Exhibit 23(p)(1)
CODE OF ETHICS
OF
CATERPILLAR INVESTMENT MANAGEMENT LTD.
CATERPILLAR SECURITIES INC.
THE PREFERRED GROUP OF MUTUAL FUNDS
This Code of Ethics ("Code"), has been adopted by the Fund on July 20,
2000. This Code shall apply to all Access Persons of the Fund, except as noted
in Section 3 below.
1. STATEMENT OF GENERAL PRINCIPLES.
This Code is intended as a statement of general fiduciary principles
that govern the personal investment activities of all Access Persons. In
addition to the specific standards and guidelines set forth below, Access
Persons must govern themselves in accordance with the following general
principles:
(a) The Code is based on the principle that the officers,
trustees, directors and employees of the companies subject to
this Code owe a fiduciary duty to, among others, the
shareholders of the Fund, to conduct their personal securities
transactions in a manner which does not interfere with Fund
portfolio transactions or otherwise take unfair advantage of
their relationship to the Fund. Persons covered by this Code
must adhere to this general principle as well as comply with
the Code's specific provisions.
(b) Access Persons should not take inappropriate advantage of
their position. Troublesome questions can arise whenever
Access Persons receive unusual investment opportunities,
perquisites, or gifts of more than de minimis value from
persons doing or seeking business with the Fund. As a general
principle, it is imperative that those who work for or on
behalf of the Fund avoid any such situation that might
compromise, or call into question, their exercise of fully
independent judgment.
(c) This Code does not attempt to identify all possible conflicts
of interests and literal compliance with each of the specific
procedures will not shield Access Persons from liability for
personal trading or other conduct which violates their
fiduciary duties to the Fund. In addition to the specific
prohibitions contained in this Code, Access Persons are also
subject to a general requirement not to engage in any act or
practice that would defraud the Fund. This general prohibition
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includes, in connection with the purchase or sale of a
Security Held or to be Acquired (as this phrase is defined
below in 2(m)) by the Fund:
(i) Making any untrue statement of a material fact;
(ii) Creating materially misleading impressions by
omitting to state or failing to provide any
information necessary to make any statements made, in
light of the circumstances in which they are made,
not misleading;
(iii) Making investment decisions, changes in research
ratings and trading decisions other than exclusively
for the benefit of and in the best interest of the
Fund;
(iv) Using information about investment or trading
decisions or changes in research ratings (whether
considered, proposed or made) to benefit or avoid
economic injury to anyone other than the Fund;
(v) Taking, delaying or omitting to take any action with
respect to any research recommendation, report or
rating or any investment or trading decision for the
Fund in order to avoid economic injury to anyone
other than the Fund;
(vi) Purchasing or selling a Security on the basis of
knowledge of a possible trade by or for the Fund;
(vii) Revealing to any other person (except in the normal
course of an Access Person's duties on behalf of the
Fund) any information regarding Securities
transactions by the Fund or the consideration by the
Fund of any such Securities transactions; or
(viii) Engaging in any manipulative practice with respect to
the Fund.
2. DEFINITIONS.
(a) "Access Person" means any director, trustee, officer, general
partner or Advisory Person of the Fund. "Access Person" also
includes any director, officer, or employee of an Adviser or
Distributor whose function causes such person to be an "Access
Person" of the Fund as so defined by Rule 17j-1. "Access
Person" shall also include all "Investment Personnel" (as
defined herein).
(b) "Adviser" means Caterpillar Investment Management Ltd. and/or
any Subadviser, as appropriate.
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(c) "Advisory Person" means any employee of the Fund or Adviser,
or of any company in a Control relationship to the Fund or
Adviser, who, in connection with his regular functions or
duties, makes, participates in, or obtains information,
regarding the purchase or sale of a Security by the Fund, or
whose functions relate to the making of any recommendations
with respect to such purchases or sales.
