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CODE OF ETHICS
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Lloyd George Management (BVI) Ltd
Lloyd George Investment Management (Bermuda) Ltd
Lloyd George Management (Hong Kong) Ltd
Lloyd George Management (Europe) Ltd
LGM Funds
Effective: 1 September, 2000
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TABLE OF CONTENTS
Table of Contents
Governing Principles
Part I. Policy on Personal Securities Transactions
Part II. Code of Conduct for All Employees
General Provisions
Appendix 1. Procedures for Policy on Personal Securities Transactions
(not part of the Code of Ethics)
Appendix 2. Policies and Procedures in Prevention of Insider Trading
(not part of the Code of Ethics)
GOVERNING PRINCIPLES
You have the responsibility at all times to place the interests of Clients
first, not to take advantage of Client transactions, and to avoid any conflicts,
or the appearance of conflicts, with the interests of Clients. The Policy on
Personal Securities Transactions provides rules concerning your personal
transactions in Securities that you must follow in carrying out these
responsibilities. You also have a responsibility to act ethically, legally, and
in the best interests of LGM and our Clients at all times. The Code of Conduct
sets forth rules regarding these obligations. You are expected not only to
follow the specific rules, but also the spirit of the Code of Ethics.
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DEFINITIONS
Company, or LGM, refers to any company within the Lloyd George Management
Group
Fund is each investment company registered under the United States
Investment Company Act of 1940 for which LGM acts as the investment adviser.
Client is any person or entity, including a Fund, for which LGM provides
investment advisory services.
Access Person is each of the following:
(1) a director, trustee, or officer of LGM;
(2) a director, trustee, or officer of a Fund, if such person is also
an employee of LGM/1/;
(3) an employee of LGM 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 a
Client, or whose functions relate to the making of any
recommendations with respect to the purchases or sales (including
a portfolio manager, investment counselor, investment analyst and
dealer); and
(4) a natural person in a control relationship to LGM who obtains
information concerning recommendations made to the Fund or other
Client with regard to the purchase or sale of Securities by the
Fund or other Client.
Investment Professional is each of the following:
(1) an employee of LGM 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 or other Client (including a portfolio manager, and an
investment analyst); and
(2) a natural person who controls a Fund or LGM and who obtains
information concerning recommendations made to the Fund or other
Client with regard to the purchase or sale of securities by the
Fund or other Client.
Every Investment Professional is also an Access Person.
Securities means notes, stocks, treasury stocks, bonds, debentures,
evidences of indebtedness, certificates of interest or participation in any
profit sharing agreement,
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/1/ The personal securities transactions of other directors, trustees or
officers of a Fund will be covered by the codes of ethics of such Fund or of the
employers of such persons.
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collateral trust certificates, pre-organization certificates or subscriptions,
transferable shares, investment contracts, voting trust certificates,
certificates of deposit for a security, fractional undivided interests in oil,
gas, or other mineral rights, puts, calls, straddles, options, or privileges on
any security (including a certificate of deposit) or on any group or index of
securities (including any interest therein or based on the value therof), or
puts, calls, straddles, options, or privileges entered into on a national
securities exchange relating to foreign currency, or, in general, any interests
or instruments commonly known as "securities," or any certificates of interest
or participation in, temporary or interim certificates for, receipts for,
guarantees of, or warrants or rights to subscribe to or purchase any of the
foregoing, but do not include shares issued by open-end investment companies
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registered under the Investment Company Act of 1940, direct obligations of the
government of the United States, bankers acceptances, bank certificates of
deposit, commercial paper, or high quality short-term debt instruments,
including repurchase agreements.
Initial Public Offering means an offering of securities registered under
the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of sections 13 or
15(d) of the Securities Exchange Act of 1934.
Limited Offering means an 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. A Limited
Offering thus includes an offering commonly referred to as a private placement,
as well as a non-public offering in limited amounts available only to certain
investors. A Limited Offering includes any offer to you to purchase any
Securities, whether stock, debt securities, or partnership interests, from any
entity, unless those Securities are registered under the Securities Act of 1933
(that is, are publicly offered/publicly traded Securities).
Large Cap Issuer is an issuer of Securities with a market capitalization of
more than $2 billion.
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PART I
POLICY ON
PERSONAL SECURITIES TRANSACTIONS
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Applicability of the Policy
Who is Covered. This Policy applies to all Company employees. It covers not
only your personal Securities transactions, but also those of your Immediate
Family (your spouse, minor children, and relatives living in your principal
residence).
