DENVER INVESTMENT ADVISORS LLC
ETHICS RULES
including
CODE OF ETHICS, INSIDER TRADING POLICY, and
GIFT and OUTSIDE EMPLOYMENT POLICY
Amended Effective October 31, 2000
TABLE OF CONTENTS
I. INTRODUCTION AND STATEMENT OF POLICY 1
A. STATEMENT OF GENERAL PRINCIPLES 1
B. THE ETHICS RULES 1
II. SUMMARY OF ETHICS RULES 3
A. CODE OF ETHICS 3
1 Securities to Which the Code Applies 3
2 Persons to Whom the Code Applies and Applicable Rules 3
2.1 Access Persons 3
2.2 General 3
2.3 Preclearance and Reporting 4
2.4 Restrictions 4
B. INSIDER TRADING POLICY 4
1 General 4
2 What to do if in Possession of Material Nonpublic
Information 5
C. GIFT AND OUTSIDE EMPLOYMENT POLICY 5
III. GENERAL INFORMATION 6
A. ENFORCEMENT 6
B. CAUTION REGARDING PERSONAL TRADING ACTIVITIES 6
C. COMMUNICATIONS WITH OUTSIDE DIRECTORS AND TRUSTEES OF INVESTMENT
COMPANIES ADVISED BY DENVER INVESTMENT ADVISORS 6
D. INTERNAL USE 6
E. FORMS 7
IV: APPENDICES DETAILING THE ETHICS RULES(Index) 8
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
SECTION I: INTRODUCTION AND STATEMENT OF POLICY
A. STATEMENT OF GENERAL PRINCIPLES
Denver Investment Advisors LLC ("Denver Investment Advisors") and its members,
officers, and employees (as defined herein, "Access Persons") are cognizant of
and committed to the performance of their fiduciary duties under general
corporate law and as more specifically articulated in the Investment Company Act
of 1940 (the "1940 Act") and the Investment Advisers Act of 1940 (the "Advisers
Act"), including, without limitation, proscriptions against overreaching,
self-dealing, insider trading, and conflicts of interests. Moreover, with
respect to certain legal matters and ethical questions arising in the course of
their deliberations and actions, Denver Investment Advisors and its Access
Persons regularly seek the advice of counsel.
These Ethics Rules are directed to the particular objectives of compliance with
the provisions of Rule 17j-1 under the 1940 Act and with various provisions of
the Advisers Act, and to the prevention of engagement in any personal securities
transactions by Access Persons which might conflict with or adversely affect the
interests and welfare of the Clients of Denver Investment Advisors.
The general principles and procedures which guide the activities of all Access
Persons are augmented by these Ethics Rules, which are based upon the
fundamental recognition that Access Persons have a fiduciary relationship with
Denver Investment Advisors' clients, which requires the maintenance by all such
individuals of the highest standards of integrity and conduct.
Professional and legal responsibilities to Denver Investment Advisors' Clients
dictate that not only conflicts of interests, but the appearance of conflicts of
interests, be avoided. Although compliance by Access Persons with the provisions
of these Ethics Rules is mandatory, codes of ethics cannot define all conflict
and potential conflict situations. Therefore, in addition to assuring that one's
conduct comports with these Rules, Access Persons must avoid engaging in any
conduct that may create a conflict of interest or the potential for a conflict
of interest. Access Persons must adhere not only to the letter but also to the
spirit of the Ethics Rules and the principles articulated herein.
B. THE ETHICS RULES
Denver Investment Advisors operates under this Code of Ethics, Insider Trading
Policy, and Gift and Outside Employment Policy (collectively the "Ethics Rules")
which apply to all members, officers and employees of Denver Investment Advisors
and, in certain instances, to their family members. Persons subject to the
Ethics Rules are encouraged to invest in investment companies advised by Denver
Investment Advisors. These persons are also permitted to personally invest in
individual securities in accordance with the Ethics Rules. Outside Directors of
Denver Investment Advisors advised investment companies who are not members,
officers or employees of Denver Investment Advisors are not subject to the
Ethics Rules.
The Ethics Rules are intended to ensure that these persons (i) at all times
place first the interests of Denver Investment Advisors' clients (collectively
and as applicable "Clients"), (ii) recognize, respect, and act in the best
interests of the Clients, (iii) conduct all personal trading consistently with
the Ethics Rules and in such a manner as to avoid any actual or potential
conflict of interest or any abuse of the person's position of trust and
responsibility, (iv) not take inappropriate advantage of their positions with
Denver Investment Advisors, (v) not use any material nonpublic information in
securities trading, and (vi) avoid any situations which might compromise their
exercise of fully independent judgment in the interests of or on behalf of
Clients. In May 1994 the Investment Company Institute issued the REPORT OF THE
ADVISORY GROUP ON PERSONAL INVESTING. The Denver Investment Advisors' code
incorporates the general principles and virtually all of the suggestions of the
ICI report. The Ethics Rules also establish policies regarding other matters,
such as outside employment and the disbursement or receipt of gifts.
Each member, officer and employee will be provided a copy of the Ethics Rules,
as well as a copy of the Code of Ethics for any registered investment company
for which Denver Investment Advisors serves as investment Adviser or Sub-
Adviser. Each member, officer and employee of Denver Investment Advisors is
required to read and retain the Ethics Rules, as well as the Codes of Ethics for
various investment companies for which Denver Investment Advisors serves as
Adviser or Sub-Adviser, and to sign and return the attached Acknowledgment Form
to Designated Investment Representatives upon commencement of employment or
other services, and on an annual basis thereafter. The Acknowledgment (i)
confirms that the person signing it has received, read and asked any questions
necessary to understand the Ethics Rules, (ii) evidences the person's agreement
to conduct himself in accordance therewith, and (iii) confirms that the person
has complied with the Ethics Rules during such time as the person has been with
Denver Investment Advisors. Various persons will be required to submit reports
or obtain clearances as discussed more fully below and in the applicable
Appendices.
The Ethics Rules are administered by the Compliance Officer and the Management
Committee, and certain matters relating to the Ethics Rules are referred
specifically to a Designated Investment Representative, the Compliance Officer,
and other individuals with compliance responsibility. Such compliance personnel
and committee members are identified in Appendix 1 Part A. The supervisory
procedures relating to the Ethics Rules and the duties and operations of the
Management Committee are discussed in Appendix 5 Parts A and B, respectively.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
SECTION II: SUMMARY OF ETHICS RULES
The Ethics Rules, including especially the Code of Ethics and the Insider
Trading Policy discussed below, apply to transactions in Covered Securities for
your personal accounts and any other accounts in which you have any beneficial
ownership. Generally speaking, you may be deemed the beneficial owner of any
account in which you have a direct or indirect financial interest. Such accounts
include, without limitation, accounts held in the name of your spouse, your
minor children, a relative sharing your home, or a trust under which you or such
persons are a beneficiary. See Appendix 1 Part B for a more complete discussion
of beneficial ownership.
