CODE OF ETHICS FOR
THE OPERATION OF THE DIVERSIFIED INVESTORS FUNDS GROUP,
THE DIVERSIFIED INVESTORS FUNDS GROUP II,
DIVERSIFIED INVESTORS STRATEGIC VARIABLE FUNDS, AND
DIVERSIFIED INVESTORS PORTFOLIOS (THE "FUNDS")
ADOPTED JOINTLY BY THE FUNDS, DIVERSIFIED INVESTMENT ADVISORS, INC. AND
DIVERSIFIED INVESTORS SECURITIES CORP.
The Diversified Investors Funds Group, The Diversified Investors Funds
Group II, The Diversified Investors Strategic Variable Funds and Diversified
Investors Portfolios (collectively, the "Funds"), Diversified Investment
Advisors, Inc. (the "Advisor") and Diversified Investors Securities Corp. (the
"Distributor") have determined to adopt this revised Code of Ethics (the "Code")
as of August 23, 2005, to specify and prohibit certain types of personal
securities transactions deemed to create a conflict of interest and to establish
reporting requirements and preventive procedures pursuant to the provisions of
Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act") and Rule
204A-1 under the Investment Advisers Act of 1940 (the "Advisers Act").
I. RULES APPLICABLE TO CERTAIN PERSONNEL
A. Definitions
1. An "Access Person" means:
(i) any Advisory Person (as defined below) of the Funds or the
Advisor; or
(ii) any director, officer or general partner of the
Distributor who, in the ordinary course of business, makes,
participates in or obtains information regarding the purchase
or sale of a Security (as defined below) by a Fund for which
the Distributor acts, or whose functions or duties in the
ordinary course of business relate to the making of any
recommendation to a Fund regarding the purchase or sale of
Securities.
All of a Fund's directors, trustees, officers and general
partners are presumed to be Access Persons of the Fund.
2. An "Advisory Person" means (1) any director, trustee, officer,
or employee of any of the Funds or the Advisor (or any company
in a control relationship to any of the Funds or the Advisor)
who, in connection with his or her regular functions or
duties, makes,
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participates in or obtains information regarding the purchase
or sale of securities by any of the Funds or whose functions
relate to the making of any recommendations with respect to
such purchases or sales; (2) any natural person in a control
relationship with any Fund or the Advisor who obtains
information concerning recommendations regarding the purchase
or sale of Securities by any Client; and (3) any Supervised
Person of the Advisor (A) who is involved in making securities
recommendations to Clients, or (B) has access to such
recommendations that are nonpublic, access to nonpublic
information regarding a Client's purchase or sale of
securities, or access to nonpublic information regarding the
portfolio holdings of an Affiliated Fund.
3. "Affiliated Fund" means the Funds and any investment company
registered under the 1940 Act whose investment adviser or
principal underwriter Controls (as defined below) the Advisor,
is Controlled by the Advisor, or is under common Control with
the Advisor.
4. "Automatic Investment Plan" means a program in which regular
purchases (or withdrawals) are made automatically in (or from)
investment accounts in accordance with a predetermined
schedule and allocation. An Automatic Investment Plan includes
a dividend reinvestment plan.
5. "Beneficial Ownership" shall be interpreted subject to the
provisions of Rule 16a-1(a) (exclusive of paragraph (1) of
such Rule) under the Securities Exchange Act of 1934.
6. "Client" means any investment advisory client of the Advisor,
including any Fund.
7. "Control" shall have the same meaning as set forth in Section
2(a)(9) of the 1940 Act.
8. "Disinterested Trustee" means a Trustee of the Funds (or, in
the case of Diversified Investors Strategic Variable Funds, a
member of the Managing Board) who is not an "interested
person" within the meaning of Section 2(a)(19) of the 1940
Act.
9. "Non-Advisory Employees" shall mean employees of the Advisor
who: (a) have no involvement, either directly or indirectly,
in the Advisor's investment advisory activities; (b) have no
access to nonpublic information about Advisor's investment
advisory activities, (c) are involved solely in Advisor's
retirement plan services business, and (d)
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are not otherwise Access Persons of the Funds or the Advisor
under the Code.
10. "Portfolio Manager" means any officer or employee of any of
the Funds or the Advisor (or any company in a control
relationship to any of the Funds or the Advisor) who decides,
or participates in deciding, which securities will be
purchased or sold on behalf of a Client.