What Accounts are Covered. This Policy applies to all Securities
transactions in all accounts in which you or members of your Immediate Family
have a direct or indirect beneficial interest, unless the Compliance Officer
determines that you or they have no direct or indirect influence or control over
the account. Normally, an account is covered by this Policy if it is (a) in your
name, (b) in the name of a member of your Immediate Family, (c) of a partnership
in which you or a member of your Immediate Family are a partner with direct or
indirect investment discretion, (d) of a trust of which you or a member of your
Immediate Family are a beneficiary and a trustee with direct or indirect
investment discretion, and (e) of a closely held corporation in which you or a
member of your Immediate Family hold shares and have direct or indirect
investment discretion.
Rules Applicable to Access Persons and other LGM Employees
1. Prohibited Transactions: You are prohibited from purchasing or selling
any security, either personally or for any Client, while you are in the
possession of material, non-public information concerning the security or its
issuer. Please read Appendix 2 to the Code of Ethics, Policies and Procedures in
Prevention of Insider Trading.
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2. Pre-Clearance: All Securities. You must pre-clear all purchases and
sales of equity Securities, except that you do not have to pre-clear:
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(1) a purchase of investment grade, non-convertible debt Securities, if
the value of such purchase, together with the value all of your
purchases of such debt Securities of the same issuer in the previous
six (6) days, would not exceed $25,000;
(2) a sale of investment grade, non-convertible debt Securities, if the
value of such sale, together with the value all of your sales of such
debt Securities of the same issuer in the previous six (6) days, would
not exceed $25,000;
(3) a bona fide gift of Securities that you make or receive;
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(4) an automatic, non-voluntary transaction, such as a stock dividend,
stock split, spin-off, and automatic dividend reinvestment;
(5) a transaction pursuant to a tender offer that is applicable pro rata
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to all stockholders; or
(6) a purchase or sale of any open-end investment company, whether or not
subject to the United States Investment Company Act of 1940.
The exemptions from pre-clearance in clauses (1) through (4) above do not
apply to trading in any Security that is placed on a restricted list (for
example, because the Company is in the possession of material inside information
about the issuer). Further, the Director of Compliance may suspend your use of
these four exemptions from pre-clearance if he or she concludes that you have
engaged in excessive personal trading or that there is an unusual pattern of
personal trading.
You will not receive pre-clearance of a transaction for any Security on a
day during which there is a pending buy or sell order for that same Security for
a Client, or when other circumstances warrant prohibiting a transaction in a
particular Security. Remember that the term "Security" is broadly defined. For
example, an option on a Security is itself a Security, and the purchase, sale
and exercise of the option is subject to pre-clearance. A pre-clearance approval
normally is valid only during the day on which it is given. Pre-clearance
procedures are set forth in the Procedures.
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3. Prohibited and Restricted Transactions. The following transactions are
either prohibited without prior approval, or are discouraged, as indicated. The
procedures for obtaining approval are in the Procedures, attached as Appendix 1.
a. Initial Public Offerings. You may not purchase or otherwise acquire
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any Security in an Initial Public Offering. You may apply to the Compliance
Officer for prior written approval to purchase or acquire such a Security, but
approval will only be granted only in and rare instances that involve
extraordinary circumstances. Accordingly, the Company discourages such
applications. The Company must maintain a record of any approval to acquire a
Security in an Initial Public Offering, with the reasons supporting the
approval, for at least five years after the end of the fiscal year in which the
approval is granted.
b. Limited Offerings. You may not purchase or otherwise acquire any
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Security in a Limited Offering, except with the prior approval from the
Compliance Officer. Such approval will only be granted where you establish that
there is no conflict or appearance of conflict with any Client or other possible
impropriety (such as where the Security in the Limited Offering is appropriate
for purchase by a Client, or when your participation in the Limited Offering is
suggested by a person who has a business relationship with any Company or Fund
or expects to establish such a relationship). Examples where approval might be
granted, subject to the particular facts and circumstances, are a personal
investment in a private fund or limited partnership in which you would have no
involvement in making recommendations or decisions, or your investment in a
close corporation or partnership started by a family member or friend. The
Company must maintain a record of any approval to acquire a Security in a
Limited Offering, with the reasons supporting the approval, for at least five
years after the end of the fiscal year in which the approval is granted.
c. LGM Activity. You may not purchase or sell Securities in any markets
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in which LGM is active for its Clients. This rule excludes your trading in
virtually all Asian stock markets.
d. Short Sales. You may not sell short any Security.
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e. Naked Options. You may not engage in option transactions with respect
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to any Security, except that you may purchase a put option or sell a call option
on Securities that you own.
f. Short-term Trading. You are strongly discouraged from engaging in
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excessive short-term trading of Securities. The purchase and sale, or sale and
purchase, of the same or equivalent Securities within 60 days are generally
regarded as short-term trading.
g. Personal Trades in Same Direction as Client. If you are an Investment
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Professional, you may not purchase any Security for your personal account until
the day after you have purchased, or recommended the purchase of, that Security
for a Client.