A. CODE OF ETHICS
The Code of Ethics (the "Code") imposes certain investment restrictions and
prohibitions, and requires certain reports as set forth below:
1 Securities to Which the Code Applies
The Code applies to Covered Securities, which are subject to various trading
prohibitions and reporting obligations. "Covered Securities" generally include
all securities and their derivatives, whether publicly or privately traded.
However, Covered Securities do not include
* shares of registered open-end investment companies,
* direct obligations of the U.S. government,
* high quality short-term debt instruments, including but not
limited to bankers acceptances, bank certificates of deposit,
commercial paper, and repurchase agreements, and
exempt investments.
Some Covered Securities, such as direct obligations of foreign governments,
derivatives on indices, and various securities acquired through dividends, pro
rata rights, or other corporate actions, must be reported but are exempt from
the trading prohibitions. See Appendix 2 Part A for additional information.
2 Persons to Whom the Code Applies and Applicable Rules
2.1 Access Persons. For purposes of these Ethics Rules, "Access
Persons" include all members, officers and employees of Denver
Investment Advisors. The Code applies to all Access Persons.
2.2 General. Any person subject to the Code is prohibited from:
2.2.1 Engaging in short sales of Covered Securities known by such person to be
owned by Clients; 2.2.2 Purchasing initial public offerings and hot issues;
2.2.3 Short-term trading; 2.2.4 Benefitting personally from actions taken for
Clients; 2.2.5 Profiting from the market effect of Client transactions; 2.2.6
Disclosing Client portfolio transactions without prior approval; 2.2.7 Engaging
in fraudulent conduct; or 2.2.8 Investing in derivatives to evade application of
the Code.
2.3 Preclearance and Reporting. Access Persons must preclear all transactions in
Covered Securities, must provide periodic reports regarding their holdings and
personal transactions in Covered Securities, and are subject to various
additional investment restrictions.
2.4 Restrictions. The following is a list of some restrictions
applicable to Access Persons:
2.4.1 Blackout Period
2.4.2 Restrictions on Service as a Director
2.4.3 Disclosure of Interests
2.4.4 Broker-Dealer Investments
2.4.5 Hedge Funds, Investment Clubs, and Other Groups
2.4.6 Investments in Investment Companies advised by Denver
Investment Advisors
See Appendix 2 Part C for additional information.
B. INSIDER TRADING POLICY
The Insider Trading Policy prohibits persons from communicating or acting on
material nonpublic information and requires persons to report such information
to a Designated Investment Representative or the Management Committee.
1 General
The Insider Trading Policy (the "Policy") applies to every member, officer and
employee of Denver Investment Advisors and prohibits such persons, as well as
their spouses and others, from trading on material nonpublic information, either
personally or on behalf of others (including Clients), and from communicating
material nonpublic information to others in violation of the law. Material
nonpublic information is commonly known as "Inside Information," and trading on
such information is commonly referred to as "Insider Trading." The Policy is
drafted broadly, and will be applied and interpreted in a similar manner. See
Appendix 3 Part B for additional information on Insider Trading and the proper
treatment of Inside Information.
2 What to do if in Possession of Material Nonpublic Information
If you think you may have Inside Information, you should immediately report such
information to one of the Designated Investment Representatives and refrain from
discussing it with any other person. See Appendix 3 Part B for additional
information on these and related procedures.
C. GIFT AND OUTSIDE EMPLOYMENT POLICY
The Ethics Rules prohibit persons from giving or receiving certain
business-related gifts. The Ethics Rules also prohibit any member, officer or
employee from engaging in outside employment unless he or she has given written
notice to a Designated Investment Representative and, in the case of
securities-related employment, has received the prior written approval of a
Designated Investment Representative. See Appendix 4 for additional information.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
SECTION III: GENERAL INFORMATION
A. ENFORCEMENT
Upon discovering a violation of the Ethics Rules, Denver Investment Advisors may
impose such sanctions as it deems appropriate, including termination of
employment. For more information about sanctions which may be imposed, see
Appendix 5 Part C.
B. CAUTION REGARDING PERSONAL TRADING ACTIVITIES
Certain personal trading activities may be risky not only because of the nature
of the transactions, but also because the potential action necessary to close
out a position may, for some personnel, become prohibited while the position
remains open. For example, the fulfillment of the obligations owed by Access
Persons to Denver Investment Advisors may heighten the risks associated with
various investments, such as short sales and transactions in derivatives.
Furthermore, if Denver Investment Advisors becomes aware of material nonpublic
information, or if a Client is active in a given security, some personnel may
find themselves "frozen" in a position. Denver Investment Advisors will not bear
any losses in personal accounts resulting from the implementation of these
Ethics Rules.
C. COMMUNICATIONS WITH OUTSIDE DIRECTORS AND TRUSTEES OF INVESTMENT
COMPANIES ADVISED BY DENVER INVESTMENT ADVISORS
As a regular business practice, Denver Investment Advisors attempts to keep the
Trustees and Directors of its investment company clients informed with respect
to its investment activities through reports and other information provided to
them in connection with board meetings and other events. In addition, personnel
are encouraged to respond to inquiries from Trustees and Directors, particularly
as they relate to general strategy considerations or economic or market
conditions affecting the funds. However, it is Denver Investment Advisors'
policy not to communicate specific trading information and advice on specific
securities to the Trustees and Directors; i.e., no information should be given
on securities for which current activity is being considered for Clients. Any
pattern of repeated requests by a Trustee or Director should be reported to the
Compliance Officer.
D. INTERNAL USE
The Ethics Rules are intended solely for internal use. For more information
regarding limitations on disclosing to others the Ethics Rules and actions taken
pursuant to the Rules, see Appendix 5 Part C.
E. FORMS
Blank forms for use in complying with the Ethics Rules are contained in Appendix
6. Such forms may be revised from time to time, as the Management Committee
shall determine. Please contact the Compliance Officer if you need additional
forms or if you have any questions.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
SECTION IV: APPENDICES DETAILING THE ETHICS RULES
(Index)
The following appendices set forth in detail the Ethics Rules summarized above.
Such appendices are incorporated herein by reference.
