchase or sale of such Security was being considered by
or with respect to the Funds. Pre-clearance approval will be
required for purchases of Securities in private transactions
conducted pursuant to Section 4(2) of the Securities Act of 1933
and Securities (debt or equity) acquired in an initial public
offering.
H. The provisions of this Code shall not apply to any Exempt Person
except with respect to transactions in Securities where such
Exempt Person knew, or in the ordinary course of fulfilling his or
her duties, should have known that such Security was being
purchased or sold by the Funds or that a purchase or sale of such
Security was being considered by or with respect to the Funds.
I. The provisions of Article VII of this Code shall not apply (I) to
a Disinteresteed Director or (ii) to any director/trustee of a
Fund who is a not interested person of any investment advisor to
the Fund (hereinafter, a "Primarily Disinterested Director").
VII. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. GENERAL. No Access Person shall purchase or sell, directly or indirectly
or for any account over which an Access Person has discretion, any Security
(including both publicly traded and private placement Securities), in which he
or she has, or by reason of such transaction acquires, any direct or indirect
Beneficial Ownership and which he or she knows or should have known at the
time of such purchase or sale
(i) is being considered for purchase or sale by a Fund; or
(ii) is being purchased or sold by a Fund.
B. PRE-CLEARANCE.
(i) Every Access Person must pre-clear all Personal Securities
Transactions with the compliance department. In order to
receive pre-clearance for Personal Securities Transactions,
an Access Person must call the Compliance Officer or
complete a Personal Trading Approval form. A member of the
compliance department is available each business day to
respond to pre-clearance requests. Access Persons are
directed to identify:
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(a) the subject of the transaction and the number of
shares and principal amount of each security involved,
(b) the date on which the Access Person desires to engage
in the subject transaction;
(c) the nature of the transaction (i.e., purchase, sale,
private placement, or any other type of acquisition or
disposition);
(d) the approximate price at which the transaction will be
effected; and
(e) the name of the broker, dealer, or bank with or
through whom the transaction will be effected.
When granted, clearance authorizations will be identified by
authorization number and will be effective until the end of
that calendar day, except for transactions in Reliastar
Financial Corp. (RLR) stock for which authorizations will be
effective for 30 days (or in the case of a private placement
purchase, the closing of the private placement
transaction).If on any particular day the Compliance Officer
is not present in the office, pre-clearance may be obtained
by providing a completed Personal Trading Approval form to a
Senior Vice President or Vice President of PII, LMC or MSRA
for authorization.The current list of designated officers of
PII, LMC and MSRA authorized to provide pre-clearance trade
approval is attached as Exhibit B. Questions regarding
pre-clearance procedures should be directed to the
compliance department.
(ii) In determining whether to grant approval of Personal
Securities Transactions of Investment Personnel who desire
to purchase or otherwise acquire Securities in private
placement transactions conducted pursuant to Section 4(2) of
the Securities Act of 1933, the appropriate Designated
Officer will consider, among other factors, whether the
investment opportunity presented by such private placement
offering should be reserved for investment company and its
shareholders, and whether the opportunity is being offered
to an individual by virtue of his position with the Fund. In
the event that Investment Personnel who have been authorized
to acquire Securities in a private placement transaction
later have any role in a Fund's subsequent consideration of
an investment in the issuer of the Securities acquired in
such prior private placement transaction, such Investment
Personnel must provide written notification of such prior
authorization and investment to the compliance department,
immediately upon learning of such Fund's subsequent
consideration. In such circumstances, the Fund's decision to
purchase Securities of such issuer will be subject to an
independent review by Investment Personnel with no personal
interest in the issuer.
Compliance of transactions with this Code by Access Persons may
depend on the subsequent investment activities of the Funds,
therefore, pre-clearance approval of a transaction by the
Designated Officer does NOT necessarily mean the transaction
complies with the Code.
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C. INITIAL PUBLIC OFFERINGS (IPOS AND HOT IPOS). No Access Person (or
account over which they have beneficial ownership) may purchase
any securities in an IPO or Hot IPO; provided, however, an Access
Person (or their beneficially owned accounts) may, upon the prior
written approval of a Designated Officer, participate in the
following IPOs:
(i) an IPO in connection with the de-mutualization of a savings
bank or the demutualization of a mutual insurance company in
which the holder of the account owns a life insurance
policy;
(ii) an IPO of a spin-off company where the Access Person
beneficially owns stock in the company that spins off the
issuer;
(iii) an IPO of a company in which the Acess Person beneficially
owns stock in the company and the stock was acquired through
participation in a private placement previously approved by
thier Designated Officer; and
(iv) an IPO of the employer of the holder of the Access Persons
account.
An IPO generally means an offering of securities registered with
the Securities and Exchange Commission (SEC), the issuer of which,
immediately before the registration, was not required to file
reports with the SEC. See, rule 17j-1(a)(6). Hot IPOs are
securities of a public offering that trade at a premium in the
secondary market whenever such secondary market begins.
D. BLACKOUT PERIODS.
(i) No Access Person may execute any Personal Securities
Transaction on a day during which any Fund has a pending
"buy" or "sell" order in that same security until such order
is executed or withdrawn.
(ii) Any purchase or sale of any Security by a Portfolio Manager
which occurs within seven (7) calendar days (exclusive of
the day of the relevant trade) from the day a Fund he or she
manages trades in such security will be subject to Automatic
Disgorgement. This seven day blackout period also applies to
any portfolio support staff member who recommends the
purchase or sale of the particular security to a Fund's
Portfolio Manager.
E. BAN ON SHORT-TERM TRADING PROFITS. Investment Personnel may not
profit from the purchase and sale, or sale and purchase, of the
same (or equivalent) Securities within sixty (60) calendar days,
unless
(i) such Securities were not eligible to be purchased by any of
the Funds under their respective investment policies, or
(ii) such Investment Personnel have requested and obtained an
exemption from this provision from the compliance department
with respect to a particular transaction. Violations of this
policy will be subject to Automatic Disgorgement.
This prohibition shall not apply to any transaction in index
futures, index options, including webs, spiders or similar
baskets of portfolio securities.
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F. GIFTS. Investment Personnel may not receive any fee, commission,
gift or other thing, or services, having a value of more than
$100.00 each year from any person or entity that does business
with or on behalf of the Funds.
G. SERVICES AS A DIRECTOR. Investment Personnel may not serve on the
boards of directors of publicly traded companies, unless
(i) the individual serving as a director has received prior
authorization from the appropriate Designated Officer based
upon a determination that the board service would be
consistent with the interests of the Funds and their
shareholders and
(ii) policies and procedures have been developed and maintained
by the board of directors/trustees of the Funds that are
designed to isolate the individual from those making
investment decisions (a "Chinese Wall").