(d) "Beneficial Ownership" shall be interpreted in the same manner
as it would be in determining whether a person is subject to
the provisions of Section 16a-1(a)(2) of the Securities
Exchange Act of 1934 and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
(e) "Control" shall have the same meaning as that set forth in
section 2(a)(9) of the Investment Company Act of 1940
("Investment Company Act").
(f) "Disinterested Trustee" means a trustee of the Fund who is not
an "interested person" of the Fund within the meaning of
Section 2(a)(19) of the Investment Company Act.
(g) "Distributor" means Caterpillar Securities Inc.
(h) "Fund" means The Preferred Group of Mutual Funds: Value Fund,
Growth Fund, International Fund, Asset Allocation Fund, Small
Cap Fund, Short-Term Government Securities Fund, Money Market
Fund and Fixed Income Fund.
(i) "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933 [15 U.S.C 77a],
the issuer of which, immediately before the registration, was
not subject to the reporting requirements of sections 13 of
15(d) of the Securities Exchange Act of 1934 [15 U.S.C. 78m or
78o(d)].
(j) "Investment Personnel" means: (i) Any employee of the Fund or
Adviser (or of any company in a Control relationship to the
Fund or 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; (ii) any natural person who controls the Fund or
Adviser and who obtains information concerning recommendations
made to the Fund regarding the purchase or sale of securities
by the Fund.
(k) "Purchase or sale of a security" includes, inter alia, the
writing of an option to purchase or sell a security, including
any security that is convertible into or exchangeable for any
security that is held or to be acquired by a fund.
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(l) "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, except that it shall
not include shares of registered open-end investment
companies, securities issued by the Government of the United
States, short-term debt securities which are "government
securities" within the meaning of Section 2(a)(16) of the
Investment Company Act, repurchase agreements and other high
quality short term debt instruments (any instrument with a
maturity at issuance of less than 366 days and that is rated
in one of the two highest rating categories by a nationally
recognized rating organization), bankers' acceptances, bank
certificates of deposit, commercial paper, and such other
money market instruments as designated by the board of
trustees of the Fund.
(m) "Security Held or to be Acquired" by the Fund means: (i) any
Security which, within the most recent 15 days: (A) is or has
been held by the Fund; or (B) is being or has been considered
by the Fund or the Adviser for purchase by the Fund; and (ii)
any option to purchase or sell, and any security convertible
into or exchangeable for, a Security described in Section
2(m)(i) of this Code.
(n) "Subadviser" means Oppenheimer Capital, Jennison Associates
LLC, Mercator Asset Management L.P., PanAgora Asset
Management, Inc., Mellon Capital Management Corporation, J.P.
Morgan Investment Management Inc. and Turner Investment
Partners, Inc.
(o) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation.
3. APPLICATION. The Subadvisers and their affiliates have their own Codes
of Ethics pursuant to Rule 17j-l under the Investment Company Act. Any
person, who is subject to a Subadviser's Code of Ethics that has been
approved by the Fund's trustees pursuant to Rule 17j-1 and who complies
with such Code, shall not be subject to the provisions of this Code.
4. EXEMPTED TRANSACTIONS. The prohibitions of Section 5 of this Code
shall not apply to:
(a) Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control.
(b) Purchases or sales of securities which are not eligible for
purchase or sale by the Fund.
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(c) Purchases or sales which are non-volitional on the part of the
Access Person or the Fund.
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired.
5. PROHIBITED PURCHASES OF SALES/BLACKOUT PERIOD.
(a) Access Persons. An Access Person shall not purchase or sell,
directly or indirectly, any Security 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:
(1) is being considered for purchase or sale by the Fund;
(2) is being purchased or sold by the Fund;
(b) Investment Personnel. (1) Investment Personnel, in addition to
the prohibition of 5(a) above, shall not purchase or sell,
directly or indirectly, any Security 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 will be
purchased or sold by the Fund within a period of seven (7)
calendar days before and seven (7) calendar days after the
purchase or sale of the Security by the Fund (the "Blackout
Period"), and any profits realized on these trades shall inure
to and be recoverable by the Fund. (2) Investment Personnel
shall not purchase or sell, directly or indirectly, any
security in which he or she has, or by reason of such
transaction acquires, any direct or indirect Beneficial
Ownership:
(A) that is issued pursuant to an "initial public
offering"; or
(B) that is issued pursuant to a "limited offering" that
is exempt from registration under the Securities Act
of 1933 pursuant to Section 4(2) or Section 4(6) or
pursuant to Rule 504, Rule 505, or Rule 506 under the
Securities Act of 1933, unless the purchase or sale
is pre-approved as provided in Section 6.