11. "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a Security (as
defined below) or the purchase or sale of a future or index on
a Security or option thereon.
12. "Security" shall have the meaning as set forth in Section
2(a)(36) of the 1940 Act (in effect, all securities), except
that it shall not include direct obligations of the Government
of the United States, bankers' acceptances, bank certificates
of deposit, commercial paper, high quality short-term debt
instruments (meaning instruments having a maturity at issuance
of less than 366 days and that are rated in one of the two
highest rating categories by a nationally recognized
statistical rating organization), including repurchase
agreements, and shares of U.S. registered open-end investment
companies other than the Affiliated Funds.
13. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation.
14. "Subadvisor" shall mean any investment advisor that the
Advisor contracts with to provide day-to-day investment
advisory services to any Fund or a portfolio thereof.
15. "Supervised Person" means any partner, officer, director (or
other person occupying a similar status or performing similar
functions), or employee of the Advisor, or other person who
provides investment advice on behalf of the Advisor and is
subject to the supervision and control of the Advisor,
provided that Supervised Persons shall not include
Non-Advisory Employees.
B. Avoiding Conflicts of Interest
No Access Person or Supervised Person shall enter into or engage in
a security transaction or business activity or relationship which
may result in
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any financial or other conflict of interest between such person and a
Client and each such person shall at all times and in all matters endeavor
to place the interests of Clients before his or her personal interests.
C. Statement of General Principles on Personal Investment Activities
Personal investment activities engaged in by an Access Person or
Supervised Person shall be subject to the following general principles:
1. as set forth in section I.B. above, no personal investment
activities shall conflict with the duty to place the interests of
Clients before any personal interests;
2. all personal investment activities shall be conducted consistent
with the requirements and standards set forth in this Code of Ethics
in such a manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust; and
3. no such person shall, directly or indirectly, otherwise take
inappropriate advantage of his or her positions with the Advisor,
the Distributor or the Funds.
D. Prohibited Personal Investment Activities
1. No Access Person shall purchase or sell, directly or indirectly, any
Security in which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which he
or she knows or should have known at the time of such purchase or
sale:
a. is being considered for purchase or sale by any Client; or
b. is being purchased or sold by any Client.
Without limiting the generality of the foregoing, no Portfolio
Manager may purchase or sell any Security within seven (7) calendar
days before and after any Client that he or she manages trades in
that security.
2. No Advisory Person of the Advisor shall acquire any securities in an
initial public offering.
3. No Advisory Person of the Advisor shall acquire any securities in a
private placement exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to section 4(2) of that
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Act without prior written approval by a designated review officer of
the Funds or the Advisor (the "Review Officer"). Prior to granting
any such approval, the Review Officer shall take into account, among
other factors, whether the investment opportunity represented by
such private placement should be reserved for Clients and whether
the opportunity is being offered to such Advisory Person by the
virtue of his or her position with the Advisor, the Distributor, or
a Fund. Any Advisory Person granted permission to invest in a
private placement must promptly disclose such investment if he or
she is subsequently involved in consideration of an investment in
the same or an affiliated issuer by a Client and the decision with
respect to such investment shall be subject to an independent review
by Advisory Persons of the Funds or the Advisor with no personal
interest in such issuer.
4. No Advisory Person of the Advisor shall purchase and sell, or sell
and purchase, the same (or equivalent) securities within sixty (60)
calendar days without the prior written approval of a Review
Officer. Prior to granting any such approval, the Review Officer
shall determine that no abuses exist and the equities of the
situation strongly support an exemption.
5. No Advisory Person of the Advisor or any of the Funds shall accept
any gift or other thing of more then de minimis value from any
person or entity that does business with or on behalf of any Client
(or with respect to an Advisory Person of the Funds, with or on
behalf of any of the Funds).
6. No Advisory Person of the Advisor shall serve on the governing board
of any publicly traded companies without the prior written approval
of the Review Officer. Prior to granting any such approval, the
Review Officer shall determine that such board service is consistent
with the interests of Clients and shall ensure that appropriate
"Chinese Wall" or other procedures are in place to isolate such
Advisory Person from persons making investment decisions as to
securities of any such company.