H. NAKED OPTIONS. Investment Personnel are prohibited from engaging
in naked options transactions. Transactions under any incentive
plan sponsored by PII, PSI, LMC or MSRA are exempt from this
restriction.
I. SHORT SALES. Short sales of Securities by Investment Personnel are
prohibited.
VIII. COMPLIANCE PROCEDURES
A. DISCLOSURE OF PERSONAL HOLDINGS. All Access Persons (other than
Disinterested Directors and Primarily Disinterested Directors)
must disclose all Personal Securities Holdings upon commencement
of employment and thereafter on an annual basis. Such annual
disclosure shall be made by January 31st of each year. Any person
filing such report may state the report shall not be deemed an
admission that such person is the beneficial owner of any
Securities covered by the report.
B. DUPLICATE TRADE CONFIRMATION STATEMENTS AND ACCOUNT STATEMENTS.
All Access Persons (other than Disinterested Directors and
Primarily Disinterested Directors) must cause duplicate trading
confirmations for all Personal Securities Transactions and copies
of periodic statements for all Securities accounts to be sent to
the compliance department, except that a Segregated Person may
satisfy this requirement by providing a statement to the
compliance department of an affiliate of the Adviser.
C. QUARTERLY TRANSACTIONS REPORTS.
(i) PII Investment Adviser Representatives.
Quarterly reporting of transactions in Securities is
required of all PII, LMC and MSRA Investment Adviser
Representatives pursuant to the requirements of Rules
204-2(a)(12) or 204-2(a)(13) under the Investment Advisers
Act of 1940. PII, LMC and MSRA must have a record of every
Personal Securities Transaction including every transaction
in Securities in which PII,
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CODE OF ETHICS
LMC or MSRA or any of its
"advisory representatives" (as such term is defined in the
rule) has (or by reason of such transaction acquires) any
direct or indirect beneficial interest and any account over
which an Access Person has discretion, except
(a) any Personal Securities Transaction effected in any
account over which neither PII, LMC or MSRA, nor such
advisory representative, has any direct or indirect
influence or control,
(b) any Personal Securities Transaction which is a direct
obligation of the United States and
(c) any Personal Securities Transactions in shares of
unaffiliated open-end funds
Such record must state
(a) the title and amount of the Securities involved in the
transaction,
(b) the trade date and nature of the transaction (i.e.,
purchase, sale, private placement, or other
acquisition or disposition),
(c) the price at which the transaction was effected, and
(d) the name of the broker, dealer or bank with or through
whom the transaction was effected,
This report must be made no later than ten days following
the end of the calendar quarter in which such Personal
Securities Transaction was effected. A Segregated Person may
satisfy this reporting requirement by providing a statement
to the compliance department of an affiliate of the Adviser.
(ii) All Other Access Persons
All other Access Persons (except as provided below) must
prepare a quarterly report of all transactions in Securities
within 10 days following the end of each quarter in which
such Personal Securities Transaction was effected. The
transactional and reporting rules under the Code for these
individuals do not include shares of registered open-end
investment companies, securities issued by the government of
the United States, bankers' acceptances, bank certificates
of deposit, commercial paper, and such other money market
instruments as designated by the board of directors/trustees
of such Fund. Such record must state:
(a) the title and amount of the Securities involved in
the transaction,
(b) the trade date and nature of the transaction (i.e.,
purchase, sale, private placement, or other
acquisition or disposition,
(c) the price at which the transaction was effected, and
CODE OF ETHICS ____________________________________________________________
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CODE OF ETHICS
(d) the name of the broker, dealer or bank with or
through whom the transaction was effected. This
report must be made no later than ten days following
the end of the calendar quarter. A Segregated Person
may satisfy this reporting requirement by providing a
statement to the compliance department of an
affiliate of the Adviser.
(iii) Disinterested Directors must submit a quarterly report
containing the information set forth in subsection (ii)
immediately above only with respect to those transactions
for which the Disinterested Director knew or, in the
ordinary course of fulfilling his or her official duties as
a Fund director/trustee, should have known that during the
15-day period immediately before or after the
director/trustee's transaction in Securities that are
otherwise subject to Access Person reporting requirements, a
Fund had purchased or sold such Securities or that it was
actively considering the purchase or sale of such
Securities.
D. CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. All Access
Persons will be provided with a copy of this Code upon beginning
his or her employment with a Fund, or with PII, PSI, LMC, LFD or
MSRA, as the case may be, and must certify annually that they have
read and understand this Code, and that they recognize that they
are subject to the terms and provisions hereof. Further, all
Access Persons must certify by January 31st of each year that they
have complied with the requirements of this Code and that they
have disclosed all personal brokerage accounts and disclosed or
reported all Personal Securities Transactions required to be
disclosed or reported pursuant to the requirements herein. The
requirements of this subsection D. shall not apply to
Disinterested Directors or to Primarily Disinterested Director.
IX. SANCTIONS
A. GENERALLY.The Designated Officer shall investigate all apparent
violations of this Code. If a Designated Officer for any Fund, or
for PII, PSI, LMC, LFD or MSRA discovers that an Access Person has
violated any provision of this Code, he or she may impose such
sanctions as he or she deems appropriate, including, without
limitation, one or more of the following: warnings, periods of
"probation" during which all personal investment activities
(except for specifically approved liquidations of current
positions), a letter of censure, suspension with or without pay,
termination of employment, or Automatic Disgorgement of any
profits realized on transactions in violation of this Code. Any
profits realized on transactions in violation of Sections D and E
of Article VII of this Code shall be subject to Automatic
Disgorgement.
B. PROCEDURES. Upon discovering that an Access Person of a Fund, or
of PII, PSI, LMC, LFD or MSRA has violated any provision of this
Code, the appropriate Designated Officer shall report the
violation, the corrective action taken, and any sanctions imposed
to the relevant entity's board of directors/trustees, which may,
at the request of the individual involved, review the matter. If a
transaction in Securities of a Designated Officer is under
consideration, another senior officer of the relevant Fund, or of
PII, PSI, LMC, LFD or MSRA, as the case may be, shall act in all
respects in the manner prescribed herein for a Designated Officer.