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You may not sell any Security for your personal account until the day after you
have sold, or recommended the sale of, that Security for a Client.
h. Personal Trades in Opposite Direction as Client: Seven-Day Blackout.
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If you are an Investment Professional, you may not sell any Security for your
personal account until the eighth (8/th/) day after you have purchased, or
recommended the purchase of, that Security for a Client. You may not purchase
any Security for your personal account until the eighth (8/th/) day after you
have sold, or recommended the sale of, that Security for a Client.
i. Trading Before a Client. If you are an Investment Professional, before
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you place an order to purchase, or recommend the purchase of, a Security for a
Client, you must disclose to the Investment Compliance Officer if you own that
Security and if you have purchased that Security for your personal account
within the preceding seven (7) days. Depending upon the circumstances, you may
be required to sell that Security before it is purchased for the Client, or to
pay to the Client's account the difference between your and the Client's
purchase price for the Security, if your price was lower. Before you place an
order to sell, or recommend the sale of, a Security for a Client, you must
disclose to the Investment Compliance Officer if you have sold that Security for
your personal account within the preceding seven (7) days. Depending upon the
circumstances, you may be required to pay to the Client's account the difference
between your and the Client's sales price for the Security, if your price was
higher.
Because your responsibility is to put your Client's interests ahead of your
own, you may not delay taking appropriate action for a Client in order to avoid
potential adverse consequences in your personal account.
j. Acting for Personal Benefit. You may not cause or recommend a Client
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to take action for your personal benefit. Thus, for example, you may not trade
in or recommend a security for a Client to support or enhance the price of a
security in your personal account, or "front run" a Client.
4. Reporting Requirements. You are required to provide the following
reports of your Security holdings and transactions to the Compliance Office.
Remember that your report also relates to members of your Immediate Family and
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the accounts referred to under "Applicability of the Policy," above. Please
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review the definition of Securities in the "Definitions" section of the Code of
Ethics above. Securities include not only publicly traded stocks and bonds, but
also stock in close corporations, partnership interests, and derivatives.
Securities do not include shares issued by open-end investment companies
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registered under the Investment Company Act of 1940, direct obligations of the
government of the United States, bankers acceptances, bank certificates of
deposit, commercial paper, or high quality short-term debt instruments,
including repurchase agreements.
Please refer to the attached Procedures for reporting procedures and forms.
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a. Initial Report of Holdings. Within ten (10) days after join LGM, you
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must submit to the Compliance Officer a report of your holdings of Securities,
including the title, number of shares and principal amount of each Security held
at the time you joined LGM, and the name of any broker, dealer or bank with whom
you maintained an account for trading or holding any type of securities, whether
stocks, bonds, mutual funds, or other types.
b. Annual Report of Holdings. After January 1 and before January 21 of
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each year, you must submit to the Compliance Officer a report of your holdings
of Securities as at the previous 31 December, including the title, number of
shares and principal amount of each Security, and the name of any broker, dealer
or bank with whom you maintained an account for trading or holding any type of
securities, whether stocks, bonds, mutual funds, or other types.
c. Quarterly Transaction Report. Within ten (10) days after the end of
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each calendar quarter, you must submit to the Compliance Officer a report of
your transactions in Securities during that quarter, including the date of the
transaction, the title, the interest rate and maturity date (if applicable), and
the number of shares and principal amount of each Security in the transaction,
the nature of the transaction (whether a purchase, sale, or other type of
acquisition or disposition, including a gift), the price of the Security at
which the transaction was effected, and the name of the broker, dealer or bank
with or through the transaction was effected. If you established an account with
a broker, dealer or bank in which any Security was held during that quarter, you
must also state the name of the broker, dealer or bank and the date you
established the account.
5. Confirmations of Transactions and Account Statements. You must ensure
that each broker, dealer or bank with which you maintain an account send to the
Compliance Assistant, as soon as practicable, copies of all confirmations of
your Securities transactions. See section A, "Applicability of the Policy - What
Accounts are Covered," above.
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PART II
RULES OF CONDUCT FOR ALL EMPLOYEES
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These Rules apply to every employee of a Company.
1. Laws and Regulations. You are expected to comply with all applicable
laws and regulations, including the Code of Ethics and policies of each Company
that employs you. These include, without limitation, tax and securities laws.
2. Conflicts of Interest. You are expected to avoid conduct that is
contrary to the interests of the Company and any Client, or that gives the
appearance of such a conflict of interest.
