ING PILGRIM GROUP FUNDS
CODE OF ETHICS
STATEMENT OF GENERAL PRINCIPLES
Each of (i) The ING 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) ING Pilgrim Investments, Inc. ("IPI"), 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) ING 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,
IPI, 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 IPI, 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).
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II. DEFINITIONS
This Code defines directors, officers and employees of the Funds, IPI, 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 IPI, 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, 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 IPI, 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 will not be permitted access to information
regarding the trading activities and/or current portfolio holdings of the Funds.
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"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.
"IPI, 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 IPI, PSI, LMC, LFD or
MSRA, the President of such Fund or of IPI, PSI, LMC, LFD or MSRA, or such other
officer as the board of directors/trustees of such Fund, or of IPI, PSI, LMC,
LFD or MSRA, as the case may be, shall designate.
"FUNDS" OR "FUND": means The ING Pilgrim Group of Funds, or any fund within The
ING 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 IPI, 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 ING Pilgrim Securities, Inc..
"IPI": means ING Pilgrim Investments, Inc. and ING 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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Code of Ethics CE4
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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 IPI, 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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Code of Ethics CE5
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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 IPI, 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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Code of Ethics CE6
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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 solel 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
IPI, 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 to:
A. Purchases or sales effected in any account over which such 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 any Fund e.g. municipal securities.
C. 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. 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. Purchases or sales of Securities which receive the prior approval of the
appropriate Designated Officer because they
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Code of Ethics CE7
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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. 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.
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 IPI, LMC or MSRA for
authorization.The current list of designated officers of IPI, 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.
(iii) A disinterested Director of a Fund need only pre-clear a transaction
in a security if at the time such director/trustee proposes to engage
in such transaction, he or she knows, in the ordinary course of
fulfilling his or her official duties as a director/trustee of such
Fund, should know that, during the fifteen (15) day period
immediately preceding the date such director/trustee proposed to
engage in the transaction, such security was purchased or sold by
such Fund or was being considered by the Fund or its investment
adviser for purchase by the Fund.
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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.
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
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(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.
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
IPI, 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 Investment Personnel 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. Every
Access Person 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) IPI Investment Adviser Representatives.
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Quarterly reporting of transactions in Securities is required of all
IPI, 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. IPI, LMC and MSRA must have a record
of every Personal Securities Transaction including every transaction
in Securities in which IPI, 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 IPI, 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 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,
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Code of Ethics CE12
<PAGE>
(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. A Segregated
Person may satisfy this reporting requirement by providing a
statement to the compliance department of an affiliate of the
Adviser.
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 IPI, 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.
IX. SANCTIONS
A. GENERALLY. The Designated Officer shall investigate all apparent violations
of this Code. If a Designated Officer for any Fund, or for IPI, 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 IPI,
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
IPI, PSI, LMC, LFD or MSRA, as the case may be, shall act in all respects
in the manner prescribed herein for a Designated Officer.
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:
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Code of Ethics CE13
<PAGE>
(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.
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
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Code of Ethics CE14
<PAGE>
transactions or to the investment recommendations of IPI, LMC or MSRA, nor
shall any officer, director/trustee or employee disclose any non-public
information relating to the business or operations of IPI, 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 CE15
<PAGE>
INITIAL CERTIFICATION OF CODE OF ETHICS
ING PILGRIM GROUP MUTUAL FUNDS
I AM FULLY FAMILIAR WITH THE EFFECTIVE CODE OF ETHICS AS ADOPTED BY EACH OF THE
ING PILGRIM GROUP MUTUAL FUNDS,ING PILGRIM INVESTMENTS, INC., ING 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:
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Code of Ethics CE16
<PAGE>
EXHIBIT A
TO CODE OF ETHICS
ING Pilgrim Bank and Thrift Fund, Inc.
ING Pilgrim Advisory Funds, Inc.