CODE OF ETHICS ____________________________________________________________
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CODE OF ETHICS
X MISCELLANEOUS PROVISIONS
A. RECORDS. The Funds shall maintain records in the manner and to the
extent set forth below, which records may be maintained on
microfilm under the conditions described in Rule 31a-2(f)(1) under
the 1940 Act and shall be available for examination by
representatives of the Commission:
(i) a copy of this Code and any other code of ethics which is,
or at any time within the past five (5) years has been, in
effect shall be preserved in an easily accessible place;
(ii) a record of any violation of this Code and of any action
taken as a result of such violation shall be preserved in an
easily-accessible place for a period of not less than five
(5) years following the end of the fiscal year in which the
violation occurs;
(iii) a copy of each duplicate confirmation statement concerning
Personal Securities Transactions of Access Persons, made
pursuant to this Code, shall be preserved for a period of
not less than five (5) years from the end of the fiscal year
in which the statement is provided, the first two (2) years
in an easily-accessible place; and
(iv) a copy of each report disclosing Personal Securities
Holdings of Investment Personnel, made pursuant to this
Code, shall be preserved for a period of not less than five
(5) years from the end of the fiscal year in which the
report is made, the first two (2) years in an
easily-accessible place;
(v) a list of all persons who are, or within the past five (5)
years have been, required to pre-clear Personal Securities
Transactions or make reports disclosing Personal Securities
Holdings pursuant to this Code shall be maintained in an
easily-accessible place.
B. CONFIDENTIALITY.
All pre-clearance requests pertaining to Personal Securities
Transactions, reports disclosing Personal Securities Holdings, and
any other information filed pursuant to this Code shall be treated
as confidential, but are subject to review as provided herein and
by representatives of the Commission.
All information relating to any Fund portfolio or pertaining to
any research activities is confidential until publicly available.
Whenever statistical information or research is supplied to or
requested by a Fund, such information must not be disclosed to any
persons other than persons designated by the appropriate
Designated Officer or the board of directors/trustees of such
Fund. If the Fund is considering a particular purchase or sale of
a security, this fact must not be disclosed except to such duly
authorized persons.
Any employee authorized to place orders for the purchase or sale
of Securities on behalf of a Fund shall take all steps reasonably
necessary to provide that all brokerage orders for the purchase
and sale of Securities for the account of the Fund will be so
executed as to ensure that the nature of the transactions shall be
kept confidential until the information is reported to the
Commission or each Fund's shareholders in the normal course of
business.
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<PAGE>
CODE OF ETHICS
If any employee of a Fund or Access Person should obtain
information concerning such Fund's portfolio (including, the
consideration by the Fund of acquiring, or recommending any
security for the Fund's portfolio), whether in the course of such
person's duties or otherwise, such person shall respect the
confidential nature of this information and shall not divulge it
to anyone unless it is properly part of such person's services to
such Fund to do so or such person is specifically authorized to do
so by the Designated Officer of the Fund. No officer, director or
employee shall disclose any non-public information relating to a
client's portfolio or transactions or to the investment
recommendations of PII, LMC or MSRA, nor shall any officer,
director/trustee or employee disclose any non-public information
relating to the business or operations of PII, PSI, LMC, LFD, MSRA
or the Funds unless properly authorized to do so.
C. INTERPRETATION OF PROVISIONS. Each Fund's board of directors/
trustees may from time to time adopt such interpretation
of this Code as such board deems appropriate.
D. EFFECT OF VIOLATION OF THIS CODE. In adopting Rule 17j-1, the
Commission specifically noted, in Investment Company Act Release
No. IC-11421, that a violation of any provision of a particular
code of ethics, such as this Code, would not be considered a per
se unlawful act prohibited by the general anti-fraud provisions of
this Rule. In adopting this Code, it is not intended that a
violation of this Code necessarily is or should be considered to
be a violation of Rule 17j-1.
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CODE OF ETHICS
INITIAL CERTIFICATION OF CODE OF ETHICS
PILGRIM GROUP MUTUAL FUNDS
I AM FULLY FAMILIAR WITH THE EFFECTIVE CODE OF ETHICS AS ADOPTED BY EACH OF THE
PILGRIM GROUP MUTUAL FUNDS,PILGRIM INVESTMENTS, INC., PILGRIM SECURITIES, INC.,
LEXINGTON MANAGEMENT CORPORATION, MARKET SYSTEMS RESEARCH ADVISORS, INC., AND
LEXINGTON FUNDS DISTRIBUTOR, INC., AND WILL COMPLY WITH SUCH CODE AT ALL TIMES
DURING THE FORTHCOMING CALENDAR YEAR.
Name (print):
Signature:
Date:
CODE OF ETHICS ____________________________________________________________
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<PAGE>
CODE OF ETHICS
EXHIBIT A
TO CODE OF ETHICS
Pilgrim Bank and Thrift Fund, Inc.
Pilgrim Advisory Funds, Inc.
Pilgrim LargeCap Leaders Fund
Pilgrim MidCap Value Fund
Pilgrim Asia-Pacific Equity Fund
Pilgrim Investment Funds, Inc.
Pilgrim MagnaCap Fund
Pilgrim High Yield Fund
Pilgrim Mutual Funds
Pilgrim Internationl Core Growth Fund
Pilgrim Worldwide Growth Fund
Pilgrim International SmallCap Growth Fund
Pilgrim Emerging Countries Fund
Pilgrim LargeCap Growth Fund
Pilgrim MidCap Growth Fund
Pilgrim SmallCap Growth Fund
Pilgrim Convertible Fund
Pilgrim Balanced Fund
Pilgrim High Yield Fund II
Pilgrim Strategic Income Fund
Pilgrim Money Market Fund
Pilgrim Government Securities Income Fund, Inc.
Pilgrim Prime Rate Trust
Pilgrim Equity Trust
Pilgrim MidCap Opportunities Fund
Northstar Galaxy Trust
Northstar Galaxy Emerging Growth Portfolio
Northstar Galaxy Growth + Value Portfolio
Northstar Galaxy High Yield Bond Portfolio
Northstar Galaxy International Value Portfolio
Northstar Galaxy Research Enhanced Index Portfolio
Pilgrim SmallCap Opportunities Funds
Pilgrim Growth Opportunities Fund
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CODE OF ETHICS
Pilgrim Domestic Equity
Pilgrim Growth and Income Fund, Inc.
Pilgrim International and Global Funds
Pilgrim Global Corporate Leaders Fund, Inc.
Pilgrim International Fund, Inc.
Pilgrim Worldwide Emerging Markets Fund, Inc.
Pilgrim Global Technology Fund, Inc.
Pilgrim Small Cap Asia Growth Fund, Inc.
Pilgrim Troika Dialog Russia Fund, Inc.
Pilgrim Fixed Income and Money Market Funds
Pilgrim GNMA Income Fund, Inc.