6. PRE-CLEARANCE OF PARTICIPATION IN LIMITED OFFERINGS. Investment
Personnel shall obtain approval from the Compliance Officer of the Fund
(as that person is designated from time to time by the Fund) prior to
the acquisition of securities issued pursuant to a "limited offering"
("Limited Offering Security"). The Compliance Officer shall promptly
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notify the person of approval or denial for the transaction.
Notification of approval or denial for the transaction may be
given verbally; however, it shall be confirmed in writing
within 72 hours of verbal notification. In reviewing the
request, the Compliance Officer shall consult with the
President of the Fund, and shall take into account, among
other factors, whether the investment opportunity should be
reserved for the Fund, and whether the opportunity is being
offered to such person as a result of his or her position with
the Fund or Adviser. Investment Personnel who are Beneficial
Owners of any Limited Offering Security shall be required to
disclose such ownership to the Compliance Officer prior to
making any recommendation regarding the purchase or sale of
the Limited Offering Security by the Fund or participating in
the determination of which recommendations shall be made to
the Fund. Under such circumstances, the Investment Personnel's
decision to purchase the Limited Offering Securities shall be
subject to an independent review by Investment Personnel with
no personal interest in the Limited Offering Securities.
7. REPORTING.
(a) Every Access Person shall report to the Compliance Officer the
information described in Sections 8(c) and 8(d) of this Code
with respect to transactions in any Security in which such
Access Person has, or by reason of such transaction acquires,
any direct or indirect Beneficial Ownership in the Security;
provided, however, that an Access Person shall not be required
to make a report with respect to transactions effected for any
account over which such person does not have any direct or
indirect influence.
(b) A Disinterested Trustee of the Fund need only make a quarterly
report in a Security or account if such trustee or director,
at the time of that transaction, knew, or in the ordinary
course of fulfilling his official duties as a trustee of the
Fund should have known, that during the 15-day period
immediately preceding the date of the transaction by the
Trustee, such Security was purchased or sold by the Fund or
Adviser or was being considered by the Fund or Adviser for
purchase or sale by the Fund or Adviser.
(c) Within ten (10) days of becoming an Access Person (except
persons who would be included in this subsection solely
because of their capacity as a Disinterested Trustee of the
Fund), such person shall disclose to the Compliance Officer
all Security holdings Beneficially Owned by the Access Person.
Annually, by January 30 of each year, all Access Persons
(except persons who would be included in this subsection
solely because of their capacity as a Disinterested Trustee of
the Fund), shall disclose to the Compliance Officer all
Security holdings Beneficially owned by them (which
information must be current as of a date no more than thirty
(30) days before the report is submitted). The first
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annual holdings report submitted will be for the year ending
December 31, 2000 and must be provided to the Compliance
Officer by January 30, 2001. Such annual or initial report
shall contain the date of the report, name, number of shares
and principal amount of all securities owned by the Access
Person and all securities accounts the Access Person maintains
with a broker, dealer or bank (or any account in which the
Access Person may have a beneficial interest).
(d) A quarterly report of all securities transactions made during
the quarter shall be made by all Access Persons (except
Disinterested Trustees as set forth in Section 8(b) above) not
later than ten (10) days after the end of the calendar quarter
in which the transaction to which the report relates was
effected, and shall contain the following information:
(1) the date of the transaction, the title and
the number of shares, and the principal
amount of each Security involved;
(2) the nature of the transaction (i.e.,
purchase, sale or any other type of
acquisition or disposition);
(3) the price at which the transaction was
effected;
(4) the name of the broker, dealer or bank with
or through whom the transaction was
effected; and
(5) the date of the report.