APPENDICES
1 DEFINITIONS
A. Personnel 1-1
B. Beneficial Ownership 1-1
2 CODE OF ETHICS
A. Overview and Covered Securities (including exemptions) 2-1
B. Periodic Acknowledgments and General Prohibitions 2-2
C. Investment and Trade Limitations 2-4
3 INSIDER TRADING POLICY
A. Background Information 3-1
B. Procedures to Implement Policy 3-3
4 GIFT AND OUTSIDE EMPLOYMENT POLICY
A. Gifts 4-1
B. Outside Employment 4-1
5 OTHER
A. Supervisory and Compliance Review Procedures 5-1
B. Role of the Management Committee in Compliance 5-4
C. General Information About the Ethics Rule 5-5
6 FORMS
A. Forms 6-1
- Request for Preclearance
- Request for Special Preclearance
- Acknowledgment
- Securities Ownership and Business Positions
- Account Information
- Certification of Non-influence and Non-control over Beneficially
Owned
Accounts
- Quarterly Verification
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 1 DEFINITIONS
A. PERSONNEL
References in the Ethics Rules to the following persons shall mean:
Designated Investment Representatives - Todger Anderson and Jeff Adams
Designated Trading Representatives - Corporate Bonds - Bill Stafford and Jerry
Powers Designated Trading Representatives - Municipal Bonds - Tom Stevens
Compliance Manager - Pam Weber Compliance Officer - Lou Kahanek
The above information shall be updated from time to time to reflect any changes
in personnel that may occur.
B. BENEFICIAL OWNERSHIP
The provisions of the Ethics Rules apply to transactions in securities for any
account "beneficially owned" by a person subject to the Rules. "Beneficial
ownership" shall be interpreted in the same manner as it would be in determining
whether a person is subject to the provisions of Rule 16a-1(a)(2) of the
Securities Exchange Act of 1934 and the rules and regulations thereunder. Thus,
for example, you should be aware that the term "beneficial ownership"
encompasses securities held in the name of your spouse, your minor children, or
a relative sharing your home (collectively "Related Parties"), or held in the
name of a trust under which you or a Related Party are a beneficiary, or held
under any other arrangement in which you share a pecuniary interest (that is,
the opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in a Covered Security). The Management Committee may,
on a case-by-case basis, exempt certain accounts and transactions from any
provision of the Ethics Rules, if, in its view, application of the Ethics Rules
is not necessary or appropriate.
The provisions of these Ethics Rules shall not apply to purchases or sales
effected in any account over which there is no direct or indirect influence or
control. Access Persons relying upon this provision will be required to file a
certification form with the Compliance Officer regarding any such accounts (see
form entitled "Certification of Non-influence and Non-control Over Beneficially
Owned Accounts" in Appendix 6).
"Managed Accounts," defined as accounts for members, officers or employees, or
their family members, that are managed by Denver Investment Advisors or other
investment advisers in a discretionary capacity, except for reporting
requirements, are not covered by these Ethics Rules so long as such person has
no direct or indirect influence or control over the account. The employment
relationship between the account holder and the individual managing the account,
in the absence of other facts indicating control, will not be deemed to give
such account holder influence or control over the account.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 2 CODE OF ETHICS
A. OVERVIEW AND COVERED SECURITIES (including exemptions)
Following is an overview of the Code and a discussion of securities covered by,
and exempted from the Code.
1 Overview
In general, it is unlawful for persons affiliated with investment advisers and
investment companies to engage in personal transactions in securities which are
held or are to be acquired by the investment adviser or the registered
investment company, if such personal transactions are made in contravention of
rules which the Securities and Exchange Commission (the "SEC") has adopted to
prevent fraudulent, deceptive and manipulative practices. Such rules require
each registered investment company and each investment adviser for such
investment company to adopt its own written code of ethics containing provisions
reasonably necessary to prevent its access persons from engaging in such
conduct, and to maintain records, use reasonable diligence, and institute such
procedures as are reasonably necessary to prevent violations of such code. This
Code and information reported hereunder will enable Denver Investment Advisors
to fulfill its obligations under such rules.
2 Covered Securities (including exemptions)
2.1 Code Applicability and Definition of Covered Securities. The trading
prohibitions and reporting obligations of the Code apply to all direct or
indirect acquisitions or dispositions of Covered Securities, whether by
purchase, sale, gift, inheritance, or otherwise, including Covered Securities
acquired in any Denver Investment Advisors compensation benefit or retirement
plan. Employees do not need to separately report on Denver Investment Advisors
benefit and retirement plan. Compliance staff will review files maintained by
the personnel department to ensure compliance.
"Covered Securities" generally include all securities, whether publicly or
privately traded, and any option, or forward contract, or other obligation,
including a security whose value is derived or based on any of the above (a
"derivative").
However, the following shall not be deemed to be Covered Securities and shall be
exempt from the trading prohibitions, preclearance requirements, and reporting
obligations of this Code:
2.1.1 Shares of registered open-end investment companies;
2.1.1.1 See Appendix 2, Section C. 11 for specific
restrictions on investments in open-end investment
companies advised by Denver Investment Advisors.
2.1.2 Direct obligations of the U.S. government;
2.1.3 High quality short-term debt instruments, including, but not limited to,
bank certificates of deposit, bankers' acceptances, repurchase agreements, and
commercial paper; and
2.1.4 "Exempt Investments" include all obligations that are not securities as
defined in the Investment Company Act of 1940, as amended, including, but not
limited to; commodities, derivatives not traded on a national securities
exchange on commodities or currencies, and life insurance or annuity contracts.
2.2 Covered Securities and Transactions Exempt from Trading
Prohibitions (but Reportable)
The following Covered Securities and transactions are exempt from the trading
prohibitions and preclearance requirements, but are nevertheless subject to the
reporting obligations, of this Code:
2.2.1 the purchase or receipt of direct obligations of a foreign
government for which a liquid market exists;
2.2.2 the purchase or receipt of any derivative on any index of
securities (not otherwise exempted as an Exempt Investment
above);
2.2.3 the acquisition of securities through stock dividends, dividend
reinvestments, stock splits, reverse stock splits, mergers, consolidations,
spin-offs, or other similar corporate reorganizations or distributions generally
applicable to all holders of the same class of such securities; and
2.2.4 the acquisition of securities through the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to the extent the
rights were acquired in the issue.
B. PERIODIC ACKNOWLEDGMENTS AND GENERAL PROHIBITIONS
All Access Persons must provide Acknowledgment Forms and comply with the General
Prohibitions as discussed below and must also comply with the applicable
provisions of Part C below.
1 Acknowledgment Forms
Each Access Person must, within 10 calendar days of commencement of services and
annually thereafter, complete an Acknowledgment Form stating that he or she has
reviewed and complied with the Ethics Rules including the Code of Ethics,
Insider Trading Policy, and Gift and Outside Employment Policy and has disclosed
or reported all applicable securities transactions. Each Access Person must also
complete the "Securities Owned and Business Position form" and attach it to the
Acknowledgment form. Unless otherwise directed, such forms should be given to
the Compliance Manager.
2 General Prohibitions
Any Access Person subject to this Code is prohibited from:
2.1 Engaging in short sales of Covered Securities that such person knows are
held by or being considered for sale by, any Client.