Pilgrim Global Income Fund
Pilgrim Money Market Trust
Pilgrim Precious Metals Fund
Pilgrim Goldfund, Inc.
Pilgrim Silver Fund, Inc
Pilgrim Natural Resources Trust
Pilgrim Mayflower Trust
Pilgrim Emerging Markets Value Fund
Pilgrim High Growth + Value Fund
Pilgrim High Total Return Fund
Pilgrim High Total Return Fund II
Pilgrim International Value Fund
Pilgrim Research Enhanced Index Fund
USLICO Series Fund
The Stock Portfolio
The Money Market Portfolio
The Bond Portfolio
The Asset Allocation Portfolio
CODE OF ETHICS ____________________________________________________________
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CODE OF ETHICS
EXHIBIT B
TO CODE OF ETHICS
Designated Officers of PII able to provide pre-clearance:
Lauren Bensinger - Primary AZ
James M. Hennessy
Rob Naka
Michael Roland
Enrique Faust - Primary NJ
Carolyn Croney
Victor Torchia
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REVISED: 2/1/99
5/5/97
<PAGE>
CODE OF ETHICS
POLICIES AND PROCEDURES TO CONTROL THE FLOW AND USE OF MATERIAL NON-PUBLIC
INFORMATION IN CONNECTION WITH SECURITIES ACTIVITIES
The reputation for integrity and high ethical standards in the conduct of its
affairs of the Pilgrim Group, Inc., Pilgrim Investments, Inc. and Pilgrim
Securities, Inc. (Pilgrim) is of paramount importance to all of us. To preserve
this reputation, it is essential that all transactions in securities are
effected in conformity with securities laws and in a manner which avoids the
appearance of impropriety. In particular, it is a long-standing policy of
Pilgrim that if an employee of Pilgrim or any of its subsidiaries or affiliated
investment companies possess material non-public information about a public
company, the employee may not trade in or recommend trading in the securities of
that company nor disclose such information to another person, whether within or
outside the Pilgrim organization, except in fulfillment of a legitimate business
objective of Pilgrim. Violations of this policy may result in severe civil and
criminal penalties under the Federal securities laws, as well as disciplinary
action by Pilgrim. Employees should refer to Pilgrim's Policies and Procedures
Governing Securities Transactions for a complete statement of these policies.
Material non-public information is information not known to the public that: (1)
might reasonably be expected to affect the market value of securities and (2)
influence investor decisions to buy, sell or hold securities. It is not possible
to define with precision what constitutes "material" information. However,
advance information about the following:
o a merger, acquisition or joint venture;
o a stock split or stock dividend;
o earnings or dividends of an unusual nature;
o the acquisition or loss of a significant contract;
o a significant new product or discovery;
o a change in control or a significant change in management;
o a call of securities for redemption;
o the public or private sale of a significant amount of additional
securities;
o the purchase or sale of a significant asset;
o a significant labor dispute;
o establishment of a program to make purchases of the issuer's own
shares;
o a tender offer for another issuer's securities; and
o an event requiring the filing of a current report under the Act.
Pilgrim Prime Rate Trust, an affiliated regulated investment company ("PPR"),
and Pilgrim Investments, Inc. as part of its structured finance activities are
both frequently in possession of material non-public information about public
companies as a result of its investments in participation interests in senior
collateralized corporate loans.
The following policies and procedures are designed to help insure that Pilgrim
abides by the prohibition on trading on the basis of material non-public
information by limiting the use and restricting the disclosure of material
non-public information to persons within or outside the Pilgrim organization who
are in the position to trade on the basis of such information or transmit it to
others.
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CODE OF ETHICS
All employees must familiarize themselves with these policies and procedures and
abide by them. Compliance with the law and with the policies and procedures
described in this memorandum is the individual responsibility of each director,
officer and employee of Pilgrim. It is each person's duty to see that the
policies and procedures set forth herein are followed in both spirit and letter.
In addition, all employees of Pilgrim should understand that supervisory
personnel have special responsibilities for taking appropriate action to prevent
insider-trading violations. FAILURE TO COMPLY WITH THESE POLICIES WILL BE DEALT
WITH HARSHLY AND COULD LEAD TO TERMINATION OF EMPLOYMENT, PERSONAL LIABILITY OR
CRIMINAL PROSECUTION.
"INVESTMENT MANAGEMENT ACTIVITIES," FOR PURPOSES OF THESE POLICIES AND
PROCEDURES, ARE ACTIVITIES OF EMPLOYEES OF PILGRIM WHOSE REGULAR FUNCTIONS OR
DUTIES PRINCIPALLY CONSIST OF MAKING, PARTICIPATION IN, OR OBTAINING INFORMATION
REGARDING, THE PURCHASE OR SALE OF PUBLICLY-TRADED SECURITIES OR MAKING, OR
OBTAINING INFORMATION ABOUT, RESEARCH AND RECOMMENDATIONS WITH RESPECT TO
PURCHASES OR SALES OF SUCH SECURITIES.
I. GENERAL "CHINESE WALL" POLICY
IN ADDITION TO PILGRIM 'S GENERAL POLICY PROHIBITING TRADING ON THE
BASIS OF MATERIAL NON-PUBLIC INFORMATION OR DISCLOSURE OF SUCH
INFORMATION TO OTHERS, IT IS PILGRIM'S POLICY THAT ANY MATERIAL
NON-PUBLIC INFORMATION ABOUT A PUBLIC COMPANY OR ITS SECURITIES
OBTAINED BY A DIRECTOR, OFFICER OR EMPLOYEE OF PILGRIM OR ANY OF ITS
AFFILIATED INVESTMENT COMPANIES, EITHER IN CONNECTION WITH HIS OR HER
PPR/STRUCTURED FINANCE INVESTMENT ACTIVITIES OR OTHERWISE, SHALL NOT BE
DISCLOSED TO ANY DIRECTOR, OFFICER OR EMPLOYEE OF PILGRIM OR ANY OF ITS
AFFILIATED INVESTMENT COMPANIES PERFORMING INVESTMENT MANAGEMENT
ACTIVITIES, OR ANY OTHER PERSON, EXCEPT AS SPECIFICALLY PERMITTED BY
THESE POLICIES AND PROCEDURES. THIS PROHIBITION APPLIES TO ORAL AS WELL
AS WRITTEN DISCLOSURE AND TO INFORMAL AS WELL AS FORMAL DISCLOSURE.
A. REPORTING MATERIAL NON-PUBLIC INFORMATION TO CHIEF COMPLIANCE
OFFICER.