ING Pilgrim LargeCap Leaders Fund
ING Pilgrim MidCap Value Fund
ING Pilgrim Asia-Pacific Equity Fund
ING Pilgrim Investment Funds, Inc.
ING Pilgrim MagnaCap Fund
ING Pilgrim High Yield Fund
ING Pilgrim Mutual Funds
ING Pilgrim Internationl Core Growth Fund
ING Pilgrim Worldwide Growth Fund
ING Pilgrim International SmallCap Growth Fund
ING Pilgrim Emerging Countries Fund
ING Pilgrim LargeCap Growth Fund
ING Pilgrim MidCap Growth Fund
ING Pilgrim SmallCap Growth Fund
ING Pilgrim Convertible Fund
ING Pilgrim Balanced Fund
ING Pilgrim High Yield Fund II
ING Pilgrim Strategic Income Fund
ING Pilgrim Money Market Fund
ING Pilgrim Government Securities Income Fund, Inc.
ING Pilgrim Prime Rate Trust
ING Pilgrim Equity Trust
ING 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
ING Pilgrim SmallCap Opportunities Funds
ING Pilgrim Growth Opportunities Fund
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Code of Ethics CE17
<PAGE>
ING Pilgrim Domestic Equity
ING Pilgrim Growth and Income Fund, Inc.
ING Pilgrim International and Global Funds
ING Pilgrim Global Corporate Leaders Fund, Inc.
ING Pilgrim International Fund, Inc.
ING Pilgrim Worldwide Emerging Markets Fund, Inc.
ING Pilgrim Global Technology Fund, Inc.
ING Pilgrim Small Cap Asia Growth Fund, Inc.
ING Pilgrim Troika Dialog Russia Fund, Inc.
ING Pilgrim Fixed Income and Money Market Funds
ING Pilgrim GNMA Income Fund, Inc.
ING Pilgrim Global Income Fund
ING Pilgrim Money Market Trust
ING Pilgrim Precious Metals Fund
ING Pilgrim Goldfund, Inc.
ING Pilgrim Silver Fund, Inc
ING Pilgrim Natural Resources Trust
ING Pilgrim Mayflower Trust
ING Pilgrim Emerging Markets Value Fund
ING Pilgrim High Growth + Value Fund
ING Pilgrim High Total Return Fund
ING Pilgrim High Total Return Fund II
ING Pilgrim International Value Fund
ING Pilgrim Research Enhanced Index Fund
USLICO Series Fund
The Stock Portfolio
The Money Market Portfolio
The Bond Portfolio
The Asset Allocation Portfolio
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Code of Ethics CE18
<PAGE>
EXHIBIT B
TO CODE OF ETHICS
Designated Officers of IPI 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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Code of Ethics CE19
<PAGE>
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 ING Pilgrim Group, Inc., ING Pilgrim Investments, Inc. and ING
Pilgrim Securities, Inc. (ING 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 ING
Pilgrim that if an employee of ING 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 ING Pilgrim organization, except in fulfillment of
a legitimate business objective of ING Pilgrim. Violations of this policy may
result in severe civil and criminal penalties under the Federal securities laws,
as well as disciplinary action by ING Pilgrim. Employees should refer to ING
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:
* a merger, acquisition or joint venture;
* a stock split or stock dividend;
* earnings or dividends of an unusual nature;
* the acquisition or loss of a significant contract;
* a significant new product or discovery;
* a change in control or a significant change in management;
* a call of securities for redemption;
* the public or private sale of a significant amount of additional
securities;
* the purchase or sale of a significant asset;
* a significant labor dispute;
* establishment of a program to make purchases of the issuer's own
shares;
* a tender offer for another issuer's securities; and
* an event requiring the filing of a current report under the Act.
ING Pilgrim Prime Rate Trust, an affiliated regulated investment company
("PPR"), and ING 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 ING
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 ING Pilgrim organization
who are in the position to trade on the basis of such information or transmit it
to others.