2.2 Purchasing, in an initial public offering, Covered Securities for which no
public market in the same or similar securities of that issuer has previously
existed. No securities may be purchased in an offering that constitutes a "hot
issue" as defined in the rules of the NASD. Such securities may be purchased,
however, where the individual has an existing right to purchase the security
based on his or her status as an investor, policyholder or depositor of the
issuer and the Access Person has obtained preclearance for the transaction in
accordance with section C.1 of this code. In addition, securities issued in
reorganizations are also outside the scope of this prohibition if the
transaction involves no investment decision on the part of the employee except
in connection with a shareholder vote.
2.3 Inducing or causing a Client to take action, or to fail to take action, to
benefit an account in which the person has a beneficial interest, rather than to
benefit such Client. For example, an employee would violate this Code by causing
a Client to purchase a security owned by the employee for the purpose of
supporting or increasing the price of that security or causing a Client to
refrain from selling a security in an attempt to protect a personal investment,
such as an option on that security.
2.4 Using knowledge of portfolio transactions made or contemplated for Clients
to profit by the market effect of such transactions.
2.5 Disclosing current portfolio transactions made or contemplated for Clients
as well as any other nonpublic information to anyone outside of Denver
Investment Advisors without the prior written approval of a Designated
Investment Representative. "Current" transactions shall include transactions for
which information is not provided to investment company customers as a matter of
policy.
Such policy is separately set by the Management Committee and may be amended
from time to time.
2.6 Engaging in fraudulent conduct in connection with the purchase or sale,
directly or indirectly, of a security held or to be acquired by a Client,
including without limitation:
* Employing any device, scheme or artifice to defraud any Client;
* Making to any Client any untrue statement of material fact or omitting to
state to any Client a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
* Engaging in any act, practice or course of business which operates or would
operate as a fraud or deceit upon any Client; or
* Engaging in any manipulative practice with respect to any Client.
For purposes of this Section 2.6, a security held or to be acquired by a Client
means any Covered Security as defined herein which, within the most recent
15-day period, is or has been held by a Client or is being or has been
considered by Denver Investment Advisors for purchase by a Client.
The provisions of these Ethics Rules have been instituted, in part, in an effort
to ensure that Access Persons do not, inadvertently or otherwise, violate these
proscriptions.
2.7 Investing in derivatives to evade the restrictions of this Code.
Accordingly, individuals may not use derivatives to take positions in securities
which the Code would prohibit if the positions were taken directly.
Persons who violate any prohibition in this Section 2 shall disgorge any profits
realized on such trades to the appropriate Client(s), or alternatively, to a
charitable organization, as the Management Committee, in its sole discretion,
shall determine.
C. INVESTMENT AND TRADE LIMITATIONS
The following sets forth various investment and trade limitations. If
reimbursement is required under more than one of the following, the Management
Committee shall, in its sole discretion, determine under which provision
reimbursement shall be required.
1 Procedures and Limitations Regarding Trade Execution
Access Persons must preclear and execute trades as noted below. Access persons
who fail to preclear a trade or who execute a trade by means of a prohibited
brokerage arrangement must disgorge any profits realized on such trades to the
appropriate Client(s), or alternatively, to a charitable organization, as the
Management Committee, in its sole discretion, shall determine.
1.1 Preclearance of Transactions. Access Persons must obtain
preclearance prior to engaging in any personal transaction in
Covered Securities. The procedures for preclearing transactions
are set forth below.
Clearances to trade will be in effect only for the day of their authorization by
a Designated Trading Representative,a Designated Investment Representative or
Compliance personnel. Open orders, including stop loss orders, will not be
allowed. Precleared transactions not executed on the day of their authorization
must be precleared again before execution. The preclearance requirement applies
to transactions in which the Access Person has a beneficial interest as defined
in Appendix 1 Part B. An Access Person must complete the Preclearance, a copy of
which is attached, in order to obtain preclearance. Copies of completed requests
for Preclearance must be promptly forwarded to, and maintained by the Compliance
Manager.
Any Access Person who has obtained written approval to purchase a restricted
security and who has purchased and continues to maintain the security in
reliance upon such approval must disclose the investment to appropriate
personnel in any instance in which the Access Person is involved in
consideration by a client of an investment in the issuer of the restricted
security. In any such instance, the decision of a Client to purchase an
investment in the issuer of the restricted security must be reviewed
independently by one or more investment personnel of Denver Investment Advisors,
selected by a Designated Investment Representative, who has no personal interest
in the issuer, who must execute written approval of the investment in the issuer
prior to the investment's being made.
For purposes of the above paragraph, a restricted security is defined as a
security which is not readily marketable and a security which cannot be resold
or distributed to the public or to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933, as Amended (the "1933 Act"), without
an effective registration statement under the 1933 Act. A security which is not
readily marketable is one which, for whatever reason, cannot be disposed of
within seven days in the ordinary course of business at approximately the amount
at which the security is reasonably valued.
1.2 Preclearance. General preclearance may be obtained from a
Designated Trading Representative or Compliance personnel using a
Request for Preclearance.
* A Designated Trading Representative or Compliance personnel may provide
clearance if the security is not being purchased or sold for a Client. A
security is being purchased or sold when, within the most recent seven
calendar day period, a transaction in such security has been effected for a
Client, or when a transaction in such security is pending or in progress for a
Client. Any profits realized on transactions which occur during the proscribed
period shall be disgorged, with the profit to be allocated in whole or in part
to the appropriate Client(s), if any, or alternatively to a charitable
organization, as the Management Committee in its sole discretion shall
determine; provided, however, that such disgorgement of short-term trading
profits shall not apply to securities transactions of Access Persons under
circumstances, determined in the sole discretion of the Management Committee,
in which disgorgement of profits would be inequitable.
1.3 Special Preclearance. Special Preclearance may be obtained from a Designated
Investment Representative for an investment by an Access Person that would
otherwise be prohibited by the Code. To obtain special preclearance, an Access
Person must submit both a Request for Preclearance and a Request for Special
Preclearance to a Designated Investment Representative. The Designated
Investment Representative may provide specific preclearance if the Designated
Investment Representative determines that the particular circumstances of the
person's proposed trade make it unlikely that the trade would disadvantage any
Client.
1.4 Evaluation of Client Interests. The Ethics Rules require Access Persons to
at all times place the interests of Clients first and to conduct all personal
trading consistently with the Ethics Rules and in such a manner as to avoid any
actual or potential conflict of interest. Accordingly, any Access Person
contemplating a personal investment that has not been made or considered for
Client accounts for which the Access Person has investment responsibility is
reminded to evaluate the appropriateness or inappropriateness of the investment
for those accounts.
2 Seven Day After Rule
If a transaction in a security has been effected for a Client or when a
transaction in the security is pending or in progress, preclearance may be given
on the eighth calendar day after the transaction is executed or withdrawn. The
existence of pending transactions will be checked as a part of the preclearance
process discussed above.