E. Exempted Transactions
The restrictions of Sections I.D.1 and I.D.4 above shall not apply to:
1. Purchases or sales effected in any account over which such person
has no direct or indirect influence or control;
2. purchases or sales which are nonvolitional on the part of the person
or the Clients;
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3. purchases which are part of an Automatic Investment Plan;
4. purchases effected upon the exercise of rights issued by an
issuer prorata 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
5. purchases and sales which receive prior approval in writing by
the Review Officer (a) as only remotely potentially harmful to
any Client because they would be very unlikely to affect a
highly institutional market or because they clearly are not
economically related to the securities to be purchased or sold
or held by any Clients or (b) as not representing any danger
of the abuses prescribed by Rule 17j-1 and Rule 204A-1, but
only if in each case the prospective purchaser has identified
to the Review Officer all factors of which he or she is aware
which are potentially relevant to a conflicts of interest
analysis, including the existence of any substantial economic
relationship between his or her transactions and securities
held or to be held by any Clients.
F. Compliance with Law
All Access Persons and Supervised Persons shall comply with all
applicable federal securities laws.
II. REPORTING
A. Quarterly Requirements for all Access Persons Except Disinterested
Trustees
1. Each Access Person, other than the Disinterested Trustees
subject to Section II.B.1 below, shall file with the Review
Officer quarterly reports containing the information required
in Section II.A.2 of this Code with respect to securities
brokerage accounts established during the preceding quarter
and all transactions during the preceding quarter in any
securities in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership. When no transactions subject to these reporting
requirements have been effected during a quarter, an Access
Person shall file a report representing that no such
transactions were effected.
2. Every Report shall be made no later than 30 days after the end
of the calendar quarter in which the transaction to which the
report relates was effected, and shall contain the following
information:
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(i) with respect to each transaction during the quarter -
a. the date of the transaction, the title, and as
applicable the exchange ticker symbol or CUSIP number,
the interest rate and maturity date, the number of
shares and the principal amount of each Security
involved;
b. the nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
c. the price at which the transaction was effected;
d. the name of the broker, dealer or bank with or through
whom the transaction was effected; and
e. the date that the Report is submitted.
(ii) with respect to each account established by the Access
Person in which any securities were held during the
quarter for the direct or indirect benefit of the Access
Person -
a. the name of the broker, dealer or bank with whom the
Access Person established the account;
b. the date the account was established; and
c. the date that the Report is submitted.
3. Any report may contain a statement that it shall not be
construed as an admission by the person making the report that
he or she has any direct or indirect beneficial ownership in
the security to which the report relates.
4. The Review Officer may require that an Access Person request
any broker-dealer with which he or she maintains a securities
account to send duplicate copies of statements and
confirmations to the Review Officer.
5. No Access Person need include in any transaction report
information with respect to purchases that are part of an
Automatic Investment Plan.
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B. Quarterly Requirements for Disinterested Trustees
1. Every Disinterested Trustee who is an Access Person solely by reason
of being a member of the Board of a Fund shall file with the Review
Officer a report containing the information required in the above
Section II.A of this Code of Ethics with respect to transactions in
any securities in which such person has, or by reason or such
transactions acquires, any direct or indirect beneficial ownership,
except exempted transactions listed under Section I.E.1, if such
Disinterested Trustee, at the time of that transaction, knew or
should have known, in the ordinary course of pursuing his or her
official duties as a Trustee, that during the 15-day period
immediately preceding or after the transaction by the Disinterested
Trustee:
a. such security was being purchased or sold by any of the Funds;
or
b. such security was being considered for purchase or sale by any
of the Funds.
2. Notwithstanding the preceding sentence, any Disinterested Trustee
may, at his or her option, report the information described in
Section II.A.2 with respect to any one or more transactions and may
include a statement that the report shall not be construed as an
admission that the person knew or should have known of portfolio
transactions by the Funds in such securities.
C. Annual Reporting of Securities Holdings
1. All Access Persons and Supervised Persons shall be provided with a
copy of this Code of Ethics and any amendments thereto and shall
provide a written acknowledgment that he or she has read and
understood the Code and recognizes that he or she is subject
thereto. All Access Persons and Supervised Persons shall provide an
annual report certifying that (i) he or she has read and understood
this Code of Ethics and recognizes that he or she is subject thereto
and (ii) he or she has complied with the requirements of this Code
of Ethics and has disclosed or reported all personal securities
transactions required to be disclosed or reported pursuant to the
requirements of this Code of Ethics.