(e) A quarterly report of all accounts established during the
quarter shall be made by all Access Persons (except
Disinterested Trustees as set forth in Section 8(b) above) not
later than ten (10) days after the end of the calendar quarter
in which the account to which the report relates was
established, and shall contain the following information:
(1) the name of the broker, dealer or bank with
whom the account was established;
(2) the date the account was established; and
(3) the date of the report.
(f) Any such report pursuant to this Section 7 may contain a
statement that the report shall not be construed as an
admission by the person making such report that he has any
direct or indirect Beneficial Ownership in the Security to
which the report relates.
(g) All reports and all related information described in this
Section 7 of the Code shall be reviewed by the Compliance
Officer.
8. RECORDS.
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(a) The Fund shall maintain records in the manner and to the
extent set forth below that shall be available for appropriate
examination by representatives of the Securities and Exchange
Commission.
(1) A copy of this Code and any other code which is, or
at any time within the past five years has been, in
effect shall be preserved in an easily accessible
place.
(2) 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 years following the end of the
fiscal year in which the violation occurs.
(3) A copy of each report made pursuant to this Code by
any Access Person shall be preserved by the Fund for
a period of not less than five years from the end of
the fiscal year in which it is made, the first two
years in an easily accessible place.
(4) A list of all persons who are, or within the past
five years have been, required to make reports
pursuant to this Code shall be maintained in an
easily accessible place.
(5) A record of any decision, and the reasons supporting
the decision, to approve the acquisition by
Investment Personnel of securities under Sections
5(b) and 6 of this Code, for at least five years
after the end of the fiscal year in which the
approval is granted.
(b) Confidentiality. All reports of securities transactions and
any other information filed with the Fund pursuant to this
Code shall be treated as confidential, except as regards
appropriate examinations by representatives of the Securities
and Exchange Commission.
9. PROHIBITED ACTIVITIES OF INVESTMENT PERSONNEL.
(a) Gifts. Investment Personnel are prohibited from receiving,
either directly or indirectly, anything of value in excess of
a de minimis amount from any person where such payment or
gratuity is in relation to the business of the employer of the
offeror of the payment or gratuity.
(b) Service as a Director. Investment Personnel are prohibited
from serving on the boards of directors of publicly traded
companies, absent a prior authorization
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from the Compliance Officer based upon a determination that
the board service would not be inconsistent with the interests
of the Fund.
10. SANCTIONS. Upon discovering a violation of this Code, the board of
trustees of the Fund may impose such sanctions as it deems appropriate,
including inter alia, a letter of censure or suspension or termination
of the employment of the violator. All material violations of this Code
and any sanctions imposed with respect thereto shall be reported
periodically to the board of trustees of the Fund.
11. CERTIFICATION OF COMPLIANCE WITH CODE. All Access Persons shall
certify annually that they:
(a) have read and understood the Code and are subject thereto,
(b) have complied with the requirements of the Code, and
(c) disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the
requirements of the Code.
12. REPORT AND CERTIFICATION OF ADEQUACY TO THE BOARD OF TRUSTEES. On an
annual basis, the Compliance Officer shall prepare a written report to
the management and the board of trustees of the Fund setting forth the
following:
(a) a statement that the Code of Ethics procedures have been
designed to prevent Access Persons from violating the Code;
(b) a summary of existing procedures concerning personal investing
and any changes in procedures made during the past year;
(c) any violations that required significant remedial action
during the past year; and
(d) any recommended changes in existing restrictions or procedures
based upon the Fund's experience under the Code, evolving
industry practices, or developments in applicable laws or
regulations.
13. BOARD APPROVAL. Following the report and certification by the
Compliance Officer, the board of trustees of the Fund (including a
majority of independent trustees) must approve this Code of Ethics on
an annual basis. Any material change to this Code must be approved
within six months.
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