3 Short-Term Trading Rule
Every Access Person who obtains a profit from a purchase and sale, or a sale and
purchase, of the same or equivalent securities within sixty (60) calendar days
shall disgorge such profit, with the profit to be allocated in whole or in part
to the appropriate Client(s), if any, or alternatively to a charitable
organization, as the Management Committee in its sole discretion shall
determine; provided, however, that such disgorgement of short-term trading
profits shall not apply to securities transactions of Access Persons under
circumstances, determined in the sole discretion of the Management Committee, in
which disgorgement of profits would be inequitable.
The Compliance Officer may provide for preclearance of a short-term trading
transaction in instances in which no abuse would be involved and the equities of
the situation support an exemption from the prohibition.
4 De Minimus Rule
Employees will be allowed to make de minimus trades which would otherwise be
subject to the preclearance requirements if the following guidelines are adhered
to:
? Employees are allowed two de minimus trades in any calendar month. ? A de
minimus trade may be made for any security in which the issuer has a market
capitalization of equal to or greater than $10 billion.
? The total dollar amount of a de minimus trade may not exceed $15,000.
De minimus trades will not be subject to either the seven day preclearance or
the seven day post-trade blackout period provisions of the Code of Ethics.
Employees must fill out a de minimus preclearance form and this form must be
approved by compliance personnel. Compliance personnel must also be notified if
a de minimus approval goes unexecuted.
De minimus trades will still be subject to the sixty day short-term trading
rule. Furthermore, employees should also note that the de minimus rule does not
exempt employees from violations of the insider trading rules. Employee trades
will be monitored to ensure that a pattern of trading with client accounts is
not present.
5 Service as a Director
No Access Person may serve on the board of directors of a publicly traded
company without prior authorization of the Management Committee.
No such service shall be approved without a finding by the Committee that the
board service would not be inconsistent with the interests of Clients. If board
service is authorized, the Access Person serving as a director normally should
be isolated through "Chinese Walls" or other procedures from persons making
investment decisions with respect to the company involved.
6 Disclosure of Interests
No Access Person shall, for or on behalf of a Client, recommend or invest in
entities with which the Access Person or a Related Party (as defined in Appendix
1 Part B) has a material business interest, without first disclosing such
interest to the Designated Investment Representatives or subjecting the
recommendation or investment to an independent review and approval by the
Management Committee with no such interest. A material business interest may be
direct or indirect and may include, without limitation, beneficial ownership of
publicly or privately traded securities (including derivatives, options,
warrants or rights), offices, directorships, significant contracts, or similar
interests or relationships held by such person or a Related Party, which might
affect such person's judgment.
7 Investments in Broker-Dealers
No Access Person may purchase Covered Securities issued by broker-dealers unless
brokerage commissions or implied commissions on principal transactions directed
by Denver Investment Advisors on behalf of Clients constitute less than 2% of
such broker-dealer's gross revenues for the prior calendar year. Information
regarding the amount of gross revenues may be relied upon if obtained from the
issuer's most recent (i) annual report to shareholders, or (ii) periodic reports
or registration statements filed with the SEC, or from other sources if there is
reason to believe any of the information contained in (i) or (ii), above, is
inaccurate.
8 Hedge Funds and Other Groups
No Access Person may participate in hedge funds or similar investment groups
except as a passive investor.
9 Investment Clubs
Access Persons may participate in investment clubs provided the club's
transactions are reported as if they were made directly on behalf of the Access
Person, and all trades by the investment club are effected in conformance with
the prohibitions, restrictions and procedures in this Code of Ethics.
10 Prohibited Brokerage Arrangements
No Access Person may place his or her personal securities transactions through a
Denver Investment Advisors trading desk employee or a brokerage firm that such
Access Person deals with in his or her professional capacity unless such
brokerage firm (i) is a discount broker that does not underwrite or make markets
in securities; (ii) is a local branch of a brokerage firm, if the local branch
is not used to effect transactions for Clients and the Access Person's
transactions do not involve an underwriting, private placement or security in
which such brokerage firm is making a market; or (iii) is a local branch or
local brokerage firm used by the Access Person to effect precleared transactions
in Colorado tax exempt securities, precleared pursuant to this Code of Ethics.
The Designated Investment Representatives may, from time to time, grant
exceptions from this prohibition when particular circumstances make it unlikely
that such trading activity would disadvantage Clients, such as, for example,
when different types of securities are involved in the Client and personal
trading or when foreign securities are involved which are not handled by
brokerage firms referenced in (i) or (ii) above. The Designated Investment
Representative's approval can be noted on the Preclearance Form.
11 Investments in Investment Companies advised by Denver Investment
Advisors
11.1 Investment Companies ("equity funds") with assets under management of less
than $100 million have greater volatility, therefore, investments in such funds
must adhere to the following:
? Denver Investment Advisors' employees' new investments greater than $10,000 in
equity funds with less than $100 million in assets may only be made on a payroll
date.
? Denver Investment Advisors' money purchase plan and employee retirement
savings plan are not currently subject to these restrictions.
Employees that do not follow this procedure may have their trades cancelled and
monies returned to them.
11.2 A portfolio manager who wishes to redeem greater than $10,000 invested in a
fund that he/she manages in any 30 day period, must seek and receive the written
approval of a Designated Investment Representative prior to making such
redemption.
12 Required Reports
12.1 Duplicate Account Information and Notification. Access Persons must arrange
for their brokers, investment advisers, trustees or custodians to provide, on a
timely basis, to the Designated Investment Representative, duplicate account
statements and confirmation of all transactions in Covered Securities for all
accounts in which they have a beneficial interest (see Appendix 1 Part B
regarding beneficial ownership). Access Persons must also notify the Designated
Investment Representative of each such account, indicating the name of the
brokerage firm, the name under which the account is carried and the date the
account was established. An Account Information Form should be completed for
this purpose. Duplicate account information will be organized and filed by the
Compliance Manager and exceptions will be reviewed by the Designated Investment
Representative to determine that no trades violate the Code of Ethics and that
there is no pattern of trading that suggests a potential violation.
12.2 Quarterly Verification. Access persons must, no later than 10 days after
the end of a calendar quarter, verify that their trading activity as shown on a
report provided to them by the Compliance Manager is complete and accurate or
make appropriate corrections.
12.3 Monthly Reports. Access Persons must provide monthly reports within 10 days
after month end with respect to all transactions for which confirmations are not
timely provided, including without limitation, brokered and nonbrokered private
placements, gifts, inheritances, and other transactions in Covered Securities
otherwise not reported. Such monthly reports must provide the following
information:
* The date of the transaction;
* The name of the security;
* The interest rate and maturity date if applicable;
* The number of shares and principal amount of each security
involved;
* The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
* The price at which the transaction was effected; * The name of the broker,
dealer, bank, or other entity with
or through whom the transaction was effected and;
* The date that the report was submitted.