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Compliance C1
<PAGE>
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 ING 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 ING 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 ING 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 ING PILGRIM 'S GENERAL POLICY PROHIBITING TRADING ON THE
BASIS OF MATERIAL NON-PUBLIC INFORMATION OR DISCLOSURE OF SUCH INFORMATION
TO OTHERS, IT IS ING PILGRIM'S POLICY THAT ANY MATERIAL NON-PUBLIC
INFORMATION ABOUT A PUBLIC COMPANY OR ITS SECURITIES OBTAINED BY A
DIRECTOR, OFFICER OR EMPLOYEE OF ING 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 ING 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 ING 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 ING Pilgrim, then he or she shall immediately report
the information as follows:
(i) A director, officer or employee of ING 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
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Compliance C2
<PAGE>
material changes in the information or 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
ING PILGRIM
Employees of ING 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, ING
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 ING 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 ING 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 IPI, wherever located, except that such persons may
attend meetings of the Board of Directors/Trustees of the ING 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 ING Pilgrim Funds'
portfolios between Investment Personnel of IPI 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 IPI 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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Compliance C3
<PAGE>
B. ING 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 ING 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 ING Pilgrim who are not
actually involved in investment management decisions;
(b) Compliance personnel; and
(c) 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 ING 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:
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Compliance C4
<PAGE>
(i) directors and senior executives of ING Pilgrim who are
not actually involved in investment management
decisions
(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 ING 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 ING 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. ING 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
ING Pilgrim) computer files. ING 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.
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Compliance C5
<PAGE>
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 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 ING 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 ING 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 ING 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, ING Pilgrim 's Compliance Department shall implement appropriate
procedures to halt trading in that security for any account for which ING
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
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Compliance C6
<PAGE>
and trading in such securities shall be monitored. Depending on individual
circumstance, such securities may also be considered for placement on ING
Pilgrim 's Restricted List.
V. HANDLING OF OTHER SENSITIVE INFORMATION
Although the preceding policies deal in particular with the subject of
MATERIAL non-public information, employees of ING 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 ING 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. ING 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 ING 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
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Compliance C7
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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 prepared and maintained for all ING 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 ING 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 ING 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 ING Pilgrim
organization, except in fulfillment of a legitimate business objective
of ING 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 ING Pilgrim (including termination of
employment). ING 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
ING 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 ING 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 ING Pilgrim 's
Chinese Wall Procedures.
ALL DIRECTORS, OFFICERS AND EMPLOYEES OF ING PILGRIM MUST FAMILIARIZE
THEMSELVES WITH THESE POLICIES AND PROCEDURES AND ABIDE BY THEM. COMPLIANCE
WITH THE LAW AND THE POLICIES AND PROCEDURES DESCRIBED IN ING PILGRIM'S
CHINESE WALL PROCEDURES IS THE INDIVIDUAL RESPONSIBILITY OF EACH DIRECTOR,
OFFICER OR EMPLOYEE OF ING PILGRIM. IT IS EACH SUCH PERSON'S DUTY TO SEE
THAT THE POLICIES AND PROCEDURES SET FORTH IN ING 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:
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(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;
(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
ING 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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Compliance C9
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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 ING Pilgrim 's Code of Ethics,
all employees, officers and directors of ING Pilgrim, all
directors/trustees of registered investment companies managed by ING
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 ING 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 ING Pilgrim's Code
of Ethics, need only pre-clear a transaction in a Security (as
that term is defined in ING 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 ING 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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Compliance C10
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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 $1,000 would still need
pre-clearance and be reportable at the end of the quarter on
the quarterly transaction reports.
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Compliance C11
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I. PERSONAL BROKERAGE ACCOUNTS. Access Persons and registered
representatives pursuant to Article III, Section 28 of the NASD Rules
of Fair Practice, 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 IPI 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 ING 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 IPI, 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 ING Pilgrim duplicate trade confirmations and
statements with respect to all transactions in such accounts. ING
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 ING 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:
ING 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
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Compliance C13
