Exhibit (p)(ii) under Form N-1A
Exhibit 10 under Item 601/Reg SK
Code of Ethics
Regarding Personal Securities Transactions
INTRODUCTION
Riggs Investment Corp (RIC) is the named investment adviser to the Riggs Funds.
An investment adviser is a fiduciary, owing a duty of undivided of loyalty to
its clients. This is a role and a responsibility with which RIC and its
employees are well accustomed. Although not for a registered investment company,
RIC has been a registered investment adviser for approximately one year.
RIC is not involved in day-to-day securities selection and portfolio
management for the Riggs Funds. That function, the actual investment and
portfolio management services for the mutual fund, is performed by two
sub-advisers: J. Bush & Company, Incorporated (J. Bush) for the Riggs Large
Cap Growth Fund, and Riggs Investment Management Corporation (RIMCO) for all
of the other Riggs Funds. Both of these sub-advisers are wholly-owned
subsidiaries of Riggs Bank N.A., as is RIC.
RIC will carry out its fiduciary responsibilities related to 17j-1 through its
oversight of the two sub-advisers and their employees, and it will be exacting
in this role. More specifically, RIC intends to prevent actual, or the
appearance of, conflicts of interest in the personal securities activities of
its employees and the employees of J. Bush and RIMCO. Therefore, along with RIC,
both J. Bush and RIMCO have new policies - written, 17j-1 codes of ethics -
concerning personal securities activities of employees. Copies of the J. Bush
and RIMCO 17j-1 codes of ethics are available from the Bank's Compliance
Department or from the two sub-advisers.
OVERSIGHT OF SUB-ADVISERS
Based on RIC's investment adviser role, its relevant fiduciary responsibilities
arise in two ways. First, RIC receives a fee for the supervisory services it
performs with respect to the sub-advisers. Second, RIC has a duty of care that
it must exercise on behalf of the Fund and the shareholders of the Fund.
A. RIC'S INVESTMENT ADVISER'S FEES
RIC receives a fee for its work as the investment adviser for the Riggs Funds,
and it earns that fee in several general ways:
1. RIC is responsible for conducting due diligence on potential
sub-advisers.
2. RIC monitors performance for J. Bush and RIMCO.
3. RIC meets regularly in-person, as well as through telephonic and written
correspondence with J. Bush and RIMCO concerning its expectations for and
to evaluate sub-adviser performance.
4. As part of this monitoring and evaluation role, RIC is prepared to advise
the Board of Trustees of the Fund on whether the investment adviser should
continue in that role, whether there should be a new adviser, or whether
there should be less substantial changes in the sub-adviser's role. Such
opinions, and other aspects of the work of the investment adviser, as
necessary, will be the subject of written reports to the Trustees of the
Funds.
B. RIC'S DUTY OF CARE
RIC also has a duty of care to the Fund and to Fund shareholders in selecting
and supervising the sub-advisers. It meets this responsibility through the
actions discussed above. In addition, however, RIC recognizes many additional
and specific ways in which it will carry out this responsibility. These include:
1. As investment adviser, RIC is first and foremost answerable to the Fund's
Board of Trustees for the performance of the sub-advisers. In this regard,
the adviser stands in the same legal position with the Fund as if it were
the sole adviser.
2. RIC will review on a regular (at least monthly) basis the sub-advisers'
investment activities, i.e., trading, cash positions, prospectus
diversification, IRS Sub-chapter M diversification.
3. RIC will test on a continuous basis (at least monthly) prospectus
compliance of the investment portfolio, i.e., whether the Fund is being
managed in a manner consistent with the prospectus disclosure.
4. RIC will review monthly reports provided by the sub-adviser, e.g.,
updates on fund investment strategies and performance.
5. RIC will collect, review and prepare any necessary information for the
Board of Trustees.
6. RIC will compare sub-adviser performance, on a continuing basis (at least
monthly), to industry standards, as well as to similar funds and to other
accounts the sub-adviser manages.
7. RIC will collect and be ready to provide proof of evaluation of the
sub-adviser for securities purchased and that the securities meet the
overall investment objectives and policies of the Fund. In this regard,
each Fund's board has adopted the Daily NAV Calculation Process, Price
Execution Procedure, Price Exception Report, Pricing NAV Error Procedure,
and NAV Error Approval Process, and RIC will coordinate with the
sub-adviser in following these procedures.
8. RIC will review periodically1:
a. Brokerage allocation procedures of the sub-adviser under Section 28(e)
of the Securities Exchange Act of 1934;
b. Investment Company Act Rule 10f-3 (Affiliated Underwritings)
transactions by the sub-adviser;
c. Investment Company Act Rule 17j-1 procedures of the sub-adviser
(annual);
d. Investment Company Act Rule 17e-1 transactions (Affiliated Brokerage
Transactions) by the sub-adviser;
e. Section 13(d) positions and filings (where a Fund owns more than 5% of
a company);
f. The sub-advisers' fidelity bond, errors and omissions insurance
coverage and Directors and Officers insurance coverage (annual);
g. The sub-advisers' procedures for maintenance of Fund records (including
trade tickets) required under Investment Company Act Rule 31a-1
(annual); and,
h. Monitor affiliated transactions pursuant to Rule 17a-7.
This level of monitoring notwithstanding, RIC has no responsibility for
furnishing "advice to an investment company with respect to the desirability of
investing in, purchasing or selling securities or other property". Further, RIC
is "empowered to determine what securities or other property shall be purchased
or sold by such company" in no circumstances.