The Designated Investment Representative may request Access Persons to provide
monthly reports regardless of whether their broker has been instructed to
provide duplicate confirmations. Such reports may be requested, for example, to
check that all applicable confirmations are being received or to supplement the
requested confirmations where a broker is difficult to work with or otherwise
fails to provide duplicate confirmations on a timely basis. Such reports will be
requested if the confirmations do not provide the foregoing information.
12.4 Annual Acknowledgments and Reports. Access Persons must also submit an
Acknowledgment Form as discussed under Part B, 1 above annually. Access Persons
must attach to each such Acknowledgment the following information:
* The title, number of shares and principal amount of each Covered Security in
which the Access Person had any direct or indirect beneficial ownership;
* 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
* The date that the report is submitted by the Access Person.
The Securities Ownership and Business Positions Form is designed for this
reporting. Furthermore, Access Persons are required to briefly describe any
positions held (e.g., director, officer, other) with entities other than Denver
Investment Advisors on this form.
12.5 Review of Reports. The Compliance Officer shall, on a timely basis, review
all reports submitted pursuant to this Section 10 to determine whether trading
patterns and other activities of Access Persons may suggest either violations of
the Ethics Rules or a failure to comply not only with the letter, but also with
the spirit, of the Ethics Rules and their general principles.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 3 INSIDER TRADING POLICY
A. BACKGROUND INFORMATION
The term "insider trading" is not defined in the federal securities statutes,
but generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider") or to communications of
material nonpublic information to others.
While the law concerning insider trading is not settled, it is appropriate to
assume that the law prohibits:
* trading by an insider, while in possession of material nonpublic
information, or
* trading by a non-insider, while in possession of material nonpublic
information, where the information either was disclosed to the non-insider
(directly or through one or more intermediaries) in violation of an insider's
duty to keep it confidential or was misappropriated or otherwise improperly
obtained by the non-insider, or
* communicating material nonpublic information to others in breach of a
duty not to disclose such information.
Trading based on material nonpublic information about an issuer does not violate
this policy unless the trader (i) is an "insider" with respect to an issuer;
(ii) receives the information from someone that the trader knows received the
information from an insider, either directly or indirectly, or (iii)
misappropriates the nonpublic information or obtains or misuses it in breach of
a duty of trust and confidence. Accordingly, trading based on material nonpublic
information about an issuer can be, but is not necessarily, a violation of this
Policy.
Application of the law of insider trading to particular transactions can be
difficult, particularly if it involves a determination about trading based on
material nonpublic information. An individual legitimately may be uncertain
about the application of this Policy in particular circumstances. If you have
any questions regarding the application of the Policy, you should contact a
Designated Investment Representative. You should also notify a Designated
Investment Representative immediately if you have any reason to believe that a
violation of the Policy has occurred or is about to occur.
The following discussion is intended to help you understand the principal
concepts involved in insider trading.
1 Who is an Insider?
The concept of "insider" is broad. It includes officers, directors and employees
of a company. In addition, a person can be a "temporary insider" if he or she
enters into a special confidential relationship in the conduct of a company's
affairs and as a result is given access to information solely for the company's
purposes. A temporary insider can include, among others, a company's attorneys,
accountants, consultants, bank lending officers, and the employees of such
organizations. In addition, Denver Investment Advisors may become a temporary
insider of a company it advises or for which it performs other services. To be
considered an insider, the company must expect the outsider to keep the
disclosed nonpublic information confidential and/or the relationship must at
least imply such a duty.
2 When is Information Nonpublic?
Information remains nonpublic until it has been made public. Information becomes
public when it has been effectively communicated to the market place, such as by
a public filing with the SEC or other governmental agency, inclusion in the Dow
Jones "tape" or publication in the Wall Street Journal or another publication of
general circulation. Moreover, sufficient time must have passed so that the
information has been disseminated widely.
3 What is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally means information for
which there is a substantial likelihood that a reasonable investor would
consider it important in making his or her investment decisions, or information
that is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material includes,
but is not limited to: dividend changes, earnings estimates, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.
Material information may also relate to the market for a company's securities.
Information about a significant order to purchase or sell securities may, in
some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about the Wall Street
Journal's "Heard on the Street" column.
4 Penalties for Insider Trading
Penalties for trading on or communicating material nonpublic information are
severe, both for individuals involved in such unlawful conduct and their
employers or other controlling persons. A person can be subject to some or all
of the penalties below even if he or she does not personally benefit from the
violation. Penalties include:
* civil injunctions
* treble damages
* disgorgement of profits
* jail sentences for up to 10 years
* fines up to $1,000,000 (or $2,500,000 for corporations and other
entities)
* civil penalties for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the person actually
benefitted, and
* civil penalties for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained or loss
avoided.
In addition, any violation can be expected to result in serious sanctions by
Denver Investment Advisors, including termination of employment.
5 Who is a Controlling Person?
Included as controlling persons are Denver Investment Advisors and its members
and officers. If you are a member or officer, you have a duty to act to prevent
insider trading. Failure to fulfill such a duty may result in penalties as
described in Part A, 4, above.
B. PROCEDURES TO IMPLEMENT POLICY
The following procedures have been established to aid the members, officers and
employees of Denver Investment Advisors in avoiding insider trading, and to aid
Denver Investment Advisors in preventing, detecting and imposing sanctions
against insider trading.
1 Identifying Inside Information
Before trading for yourself or others, including Clients, in the securities of a
company about which you may have potential inside information, ask yourself the
following questions:
1.1 To whom has this information been provided? Has the information
been effectively communicated to the marketplace?
1.2 Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would affect the market price of the securities if
generally disclosed?
2 Reporting Inside Information
If, after consideration of the above, you believe that the information is
material and nonpublic, or if you have questions as to whether the information
is material and nonpublic, you should take the following steps.
2.1 Do not purchase or sell the securities on behalf of yourself or
others, including Clients.
2.2 Do not communicate the information inside or outside of Denver Investment
Advisors, other than to the Compliance Officer.
2.3 Immediately advise a Designated Investment Representative of the nature and
source of such information, and he will determine if the information needs to be
reviewed by the Management Committee.
2.4 Depending upon the determination made by the Management Committee, or by a
Designated Investment Representative until the Committee can be convened, you,
or you and others may be instructed to continue the prohibition against trading
and communication. Alternatively, if it is determined that the information
obtained is not material nonpublic information, you may be allowed to trade and
communicate the information.
3 Protecting Information
Members, officers and employees of Denver Investment Advisors shall not disclose
any nonpublic information (whether or not it is material) relating to Denver
Investment Advisors or its securities transactions to any person outside Denver
Investment Advisors (unless such disclosure has been authorized by the
Compliance Officer). Material nonpublic information may not be communicated to
anyone, including any member, officer or employee of Denver Investment Advisors,
except as provided in this Policy. Access to such information must be
restricted. For example, access to files containing material nonpublic
information and computer files containing such information should be restricted,
and conversations pertaining to such information, if appropriate at all, should
be conducted in private.