From time to time, a director, officer or employee of Pilgrim
may come into possession of material non-public information (of
the type described on page 18 of these policies and procedures)
about a company. If such information is obtained in connection
with the performance of such person's responsibilities as a
director, officer or employee of Pilgrim, then he or she shall
immediately report the information as follows:
(i) A director, officer or employee of Pilgrim, other than a
PPR/Structured Finance staff member, shall report such
information immediately to the Compliance Department, which
is responsible for taking appropriate action, which may
include restricting trading in the affected securities.
Depending on the nature of such information, such director,
officer or employee may have an ongoing duty to inform the
Compliance Department of material changes in the
information or
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CODE OF ETHICS
the status of the transaction which it
relates in order to permit the Compliance Department to
take appropriate action, including restricting or
terminating restrictions on trading in the affected
securities.
(ii) PPR/Structured Finance staff members who in their normal
course of business deal with material non-public
information are to follow the SPECIFIC "CHINESE WALL"
PROCEDURES as set forth below.
(iii)Such information need not be reported if, after reasonable
inquiry, the director, officer or employee is satisfied
that the Compliance Department has already received such
information.
II. "CHINESE WALL" POLICIES AND PROCEDURES APPLICABLE TO SECURITIES TRADING
BY PILGRIM
Employees of Pilgrim performing investment management related
activities for PPR/Structured Finance Vehicles ("PPR/Structured Finance
Investment Activities) (and persons with supervisory or higher
management responsibilities for such employees) are likely to receive
in the normal course of their activities material non-public
information about issuers of publicly-traded securities. The following
policies and procedures are designed to prevent the flow of material
non-public information about a public company or its securities from
employees engaged in PPR/Structured Finance Investment Activities to
those performing other "investment management activities." By following
these policies and procedures, Pilgrim can continue, in most instances,
to engage in "investment management activities," even though material
non-public information about public companies may be known to others
within the Pilgrim organization who are involved in performing
PPR/Structured Finance Investment Activities.
III. SPECIFIC "CHINESE WALL" PROCEDURES
A. COMPLIANCE WITH SECTIONS 13(F) AND 13(G) OF THE SECURITIES
EXCHANGE ACT OF 1934 ("EXCHANGE ACT")
All directors, executive officers (or persons performing similar
functions) or Investment Personnel of ReliaStar Financial Corp.
("ReliaStar") shall not have access to current information (less
than 7 days old) that relates to the voting and investment power
of the securities held by the Pilgrim Funds' portfolios. Such
persons shall not have access to investment reports, Investment
Personnel, the premises of Investment Personnel or attend
meetings of Investment Personnel of PII, wherever located,
except that such persons may attend meetings of the Board of
Directors/Trustees of the Pilgrim Funds based on the premise
that information concerning portfolio holdings is more than 7
days old. Communications concerning the holdings, voting or
investment power of the Pilgrim Funds' portfolios between
Investment Personnel of PII and directors, executive officers
(or persons performing similar functions) or Investment
Personnel of ReliaStar are prohibited. Exceptions may be
permitted by the Chief Compliance Officer where the Chief
Compliance Officer believes such persons will not act in concert
with Investment Personnel of PII for purposes of transactions in
securities that would require reporting under Sections 13(f) and
13(g) of the Exchange Act.
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CODE OF ETHICS
B. PILGRIM PRIME RATE TRUST
In order to contain material non-public information concerning a
public company or its securities within the immediate group of
persons engaged in performing PPR/Structured Finance Investment
Activities who have a need to know such information, and in
order to ensure that such information does not flow to those
engaged in other investment management activities, the following
policies and procedures should be followed:
(i) ORAL AND WRITTEN COMMUNICATIONS. Except as specifically
permitted by these policies and procedures, employees
engaged in performing PPR/Structured Finance Investment
Activities should not discuss or exchange any written or
oral non-public information, whether or not material, about
a company or its securities with employees performing other
investment management activities.
Any communication, whether written or oral, containing
material non-public information (of the type described on
the attached copy of Pilgrim 's Policies and Procedures to
Control the Flow and Use of Material Non-Public Information
in Connection with Securities Activities) about an issuer
or its securities shall be restricted, on a need-to-know
basis, to employees engaged in performing PPR/Structured
Finance Investment Activities and to the following persons:
(a) directors and senior executives of Pilgrim who are
not actually involved in investment management
decisions;
(b) Compliance personnel; and
(b) certain identified accountants, attorneys or other
outside professional advisers.
In addition, the Company involved shall be placed on
PPR/Structured Finance's Watch List/Inside Information
List. Written communications containing material non-public
information shall be marked "confidential." Documents
prepared for presentation to PPR's Board of Directors shall
be presumed to contain material non-public information and
shall be handled accordingly.
(ii) ATTENDANCE AT MEETINGS. Attendance at meetings, whether
held inside or outside the Pilgrim organization, at which
personnel performing PPR/Structured Finance Investment
Activities may be present, is limited as follows:
(a) Attendance at meetings at which material non-public
information regarding a company or its securities are
to be, or are likely to be, discussed is restricted to
employees, on a need-to-know basis, performing
PPR/Structured Finance Investment Activities and to
the following persons:
(i) directors and senior executives of Pilgrim who
are not actually involved in investment
management decisions
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CODE OF ETHICS
(ii) compliance personnel; and
(iii)certain identified accountants, attorneys, or
other outside professional advisers. Persons engaged
in other investment management activities ARE
PROHIBITED from attending meetings at which material
non-public information about a public company or its
securities is to be, or is likely to be, discussed,
without the specific authorization of the Compliance
Department, after appropriate legal consultation.
(b) The preceding paragraph shall not prohibit investment
management personnel from preparing and participating
in written or oral presentations and attending
meetings with persons performing PPR/Structured
Finance Investment Activities in order to develop
products or marketing plans, to report on the
financial services of Pilgrim to existing or
prospective clients or to discuss matters not related
to PPR/Structured Finance Investment Activities,
provided, that such persons shall leave such meetings
if non-public matters are raised.
C. LIBRARY AND FILES. A separate credit file room has been
established. The door is closed and locked at all times except
when an Authorized Person is working in the room. NO OTHER
PERSONS ARE ALLOWED IN THE PPR/STRUCTURED FINANCE FILE ROOM EVEN
IN THE COMPANY OF AN AUTHORIZED PERSON (AS DEFINED ABOVE) OTHER
THAN REPAIR OR MAINTENANCE PERSONNEL AND THEN ONLY IN THE
PRESENCE OF AN AUTHORIZED PERSON. The Library's access is to be
monitored by an Authorized Person.
All information awaiting filing in the Library is to be under
the supervision of an Authorized Person at all times or locked
in a PPR/Structured Finance staff member's office or other
lockable file cabinet.