3. Gifts, Etc. You must not seek or accept any gift, favor, preferential
treatment, of special arrangement of Material Value from any provider or
prospective provider of goods or services to a Company or a Client. You must
report any such receipt or offer of an item prohibited by this rule to the
Compliance Officer. "Material Value" does not include occasional meals or social
gatherings for business purposes; occasional tickets for theater, musical,
sporting or other entertainment events conducted for business purposes;
occasional small gifts or mementos with a value of under $100. "Material Value"
includes such items as tickets for theater, musical, sporting or other
entertainment events on a recurring basis; costs of transportation and/or
lodging to locations outside of Hong Kong or London (as appropriate to employees
of LGM (HK) or LGM (Europe), unless approved in advance the Compliance Officer
as having a legitimate business purpose; personal loans on terms more favorable
than generally available for comparable credit standing and collateral; or
preferential brokerage or underwriting commissions or spreads or allocations of
shares or interests in an investment. If you are offered anything, to be on the
safe side, check with the Compliance Officer.
4. Political Contributions. You may not use Company funds to make a
contribution to any political party or candidate, whether directly or by
reimbursement to the individual making the contribution.
5. Improper Payments. You may not pay, offer, or commit to pay any amount
that might be or appear to be a bribe or kickback in connection with the
Company's business.
6. Confidential Information. You may not disclose to anyone, whether
inside or outside the Company, any Company trade secrets, proprietary or
confidential information unless you have been authorized to do so. You must keep
confidential
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information regarding Client investment portfolios, actual or proposed
securities trading activities of any Client, or investment research developed in
the Company. You should take appropriate steps, when communicating the foregoing
information internally, to maintain confidentiality, for example, by using
sealed envelopes, limiting computer access, and speaking in private.
7. Outside Directorships, Etc. You may not serve as a director, officer,
employee, trustee, or general partner of any corporation or other entity,
whether or not you are paid, without the prior written approval of the Chairman
of LGM, except that you may serve any charitable or non-profit organization
without such approval.
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GENERAL PROVISIONS
1. Review of Securities Reports. The Compliance Officer shall ensure that
all Initial and Annual Reports of Securities Holdings and Quarterly Transaction
Reports, together with all Securities Transaction Confirmations and Account
Statements received by the Compliance Assistant, will be reviewed in accordance
with the attached Procedures (Appendix 1).
2. Annual Certification by Employees. Each employee of a Company must
certify annually that he or she has read and understood the Code of Ethics and
has complied and will comply with its provisions.
3. Fund Board Approval. The Board of Trustees of each Fund, including a
majority of the Independent Fund Trustees, has approved this Code of Ethics and
must approve any material change hereto within six months after its adoption.
4. Annual Report to Fund Board. At least annually each Company shall
submit to the Board of Trustees of each Fund for consideration a written report
that (i) describes any issues arising under the Code of Ethics or the Procedures
since the last report the Board, including information about material violations
of the Code of Ethics or the Procedures and the sanctions imposed in response to
material violations, and (ii) certifies that each Company has adopted procedures
reasonably necessary to prevent violation of Access Persons from violating the
Code of Ethics.
5. Recordkeeping Requirements. Each Company shall maintain the following
records at its principal place of business and make these records available to
the United States Securities and Exchange Commission ("Commission") or any
representative of the Commission at any time and from time to time for
reasonable periodic, special or other examination:
(1) copies of the Code of Ethics currently in effect and in effect at any
time within the past five years, to be maintained in an easily
accessible place;
(2) a record of any violation of the Code of Ethics and of any action
taken as a result of the violation, to be maintained in an easily
accessible place for at least five years after the end of the fiscal
year in which the violation occurred;
(3) copies of each report, including transaction confirmations and other
information, referred to in section C.6 of the Policy on Personal
Securities Transactions ("Policy"), Part I above, to be maintained for
at least five years after the end of the fiscal year in which the
report is made or information provided, the first two years in an
easily accessible place;
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(4) a record of all persons, currently or within the past five years, who
are or were required to make reports referred to in section C.6 of the
Policy and who are or were responsible for reviewing such reports, to
be maintained in an easily accessible place; and
(5) a copy of each Annual Report to a Fund Board referred to in section
D.5 of the Policy, to be maintained for at least five years after the
end of the fiscal year in which it was made, the first two years in an
easily accessible place.
7. Confidentiality. All reports and other documents and information
supplied by any employee of a Company in accordance with the requirements of
this Code of Ethics shall be treated as confidential, but are subject to review
as provided herein and in the Procedures, by senior management of LGM, by
representatives of the Commission, or otherwise as required by law, regulation,
or court order.
8. Interpretations. If you have any questions regarding the meaning or
interpretation of the provisions of this Code of Ethics, please consult with the
Compliance Officer.
9. Violations and Sanctions. Any employee of a Company who violates any
provision of this Code of Ethics shall be subject to sanction, including but not
limited to censure, a ban on personal Securities trading, disgorgement of any
profit or taking of any loss, fines, and suspension or termination of
employment.
In adopting and approving this Code of Ethics, the Company and the Fund
Boards of Trustees do not intend that a violation of this Code of Ethics
necessarily is or should be considered to be a violation of Rule 17j-1 under the
Investment Company Act of 1940.
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