To avoid unintended disclosures, it is important that all employees take the
following steps to safeguard the confidentiality of material and nonmaterial
nonpublic information:
* Do not discuss confidential information in public places such as
elevators, hallways or social gatherings;
* To the extent practical, limit access to the areas of the firm where
confidential information could be observed or overheard by employees with a
business need for being in the area;
* Avoid use of speaker phones in areas where unauthorized persons may
overhear conversations;
* Avoid use of wireless and cellular phones, or other means of
communication which may be intercepted;
* Where appropriate, maintain the confidentiality of Client
identities by using code names or numbers for confidential
projects;
* Exercise care to avoid placing documents containing confidential information
in areas where they may be read by unauthorized persons and to store such
documents in secure locations when they are not in use; and
* Destroy copies of confidential documents no longer needed for a project unless
required to be saved pursuant to applicable recordkeeping policies or
requirements.
4 Responsibility to Monitor Transactions
The Compliance Manager will monitor Client and employee transactions for which
reports are received to detect the existence of any unusual trading activities.
The Compliance Manager will immediately report any unusual trading activity
directly to a Designated Investment Representative, who will be responsible for
determining what, if any, action should be taken.
5 Preclearance and Other Requirements
No person to whom this Policy applies may trade, either personally or on behalf
of others (including Clients), while in possession of material nonpublic
information, nor may such Denver Investment Advisors personnel communicate
material nonpublic information to others in violation of the law. Even if
information is not deemed to be material nonpublic information, Denver
Investment Advisors personnel must nevertheless comply with the other provisions
of the Ethics Rules. For example, please refer to Appendix 2 Part C, 1.1 of the
Ethics Rules, regarding the preclearance requirement applicable to Access
Persons.
6 Tender Offers
Tender offers represent a particular concern in the law of insider trading for
two reasons. First, tender offer activity often produces extraordinary gyrations
in the price of the target company's securities.
Trading during this time period is more likely to attract regulatory attention
(and produces a disproportionate percentage of insider trading cases). Second,
the SEC has adopted a rule which expressly forbids trading and "tipping" while
in possession of material nonpublic information regarding a tender offer
received from the tender offeror, the target company or anyone acting on behalf
of either. Denver Investment Advisors employees and others subject to this
Policy should exercise particular caution any time they become aware of
nonpublic information relating to a tender offer.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 4 GIFT AND OUTSIDE EMPLOYMENT POLICY
A. GIFTS
The following outlines the policy on giving and receiving gifts.
1 Given
No member, officer or employee shall, directly or indirectly, give or permit to
be given anything of value, including gratuities, in excess of $100 per year, to
any principal, proprietor, employee, agent, or representative of a broker-dealer
if such payment is in relation to the business of the employer of the recipient.
2 Received
No member, officer or employee may receive any gift or other thing of value in
excess of $100 per year from any person or entity that does business with or on
behalf of Denver Investment Advisors or any Client, provided however, receipt of
the following shall not be prohibited:
* an occasional dinner, ticket to a sporting event or
the theater, or comparable entertainment, which is neither so
frequent nor so costly as to raise any question of impropriety; or
* a breakfast, luncheon, dinner, reception, or cocktail party given in
conjunction with a bona fide business meeting.
B. OUTSIDE EMPLOYMENT
No member, officer or employee of Denver Investment Advisors shall be employed
by, or accept compensation from any other person as a result of any business
activity, other than a passive investment, outside the scope of his relationship
with Denver Investment Advisors unless such person has provided prompt written
notice of such employment to the Compliance Officer, and, in the case of
securities-related employment or compensation, has received the prior written
approval of the Compliance Officer.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 5 OTHER
A. SUPERVISORY AND COMPLIANCE REVIEW PROCEDURES
Supervisory procedures can be divided into two classifications: prevention of
violations and detection of violations. Compliance review procedures include
preparation of special and annual reports, record maintenance and review, and
confidentiality preservation.
1 Prevention of Violations
In an effort to prevent violations of the Ethics Rules, the Designated
Investment Representative should, in addition to the procedures previously
outlined in the Ethics Rules:
1.1 Review and update the Ethics Rules as necessary, at least once annually,
including but not limited to a review of the Code by the Compliance Officer, the
Management Committee and/or counsel;
1.2 Answer questions regarding the Ethics Rules;
1.3 With such assistance from the Designated Investment Representatives, outside
counsel, or Human Resources Manager as may be appropriate, maintain a continuing
education program consisting of the following:
1.3.1 orienting members, officers, and employees
who are new to Denver Investment Advisors. The orientation
shall include without limitation a discussion of the Ethics
Rules,
1.3.2 further educating members, officers, and employees by distributing memos
or other materials that may be issued by outside organizations such as the
Investment Company Institute discussing the issue of insider trading and other
issues raised by the Ethics Rules;
1.4 Request from all persons upon commencement of
services and annually thereafter, any applicable forms and reports
as required by the Ethics Rules;
1.5 Write letters to securities firms requesting
duplicate confirmations and account statements where necessary; and
1.6 Resolve with the Management Committee issues of whether information received
by a member, officer or employee of Denver Investment Advisors is material and
nonpublic and determine what action, if any, should be taken.
2 Detection of Violations
In an effort to detect violations of these Ethics Rules, the Compliance Officer
and Designated Investment Representative should, in addition to the procedures
previously outlined in the Ethics Rules:
2.1 Review reports, confirmations, and statements relative to
applicable restrictions, as provided under the Code;
2.2 Spot checks of certain information are permitted as noted under the
Code.
3 Reports of Potential Deviations or Violations
Upon learning of a potential deviation or violation of the Ethics Rules, a
Designated Investment Representative should promptly report to the Management
Committee providing full details and recommendations for further action. The
Management Committee shall thereafter take such action as deemed appropriate.
4 Annual Reports
The Designated Investment Representative should prepare at least annually a
written report for the Management Committee and for the Boards of Directors of
any registered investment company for which Denver Investment Advisors serves as
investment adviser. This report shall be confidential and set forth the
following information:
4.1 Copies of the Ethics Rules, as revised, including a summary of any
changes made during the past year;
4.2 Identification of any violations requiring remedial action during
the past year, and the sanctions imposed for each such violation;
4.3 Recommendations, if any, regarding changes in existing restrictions or
procedures based upon Denver Investment Advisor's experience under these Ethics
Rules, evolving industry practices, or developments in applicable laws or
regulations; and
4.4 Certification that, in the opinion of the Compliance Officer, the Ethics
Rules include such procedures as are reasonably necessary to prevent Access
Persons from violating the Ethics Rules.