Materials, which have been archived, are stored with a storage
company whose procedures restrict access to archived materials
and where only a Pilgrim Authorized Person may request retrieval
of files from the archives.
D. PPR/STRUCTURED FINANCE OFFICES ARE TO BE LOCKED when not
occupied or supervised. Authorized Persons requiring keys
must sign in/out for keys on a log maintained by the
Administrative Assistant.
E. COMPUTERS WITH ACCESS TO PPR/STRUCTURED FINANCE FILES ARE TO
HAVE SEPARATE ACCESS PASSWORDS. Pilgrim 's company-wide computer
security has also been reviewed to insure that all reasonable
and practical measures have been taken to limit the possibility
that unauthorized access could be made to PPR/Structured Finance
(and all Pilgrim) computer files. Pilgrim 's MIS personnel are
required to notify in writing a PPR Senior Vice President of any
file/systems maintenance work, in advance of beginning any such
work.
F. THE (602) 417-8327 FAX MACHINE IS FOR THE EXCLUSIVE USE OF THE
PPR/STRUCTURED FINANCE CREDIT DEPARTMENT. It is to remain
situated in direct
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CODE OF ETHICS
proximity to the PPR/Structured Finance
Department Administrative Assistant for monitoring of
incoming/outgoing information. Any Authorized Person noting any
unattended information on the machine is required to take
possession of that information until it can be properly
delivered to the appropriate PPR/Structured Finance staff
member.
If any Pilgrim employee should inadvertently receive
PPR/Structured Finance faxes, he/she is to immediately deliver
it to a PPR/Structured Finance staff member and should
immediately report the occurrence to a Senior Vice President of
PPR. The Senior Vice President will decide if there has been any
exposure of non-public information and, if so, will immediately
inform the Chief Compliance Officer and place the issuer on the
Restricted List.
G. ALL PPR/STRUCTURED FINANCE NON-PUBLIC DUPLICATE MATERIALS OR
OTHER SUCH REFUSE OF A CONFIDENTIAL NATURE MUST BE DISPOSED OF
PROPERLY. A document shredder is available for the use of each
Authorized Person.
H. ALL PPR/STRUCTURED FINANCE MAIL IS TO BE DELIVERED UNOPENED TO
THE PPR DEPARTMENT ADMINISTRATIVE ASSISTANT (OR NEAREST
AVAILABLE PPR/STRUCTURED FINANCE STAFF MEMBER). If any Pilgrim
employee should inadvertently receive PPR/Structured Finance
mail, he/she is to immediately hand deliver it to a
PPR/Structured Finance staff member. If the mail was opened
before receipt by a PPR/Structured Finance staff member, the
occurrence should be immediately reported to a Senior Vice
President of PPR. The Senior Vice President will decide if there
has been any exposure of non-public information and, if so, will
immediately inform the Chief Compliance Officer and place the
issuer on the Restricted List.
I. PPR/STRUCTURED FINANCE'S MAIL DISTRIBUTION IS TO BE HANDLED AS
FOLLOWS: Mail is received and opened. Each item is reviewed to
determine content. If the item is found to contain material,
non-public information, the company will be placed on the Watch
List/Inside Information List provided it is not currently in the
portfolio and, therefore, already on the Watch List/Inside
Information List. All items are distributed to the appropriate
recipient.
IV. RESTRICTIONS ON TRADING
From time to time it may be appropriate to restrict or halt trading in
a security if Pilgrim is in possession of material non-public
information about the issuer of such security, particularly if such
information is derived from a significant transaction or proposed
transaction involving PPR/Structured Finance and the issuer. Whenever a
trading restriction is in effect, Pilgrim 's Compliance Department
shall implement appropriate procedures to halt trading in that security
for any account for which Pilgrim Investments, Inc. acts as
discretionary investment manager or adviser.
Where PPR/Structured Finance is involved in a transaction, or is
otherwise in possession of material non-public information, the
securities of the affected company shall be placed on the Watch
List/Inside Information List and trading in such securities shall be
monitored. Depending on individual circumstance, such securities may
also be considered for placement on Pilgrim 's Restricted List.
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V. HANDLING OF OTHER SENSITIVE INFORMATION
Although the preceding policies deal in particular with the subject of
MATERIAL non-public information, employees of Pilgrim have an
obligation to treat ALL sensitive non-public information in strictest
confidence. To safeguard this information, the following procedures
should be followed:
A. Papers relating to non-public matters concerning issuers of
securities should not be left lying in conference rooms or
offices and should be locked in file cabinets or desks overnight
or during absence from the office. In addition, sensitive
information stored in computer systems and other electronic
files should be kept secure.
B. Appropriate controls for the reception and oversight of visitors
to sensitive areas should be implemented and maintained. For
example, guests should be escorted around Pilgrim 's offices and
should not be left unattended.
C. Document control procedures, such as numbering counterparts and
recording their distribution, and shredding papers containing
material non-public information should be used where
appropriate.
D. If an employee is out of the office on business, secretaries and
receptionists should use caution in disclosing the employee's
location.
E. Business conversations should be avoided in public places, such
as elevators, hallways, restrooms and public transportation or
in any other situation where such conversations may be
overheard.
VI. QUESTIONS
Questions concerning the interpretation or application of these
procedures should be referred to the Compliance Department, who will
consult with counsel about matters requiring legal interpretations.
VII. POLICIES AND PROCEDURES GOVERNING SECURITIES TRANSACTIONS
A. RESTRICTIONS ON TRADING IN SECURITIES. Pilgrim maintains a list
of securities that are subject to trading restrictions or
monitoring in accordance with its Code of Ethics, Chinese Wall
Procedures and various provisions of the federal securities laws.
These lists, referred to as the Restricted List, the Watch
List/Inside Information List and the Trading Lists, are
maintained and continuously updated under the supervision of the
Compliance Department. Securities included on the Restricted List
may not be purchased or sold in portfolio accounts, except for
Pilgrim Prime Rate Trust ("PPR") and structured finance vehicles.
Securities Watch List/Inside Information List securities are
securities of issuers with respect to which there is a
significant likelihood that PPR/Structured Finance is in
possession of material inside information. Trading List
securities are those with respect to which a portfolio manager
has indicated an intent to trade or Structured Finance/PPR public
companies to which PPR/Structured Finance is a lender or
PPR/Structured Finance is, or within the preceding ninety (90)
days has been, in possession of material non-public information
concerning such company. The Restricted List, the Watch
List/Inside Information List and the Trading Lists will be
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prepared and maintained for all Pilgrim Funds; provided that
exceptions from the requirement for such lists may be granted on
a case by case basis when the Compliance Department determines
that a portfolios manager's alternative methodology is sufficient
to achieve the purposes of such lists.