2. Each Access Person, other than the Disinterested Trustees, shall
file with the Review Officer, not later than February 14 of each
year, the following information (which information must be current
as of the immediately preceding December 31):
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a. The title and type of Security, and as applicable the exchange
ticker symbol or CUSIP number, number of shares and principal
amount of each Security in which the Access Person had any
direct or indirect beneficial ownership;
b. the name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
c. the date on which the report is submitted by the Access
Person.
D. Initial Reporting of Securities Holdings
Each Access Person who becomes an Access Person, other than the
Disinterested Trustees, shall file with the Review Officer, not later than
10 days after the person becomes an Access Person, the following
information current as of a date no more than 45 days prior to the date
the person becomes an Access Person:
1. the title and type of Security, and as applicable the exchange
ticker symbol or CUSIP number, number of shares and principal amount
of each security in which the Access Person had any direct or
indirect beneficial ownership;
2. the name of any broker, dealer or bank with whom the Access Person
maintained an account in which any securities were held for the
direct or indirect benefit of the Access Person; and
3. the date the report is submitted by the Access Person.
E. Exception from Reporting
No Access Person shall be required to report transactions pursuant to the
foregoing Sections II.A-II.D effected for, and securities held in, any
account over which such Access Person has no direct or indirect influence
or control, except that such Access Person (other than a Disinterested
Trustee) must file a written certification stating that he or she has no
direct or indirect influence or control over the account in question.
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F. Annual Reports to Governing Boards
The Secretary of the Funds, and an authorized officer of the
Advisor, each Subadvisor and the Distributor shall cause to be
prepared and delivered annually to each of the Boards of the Funds a
report:
1. summarizing existing procedures concerning personal investing
and reviewing any changes effected in such procedures during
the year;
2. identifying any issues arising under their respective Codes of
Ethics since the last report to the governing Boards,
including, without limitation, information about material
violations and any sanctions or remedial actions during the
past year;
3. identifying any recommended changes in existing restrictions
or procedures based upon the Funds' experience under this Code
of Ethics, evolving industry practice or developments in
applicable laws or regulations; and
4. certifying that the Funds, Advisor, Subadvisor or Distributor,
as the case may be, has adopted procedures reasonably
necessary to prevent such entity's Access Persons from
violating the applicable Code of Ethics, Rule 17j-1 and, in
the case of an Advisor or Subadvisor, Rule 204A-1.
III. REVIEW AND APPROVAL OF CODES OF ETHICS AND COORDINATION WITH THE
SUBADVISORS
A. General
Any amendment of the terms of this Code of Ethics shall be effective
with respect to a Fund upon the approval of the terms of the
Amendment by the governing board of such Fund. Any amendment of the
terms of this Code of Ethics shall be effective with respect to the
Advisor or Distributor upon approval of an authorized party of such
entity. All material amendments to this Code of Ethics with respect
to the Advisor or Distributor will be submitted to the governing
Boards of the Funds for review and approval in accordance with Rule
17j-1. In accordance with certain contractual arrangements, the
Funds, the Advisor and the Distributor share certain directors,
trustees, officers and employees, including personnel responsible
for compliance with this Code of Ethics. Accordingly, reports or
reviews required under this Code of Ethics by virtue of an
individual's affiliation with two or more of the Advisor, the
Distributor or the Funds will be made jointly to the extent possible
to avoid unnecessary duplication of procedures.
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B. Subadvisors' Codes of Ethics
Each Subadvisor shall adopt, and deliver to the Funds a copy of, a
Code of Ethics pursuant to Rule 17j-1 of the 1940 Act and Rule
204A-1 of the Advisers Act which seeks to ensure that all
individuals who are Access Persons of any of the Funds by virtue of
their affiliation with a Subadvisor comply with the terms of this
Code of Ethics by providing procedures and restrictions
substantially equivalent to those set forth herein, except to the
extent variations therein are expressly approved by the governing
Boards of the Funds. Accordingly, requirements for reports, reviews
and other procedures set forth herein shall be satisfied for
individuals who are Access Persons of the Funds by virtue of their
affiliation with a Subadvisor by equivalent procedures effected by
such Subadvisor. Each Subadvisor shall present its Code of Ethics
and all material amendments thereto to the governing Boards of the
Funds for review and approval in accordance with Rule 17j-1. The
Boards must approve each material amendment to each Subadvisor's
Code of Ethics no later than six months after the adoption of the
amendment.