5 Records
The Compliance Officer is responsible for ensuring that the following records
are created and maintained:
5.1 A copy of the Ethics Rules which are, or at any time within the
past five years have been, in effect;
5.2 Files for personal securities transaction confirmations and account
statements, all reports and other forms submitted pursuant to these Ethics Rules
and any other pertinent information;
5.3 A copy of each preclearance;
5.4 A record of any violation of the Ethics Rules and of any action
taken as a result of such violation;
5.5 A log noting the dates of review, annual update activity and any
other information pertaining to implementation of these procedures;
and
5.6 A list of all persons who are, or have been, required to make reports
pursuant to these Ethics Rules.
6 Inspection
The records and reports maintained by the Designated Investment Representative,
Designated Trading Representatives, the Compliance Manager, and the Compliance
Officer pursuant to the Ethics Rules shall at all times be available for
inspection, without prior notice, by any member of the Management Committee.
7 Record Retention
Copies of the records specified in Section 5 above and of memoranda and minutes
regarding the administration of these procedures shall be maintained by the
Compliance Officer for a minimum of six years. All records listed in Section 5
above shall be kept in an easily accessible place except that the records
specified in Section 5.1 need only be kept in an easily accessible place for two
years.
8 Confidentiality
All procedures, reports and records monitored, prepared or maintained relating
to the Code of Ethics shall be considered confidential and proprietary to Denver
Investment Advisors and shall be maintained and protected accordingly. Except as
otherwise required by law or this Ethics Code no disclosure shall be made about
Ethics Code issues other than to members of the Management Committee.
B. ROLE OF THE MANAGEMENT COMMITTEE IN COMPLIANCE
One of the roles of the Management Committee is to provide an effective
mechanism for monitoring compliance with the standards and procedures contained
in the Ethics Rules and to take appropriate action at such times as violations
or potential violations are discovered.
1 Membership of the Committee
The members of the Committee will be the Executive Managers and the three
Managers elected annually pursuant to the LLC Operating Agreement.
2 Committee Meetings
The Committee shall review on a quarterly basis or as often as necessary the
operations of the compliance program and consider technical deviations from
operational procedures, inadvertent oversights, or any other potential violation
of the Ethics Rules. The Designated Investment Representative shall report
information about potential violations, together with all documents relating to
the matter at the next regular meeting of the Committee, or convene a special
meeting.
Deviations alternatively may be addressed by including them in the employee's
personnel records maintained by Denver Investment Advisors. Management Committee
reviews are primarily intended for consideration of the general operation of the
compliance program and substantive or serious departures from standards and
procedures in the Ethics Rules.
A Committee meeting may be attended, at the discretion of the Committee, by such
other persons as the Committee shall deem appropriate. Any individual whose
conduct has given rise to the meeting may also be called upon, but shall not
have the right, to appear before the Committee.
It is not required that minutes of Committee meetings be maintained; in lieu of
minutes the Committee may issue a report describing any action taken. The report
shall be included in the confidential file maintained by the Designated
Investment Representative with respect to the particular employee or employees
whose conduct has been the subject of the meeting.
The Committee will also prepare reports or make copies of minutes available as
needed for Directors/Trustees of investment companies advised by Denver
Investment Advisors.
3 Special Discretion
The Committee shall have the authority by a majority vote to exempt any person
or class of persons from all or a portion of the Ethics Rules, provided that:
3.1 The Committee determines, on advice of counsel, that the particular
application of all or a portion of the Ethics Rules is not legally
required;
3.2 The Committee determines that the likelihood of any abuse of the
Ethics Rules by such exempted person(s) is remote;
3.3 The terms or conditions upon which any such exemption is granted is
evidenced in a written instrument; and
3.4 The exempted person(s) agrees to execute and deliver to the Compliance
Officer, at least annually, a signed Acknowledgment Form, a copy of which can be
found in Appendix 6 of the Ethics Rules, which Acknowledgment shall, by
operation of this provision, include such exemptions and the terms and
conditions upon which it was granted.
The Committee shall also have the authority by a majority vote to impose such
additional requirements or restrictions as it, in its sole discretion,
determines appropriate or necessary.
Any exemption, and any additional requirement or restriction, may be withdrawn
by the Committee at any time.
C. GENERAL INFORMATION ABOUT THE ETHICS RULES
The following describes additional information generally applicable to the
Ethics Rules.
1 Designees
The Management Committee, the Designated Investment Representatives, and the
Compliance Officer may appoint designees to carry out certain functions pursuant
to these Ethics Rules.
2 Enforcement
In addition to the penalties described elsewhere in the Ethics Rules, upon
discovering a violation of the Ethics Rules, Denver Investment Advisors may
impose such sanctions as it deems appropriate, including without limitation, a
letter of censure or suspension or termination of employment or personal trading
privileges of the violator or disgorgement of any profits realized on certain
transactions to the appropriate client(s), or alternatively to a charitable
organization, as the Management Committee in its sole discretion shall
determine. All material violations of the Ethics Rules and any sanctions imposed
with respect thereto shall be reported periodically to the Management Committee.
3 Internal Use
The Ethics Rules are intended solely for internal use by Denver Investment
Advisors and do not constitute an admission, by or on behalf of Denver
Investment Advisors, as to any fact, circumstance or legal conclusion. The
Ethics Rules are not intended to evidence, describe or define any relationship
of control between or among any persons. Further, the Ethics Rules are not
intended to form the basis for describing or defining any conduct by a person
that should result in such person being liable to any other person, except
insofar as the conduct of such person in violation of the Ethics Rules may
constitute sufficient cause for Denver Investment Advisors to terminate or
otherwise adversely affect such person's relationship with Denver Investment
Advisors.
DENVER INVESTMENT ADVISORS LLC ETHICS RULES
APPENDIX 6 FORMS
A. FORMS
Following are blank forms for your use in complying with the foregoing Policy.
F:\D\DENINVST\COMPLIAN\ETHICS3.EFO
July 16, 1998
NOTE: FORMS ARE IN SEPARATE FILE
Restrictions on personal transactions apply to transactions involving
Covered Securities as well as any derivatives thereof. When determining the
amount of disgorgement required with respect to derivatives, consideration will
be given to price differences in both the derivative and the underlying
securities, with the smaller difference being used for purposes of computing
disgorgement. For example, in determining whether a reimbursement is required
when the applicable personal trade is in a derivative and the Client transaction
is in the underlying security, the amount shall be calculated using the lesser
of (a) the difference between the price paid or received for the derivative and
the closing bid or ask price (as appropriate) for the derivative on the date of
the Client transaction, or (b) the difference between the last sale price, or
the last bid or ask price (as appropriate) of the underlying security on the
date of the derivative transaction, and the price received or paid by the Client
for the underlying security. Neither preclearance nor disgorgement shall be
required if such person's transaction is to close, sell or exercise a derivative
within five days of its expiration.
7