Each portfolio manager will maintain a separate Trading List,
unless an exception has been granted by the Compliance
Department, as provided above. Each portfolio manager will
have access to his/her Trading List and the Restricted List.
B. CHINESE WALL PROCEDURES. Employees of Pilgrim performing
investment management related activities for PPR/Structured
Finance ("PPR/Structured Finance Investment Activities") (and
persons with supervisory or management responsibilities for such
employees) are likely, in the normal course of their activities,
to receive material non-public information about issuers of
publicly traded securities. If any employee of Pilgrim possesses
material non-public information about a public company,
regardless of its source, such employee may not trade in the
securities of that company or recommend trading in such
securities to any person nor can they disclose such information
to another person, whether inside or outside the Pilgrim
organization, except in fulfillment of a legitimate business
objective of Pilgrim. Violations of this policy may result in
severe civil or criminal penalties under the federal securities
laws, as well as in disciplinary action by Pilgrim (including
termination of employment). Pilgrim has adopted a series of
stringent procedures designed to prevent the flow of material
non-public information about a public company or its securities
from employees engaged in "PPR/Structured Finance Investment
Activities" to employees performing other "investment management
activities." As a general matter, it is Pilgrim's policy that any
material non-public information about a public company or its
securities that is obtained by a director, officer or employee of
Pilgrim, either in connection with their PPR/Structured Finance
Investment Activities or otherwise, shall not be disclosed beyond
the immediate group of persons involved in a particular
transaction, except as specifically permitted by the firm's
Chinese Wall Procedures. Employees should refer to Pilgrim 's
Chinese Wall Procedures.
ALL DIRECTORS, OFFICERS AND EMPLOYEES OF PILGRIM MUST FAMILIARIZE
THEMSELVES WITH THESE POLICIES AND PROCEDURES AND ABIDE BY THEM.
COMPLIANCE WITH THE LAW AND THE POLICIES AND PROCEDURES DESCRIBED IN
PILGRIM'S CHINESE WALL PROCEDURES IS THE INDIVIDUAL RESPONSIBILITY OF
EACH DIRECTOR, OFFICER OR EMPLOYEE OF PILGRIM. IT IS EACH SUCH PERSON'S
DUTY TO SEE THAT THE POLICIES AND PROCEDURES SET FORTH IN PILGRIM'S
CHINESE WALL PROCEDURES ARE FOLLOWED IN BOTH SPIRIT AND LETTER. FAILURE
TO COMPLY WITH THE CHINESE WALL PROCEDURES WILL BE DEALT WITH HARSHLY
AND COULD LEAD TO TERMINATION OF EMPLOYMENT, PERSONAL LIABILITY OR
CRIMINAL PROSECUTION.
D. THE RESTRICTED LIST. Securities are placed on the Restricted
List:
(i) in the unlikely event that there is a failure of the
Chinese Wall Procedures and material non-public information
is disseminated beyond persons performing PPR/Structured
Finance Investment Activities;
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(ii) upon a determination by the Compliance Department or the
Firm's General Counsel that the sensitivity of a
transaction being considered by PPR/Structured Finance, the
nature of the information in the possession of
PPR/Structured Finance or other circumstances justify a
halt in trading activity in securities of an issuer; and
(iii)in other circumstances as determined by the Compliance
Department or the Firm's General Counsel. Portfolios
managed by Pilgrim, other than PPR, may not trade in
securities that have been placed on the Restricted List.
Pre-clearance requests for personal securities transactions
in securities of an issuer on the Restricted List will not
be approved. It is anticipated that few, if any, securities
will be included on the Restricted List.
D. WATCH LIST/INSIDE INFORMATION LIST. Each company will be placed
on the Watch List/Inside Information List if PPR/Structured
Finance is, or within the preceding ninety (90) days has been, in
possession of material non-public information concerning such
company.
E. PREPARATION OF THE WATCH LIST/INSIDE INFORMATION LIST. Persons
performing PPR/Structured Finance Investment Activities must
immediately log the names of companies on the Watch List/Inside
Information List upon the receipt of material non-public
information concerning such company. PPR's/Structured Finance
portfolio managers must advise the Compliance Department of any
changes in the status of such information which might permit the
removal of such securities from the Watch List/Inside Information
List or require placing them on the Restricted List. In addition,
the Firm's General Counsel may advise the Compliance Department
to place the securities of a particular company on the Watch
List/Inside Information List. While portfolio trading in
securities on the Watch List/Inside Information List is NOT
prohibited, such trading is monitored frequently to detect any
unusual trading activity involving Watch List/Inside Information
List securities. The Watch List/Inside Information List is
prepared by a PPR/Structured Finance Portfolio Manager.
F. TRADING LISTS. OPEN-END FUNDS A separate Trading List is
maintained for each portfolio. A security of an issuer is placed
on a Trading List each Friday or commencing upon the date that a
portfolio manager determines to engage in a transaction involving
such security imminently (generally within seven (7) business
days, subject to market conditions) and for a period of five (5)
business days following such transaction. A portfolio manager's
decision to place a security on a Trading List should be made by
reference to a number of factors, including, the relationship
between the target buy/sell price and the market price, the
volatility of the issue and consideration of other factors that
may lead a portfolio manager to trade in a particular security.
Obviously, unforeseen circumstances may lead to a rapid trading
decision, in which case a security may be placed on the Trading
List at the same time as a trading order is placed. Pre-clearance
requests for personal securities transactions in securities of an
issuer on the Trading List will not be approved.
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E. G. TRADING LIST -PPR AND STRUCTURED FINANCE VEHICLES Public
companies will be put on PPR/Structured Finance's Trading list if
either entity
(i) owns a loan participation with respect to such company or
(ii) is, or within the proceeding ninety (90) days has been, in
possession of material non-public information concerning
such company. Pre-clearance requests for personal securities
transactions in securities of an issuer on the
PPR/Structured Finance Trading List will not be approved.