As a subsidiary of the Bank, RIC is primarily engaged in the business of a
broker-dealer, not in advising funds or even other advisory clients. For its
first fiscal year, RIC derived more than 50 percent of its total sales and
revenues and more than 50 percent of its income, before taxes and extraordinary
items, from its broker-dealer business. RIC is owned by and some of its
directors are employees of Riggs Bank N.A. The bank is primarily engaged in the
business of banking, not in advising funds or other advisory clients. For its
most recent three fiscal years, RIC derived more than 50 percent of its total
sales and revenues and more than 50 percent of its income, before taxes and
extraordinary items, from its banking business. The Bank has purposely
concentrated the experts in investment management in subsidiary businesses that
focus entirely on those activities.
It follows that none of the directors of RIC, with respect to any Fund, makes
any recommendation, participates in the determination of which recommendation
will be made, or has a principal function or duty relating to the determination
of which recommendation will be made, or in connection with his or her duties
obtains any information concerning decisions concerning Covered Securities being
made by one of the subadvisers to any Fund. For these reasons, none of the
directors of RIC would meet the definition of "access person" or "advisory
person" under 17j-1(a)(2).
Several officers or employees of RIC are close enough to the definition of
"access person" to make it prudent for RIC to consider them as such. These
officers or employees are as follows:
o Richard B. Coltrane III
President
o Position Currently Vacant
Compliance Officer
o Lauralee A. Schwebel
Mutual Fund Administration
THE CODE OF ETHICS
In accord with the scope of its responsibilities as an investment adviser to a
fund, RIC is adopting this code of ethics whose objective is to prevent Access
Persons from engaging in prohibited conduct under 17 CFR 270.17j-1(b). The
specific provisions of RIC's code are:
I. RIC will seek immediate approval of its code of ethics, along with
the codes of the sub-advisers, as well as re-approval of any of the
codes for which a material change is made in the future.
II. RIC will provide an annual report to the Board of Trustees that --
A. Describes issues arising under the code of ethics or implementation
procedures, including violations; and,
B. Certifies that RIC has adopted procedures reasonably necessary to
prevent Access Persons from violating the code.
IV. All Access Persons will report the following information --
A. INITIAL HOLDINGS REPORTS: No later than 10 days after the employee
becomes an Access Person, the following information --
1. The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the employee became an
Access Person;
2. The name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held
for the direct or indirect benefit of the Access Person as of
the date the employee became an Access Person; and,
3. The date that the report is submitted by the Access Person.
B. QUARTERLY TRANSACTION REPORTS: No later than 10 day after the end of a
calendar quarter, the following information --
1. With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or
indirect beneficial ownership --
a. The date of the transaction, the title, the interest rate and maturity
date (if applicable), the number of shares and the
principal amount of each Covered Security involved;
b. The nature of the transaction (i.e., purchase, sale, or any other type
of acquisition or disposition);
c. The price of the Covered Security at which the transaction was effected;
d. The name of the broker, dealer or bank with or through which the
transaction was effected; and,
e. The date that the report is submitted by the Access Person.
2. With respect to any account established by the Access Person in which
any securities were held during the quarter for the direct
or indirect benefit of the Access Person --
a. The name of the broker, dealer or bank with whom the Access Person
established the account;
b. The date the account was established; and,
c. The date that the report is submitted by the Access Person.
C. ANNUAL HOLDINGS REPORTS: Annually, the following information (which
information must be current as of a date no more than 30 days
before the report is submitted) --
1. The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or
indirect beneficial ownership;
2. The name of any broker, dealer or bank with whom the Access
Person maintains an account In which any securities are held
for the direct or indirect benefit of the Access Person; and,
3. The date that the report is submitted by the Access Person.
D. INVESTMENTS IN IPOS AND LIMITED OFFERINGS
Employees must obtain approval from RIC before directly or
indirectly acquiring beneficial ownership in any securities in an
Initial Public Offering or a Limited Offering.
E. DEFINITIONS
1. ACCESS PERSON -- "Any director, officer, general partner, or Advisory
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Person of the investment adviser who, with respect to any
Fund, makes any recommendation, participates in the
determination of which recommendation will be made, or whose
principal function or duties relate to the determination of
which recommendation will be made, or who, in connection
with his or her duties, obtains any information concerning
recommendations on Covered Securities being made by the
investment adviser to any Fund."
2. ADVISORY PERSON -- (a) Any employee of the investment adviser
who, in connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding the
purchase or sale of Covered Securities by a Fund, or whose
functions relate to the making of any recommendations with
respect to the purchases or sales; and,
(b) Any natural person in a control relationship to the
investment adviser who obtains information concerning
recommendations made to the Fund with regard to the purchase or
sale of Covered Securities by the Fund.
3. COVERED SECURITY -- Covered security means a security OTHER THAN:
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(a) A direct obligation of the U.S.;
(b) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(c) Shares issued by open-end Funds (i.e., mutual funds).
IV. Reporting Procedures
A. Each Access Person and Advisory Person will provide timely
reports, on forms provided by RIC, supplying the required
information on securities holdings and transactions.
B. The Bank's Compliance Division will provide each Access Person
and Advisory Person with forms for reporting all required
information on holdings and quarterly transactions in time for
them to use those forms for filing reports.
C. The Bank's Compliance Division will collect completed reports from each
Access Person and Advisory Person in a timely manner.
D. The Bank's Compliance Division will maintain required records pursuant
to this code of ethics. These records include --
1. The current code of ethics.
2. Records of violations of the code of ethics and any action
taken as a result of that violation. This record will be
maintained for 5 years after the year in which the violation
occurred.
3. A copy of each report from each Access Person, including any
information that might be submitted in lieu of a report. These
records will be maintained for 5 years after the report is
made, with the first two years being in an easily accessible
place.
4. A list of all persons, currently or within the past 5 years
who are or were required to make reports or who were
responsible for reviewing the reports. This list will be
maintained in an easily accessible place.