Each Subadvisor shall submit, quarterly, a certification to the
Funds which states:
1. The Code of Ethics of the Subadvisor in the form delivered to
the Funds remains in full force and effect and satisfies the
requirements of Section 17(j) of the 1940 Act, Rule 17j-1
thereunder and Rule 204A-1 under the Advisers Act; and
2. no material violations of the Code of Ethics of the Subadvisor
relating to Access Persons of any of the Funds occurred during
the period since delivery of the last certification (if any
material violations have occurred, the certification shall
include all relevant details).
IV. REVIEW
The Review Officer shall review all of the reports furnished under Section
II hereof to determine whether a violation of this Code of Ethics has
occurred. In reviewing transactions, the Review Officer shall take into
account the exemptions allowed under Section I.E. Before making a
determination that a violation has been committed, the Review Officer
shall give such person an opportunity to supply additional information
regarding the transaction in question.
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V. SANCTIONS
A. Sanctions for Violations by Supervised Persons and Access Persons
Other than Disinterested Trustees
If the Review Officer determines that a violation of this Code has
occurred, he or she shall so advise the appropriate governing Board
and that Board may impose such sanctions as it deems appropriate,
including, inter alia, a letter of censure or suspension or
termination of the employment of the violator. Without limiting the
generality of the foregoing, any financial profits realized by an
individual through prohibited personal investment activities
described in Section I.D. may be required to be disgorged. All
material violations of the Code and any sanctions imposed as a
result thereto shall be reported to the appropriate governing Board.
B. Sanctions for Violations by Disinterested Trustees
If the Review Officer determines that any Disinterested Trustee has
violated this Code, he or she shall so advise the President of the
affected Fund, as appropriate, and also a committee consisting of
the Disinterested Trustees (other than the person whose transaction
is at issue) and shall provide the committee with the report, the
record of pertinent actual or contemplated portfolio transactions,
and any additional information supplied by such person. The
committee, at its option, shall either impose such sanctions as it
deems appropriate or refer the matter to the full Board, which shall
impose such sanctions as it deems appropriate.
VI. MISCELLANEOUS
A. Access Persons
The Review Officer will identify all Access Persons who are under a
duty to make reports under this Code and will inform such persons of
such duty, except that persons who are Access Persons by virtue of
their affiliation with a Subadvisor shall be identified and informed
by an appropriate officer of that Subadvisor. Any failure by the
Review Officer to notify any person of his or her duties under this
Code shall not relieve such person of his or her obligations
hereunder.
B. Records
The Fund, the Advisor, and the Distributor shall maintain records as
set forth below in an easily accessible place at its principal place
of business, which records may be maintained in micrographic or
electronic form under the conditions described in Rule 31a-2(f)
under the 1940 Act and, if applicable,
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Rule 204-2(g) under the Advisers Act, and shall be available for
examination by representatives of the Securities and Exchange
Commission ("SEC"):
1. a copy of this Code and any other code which is, or at any
time within the past five years has been, in effect;
2. a record of any violation of this Code and of any action taken
as a result of such violation shall be preserved for a period
of not less than five years following the end of the fiscal
year during which the last entry was made on such record;
3. a record of all written certifications as required by Section
II.C.1 of this Code for each person who is currently, or
within the past five years was, an Access Person or Supervised
Person;
4. a copy of each report made by an Access Person pursuant to
this Code shall be preserved for a period of not less than
five years from the end of the fiscal year in which it is
made;
5. a list of all persons who are, or within the past five years
have been, Access Persons;
6. a copy of each report furnished pursuant to Section II.F of
this Code shall be preserved for a period of not less than
five years from the end of the fiscal year in which it is
made; and
7. a record of any decision, and the reasons supporting the
decision, to approve the acquisition by any Access Person or
Advisory Person of any security under I.D.3 (private
placements), I.D.4 (securities held less than 60 days), or
I.E.5 (non-abusive transactions) shall be preserved for a
period of not less than five years from the end of the fiscal
year in which the approval is granted.
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C. Reporting of Violations
All Access Persons and Supervised Persons must promptly report any
violations of this Code of Ethics to the Chief Compliance Officer of
the Fund, Advisor, Subadvisor, or Distributor, as appropriate.
D. Confidentiality
All reports of securities transactions and any other information
filed pursuant to this Code shall be treated as confidential, except
that the same may be disclosed to the Boards of the Funds, to any
regulatory or self-regulatory authority or agency upon its request
or as required by law or court or administrative order.
E. Interpretation of Provisions
The governing Boards of the Funds may from time to time adopt such
interpretations of this Code as they deem appropriate.
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