H. PERSONAL SECURITIES TRANSACTIONS. Under Pilgrim 's Code of
Ethics, all employees, officers and directors of Pilgrim, all
directors/trustees of registered investment companies managed by
Pilgrim, as well as certain consultants and independent
contractors who have access to confidential information, other
than Segregated Persons (collectively, "Access Persons") must
(i) obtain pre-clearance for personal securities transactions
involving beneficial ownership (as defined in Pilgrim 's
Code of Ethics) and
(ii) cause duplicate trading confirmations for such personal
securities transactions to be sent to the Compliance
Department A Segregated Person, as that term is defined in
Pilgrim's Code of Ethics, need only pre-clear a transaction
in a Security (as that term is defined in Pilgrim's Code of
Ethics) if at the time such Segregated Person proposed to
engage in such transaction, he or she knew, or in the
ordinary course of fulfilling his or her duties, should have
known that such Security was being purchased or sold by the
Funds or that a purchase or sale of such Security was being
considered by or with respect to the Funds except that
pre-clearance approval will be required for purchases of
securities in private transactions conducted pursuant to
Section 4(2) of the Securities Act of 1933 and Securities
(debt or equity) acquired in an initial public offering.
All Pilgrim Registered Representatives not deemed to be Access
Persons must also pre-clear all Personal Securities Transactions
with the Compliance Department. In order to receive
pre-clearance for Personal Securities Transactions, a Registered
Representative must call the Compliance Officer or complete a
Personal Trading Approval form. A member of the Compliance
Department is available each business day from 9:00 a.m. to 5:00
p.m. to respond to pre-clearance requests. Registered
Representatives are directed to identify
(i) the securities that will be the subject of the transaction
and the number of shares and principal amount of each
security involved,
(ii) the date on which they desire to engage in the subject
transaction;
(iii)the nature of the transaction (i.e., purchase, sale,
private placement, or any other type of acquisition or
disposition);
(iv) the approximate price at which the transaction will be
effected; and
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(v) the name of the broker, dealer, or bank with or through
whom the transaction will be effected. Transactions
in securities of an issuer on the Restricted List or the
Trading Lists will not be approved. In order to
maintain the confidentiality of the Restricted List, the
Watch List/Inside Information List and the Trading
Lists, callers will not be apprised of the reason for the
denial of the authorization to trade. If on any particular
day the Compliance Officer is not present in the office,
pre-clearance may be obtained by providing a completed
Personal Trading Approval form to the Compliance Analyst
for authorization who will obtain the signature of an
appropriate designated officer. Questions regarding
pre-clearance procedures should be directed to the
Compliance Department.
Exceptions -Certain Transactions No pre-clearance of a
securities transaction is required for the following
transactions:
(i) Shares of registered open-end investment companies,
(ii) Securities issued by the government of the United States,
bankers' acceptances, bank certificates of deposit and time
deposits, commercial paper, repurchase agreements and such
other money market instruments as designated by the board
of directors/trustees of such Fund and shares of ReliaStar
Financial Corporation.
(iii)Purchases or sales effected in any account over which such
Registered Representative has no direct or indirect
influence or control;
(iv) Purchases or sales of securities which are not eligible for
purchase or sale by any Fund e.g. municipal securities.
(v) Purchases or sales which are non-volitional on the part of
either the Registered Representative or a Fund;
(vi) Purchases which are part of an automatic dividend
reinvestment plan or employee stock purchase plan;
(vii)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.
(viii) Purchases or sales of securities which receive the prior
approval of the appropriate Designated Officer because they
(i) are only remotely potentially harmful to each Fund,
(ii) would be very unlikely to affect a highly
institutional market, or (iii) clearly are not related
economically to the securities to be purchased, sold or
held by each Fund.
(ix) Future elections into an employer sponsored 401(k) plan, in
an amount not exceeding $1,000 in any calendar month and
any other transfers to an open end fund. However, an
exchange of a current account balance into or from one of
the closed end funds in an amount greater than
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$1,000 would still need pre-clearance and be reportable at
the end of the quarter on the quarterly transaction
reports.
I. PERSONAL BROKERAGE ACCOUNTS. Access Persons and registered
representatives pursuant to Rule 3050 of the NASD Conduct Rules,
are required to notify the securities brokers with whom he or
she opens personal brokerage accounts that he or she is an
affiliated person of PII or PSI as appropriate. This
notification should take place at the time the brokerage account
is opened and applies to your personal accounts and to any
account in which you have a beneficial interest as defined in
Pilgrim 's Code of Ethics. If the securities account is with a
non-member institution (e.g., investment adviser, bank or other
financial institution) you are required to notify the Chief
Compliance Officer prior to the execution of any initial
transactions, of your intention to open such account or place an
order.
For brokerage and/or non-member institution accounts established
prior to your association with PSI or PII, you are required to
notify the Chief Compliance Officer promptly after your hire
date.
J. TRADE CONFIRMATIONS. Access Persons (other than Segregated
Persons) and registered representatives shall cause
broker-dealers maintaining accounts to deliver to Pilgrim
duplicate trade confirmations and statements with respect to all
transactions in such accounts. Pilgrim has prepared a form
letter to be used such Access Persons to direct brokerage firms
maintaining such accounts to send duplicate trade confirmations
to the Compliance Department. A copy of this form letter is
attached as Exhibit C.
K. NEW ISSUES. "Hot issues" are securities which, immediately after
their initial public distribution, sell at a premium in the
secondary market. No Access Person nor Registered Representative
("RR") may purchase hot issue securities during the primary
offering for his or her personal account, for any account in
which the individual has a direct or indirect financial
interest, or for the account of any member of the individual's
immediate family. For this purpose, the term "immediate family"
includes parents, spouse, brothers, sisters, in-laws, children
or any other person who is directly or indirectly materially
supported by you.
Because of the difficulty in recognizing a potential "hot issue"
until after distribution, you and your immediate family may not
purchase, for any account in which you have a beneficial
interest, any new issue of a security unless such purchase has
been approved in advance by the Chief Compliance Officer.
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EXHIBIT C
SAMPLE LETTER TO BROKERAGE FIRM
TO ESTABLISH DUPLICATE CONFIRMS AND PERIODIC STATEMENTS
(PAGE C12, H. TRADE CONFIRMATIONS)
January 2, 1996
Merrill Lynch, Pierce, Fenner & Smith, Inc.
111 W. Ocean Blvd., 24th Floor
Long Beach, CA 90802
RE: The Brokerage Account of Account Registration
Account No. Your Account Number
--------------------
AE Name of Your Registered Representative
--------------------------------------
Dear Ladies/Gentlemen:
In accordance with the policies of Pilgrim Group, Inc., a financial services
firm with which I have become associated, effective immediately, please forward
duplicate trade confirmations and periodic statements on the above-captioned
accounts as follows:
Pilgrim Group, Inc.
ATTN: LAUREN D. BENSINGER
VP & CHIEF COMPLIANCE OFFICER
TWO RENAISSANCE SQUARE
40 North Central Avenue
Suite 1200
Phoenix, AZ 85004
Sincerely,
Your Name
COMPLIANCE ___________________________________________________________________
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