THE MATTERHORN GROWTH FUND, INC.
CODE OF ETHICS
Preamble
The Fund adopts the following general fiduciary principles and intends that
its Code of Ethics shall be consistent with these principles:
I. With respect to personal transactions in securities, there is a
duty at all times to place the interests of Fund shareholders
first. All personnel must scrupulously avoid serving their own
personal interests ahead of the interests of Fund shareholders.
II. All personal transactions in securities shall be conducted in
such a manner as to be consistent with this Code of Ethics and so
as to avoid any actual or potential conflict of interest or abuse
of an individual's position with the Fund. Any such position with
the Fund shall be deemed to be a position of trust and
responsibility.
III. No personnel shall take inappropriate advantage of his/her
position with the Fund.
1. DEFINITIONS
(a) "Fund" means The Matterhorn Growth Fund, Inc.
(b) "Adviser" means Matterhorn Asset Management Corporation, or such other
entity who has been most recently approved pursuant to the provisions
of Section 15 of the Investment Company Act of 1940 as the investment
adviser to the Fund.
(c) "Principal Underwriter" means Bainbridge Securities, Inc. such other
entity who has been most recently approved pursuant to the provisions
of Section 15 of the Investment Company Act of 1940 as the principal
underwriter of Fund shares.
(d) "Access Person" means any director, officer or Advisory Person of the
Fund, the Adviser or the Principal Underwriter.
(e) "Advisory Person" means any employee of the Fund or of any company in
an advisory relationship to the Fund, or any other individual
designated as an "Advisory Person" by the Fund's Board of Directors,
who, in connection with such employee's regular functions or duties,
makes, participates in, or obtains information regarding the purchase
or sale of Securities by the Fund, or whose functions relate to the
making of any recommendations with respect to such purchases or sales
and any natural person in a control relationship to the Fund of the
<PAGE>
Adviser who obtains information with regard to the purchase or sale of
a security by the Fund.
(f) A security is "being considered for purchase or sale" when:
(i) With respect to the person responsible for making investment
decisions for the Fund, such person takes affirmative steps to obtain
specific information regarding such security with the intent of making an
investment decision for the Fund on such security; and
(ii) With respect to other Access Persons:
(A) When a recommendation or decision to purchase or sell such
Security has been communicated, directly or indirectly, to
any such Access Person; or
(B) When any such Access Person knows that the person who makes
investment decisions for the Fund is taking affirmative
steps to obtain specific information on such security; or
(C) When any such Access Person knows, or in light of the
surrounding facts and circumstances reasonably should know,
that the person who makes investment decisions for the Fund
intends to make an investment decision on such Security.
(g) "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions
of Section 16 of the Securities Exchange Act of 1934 and interpreted
in accordance with Rule 16a-1(a)(2) thereunder and the other rules and
regulations thereunder, except that the determination of direct or
indirect beneficial ownership shall apply to all Securities which an
Access Person has or acquires.
(h) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act of 1940.
(i) "Disinterested Director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Investment Company Act of 1940.
(j) "Investment Personnel" means any employee of the Fund or of a company
in a control relationship with the Fund who, in connection with his or
her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the
Fund, or who controls the Fund and obtains information concerning
recommendations made to the Fund regarding the purchase or sale of
securities by the Fund.
<PAGE>
(k) "Purchase or Sale of Security" includes, inter alia, the writing of an
option to purchase or sell a Security.
(l) "Security" shall have the meaning set forth in Section 2(a)(36) of the
Investment Company Act of 1940, except that it shall not include
securities issued by the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper and shares
of registered open-end investment companies.
2. EXEMPT TRANSACTIONS
The prohibitions of Section 3 and the reporting requirements of Section 5
of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or Control.
(b) Purchases or sales of Securities which are not eligible for purchase
or sale by the Fund, as may be determined by reference to the
investment objectives, policies and restrictions of the Fund, and such
other policies as may be adopted by the Fund, all as set forth in the
Fund's then current Registration Statement on Form N-1A, as amended
from time to time, and by reference to the provisions of the
Investment Company Act of 1940 and the rules and regulations
promulgated thereunder.
(c) Purchases or sales which are non-volitional on the part of either the
Access Person or the Fund.
(d) Purchases which are part of an automatic dividend reinvestment plan.
(e) Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its Securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
(f) Purchases or sales which receive the prior approval of a majority of
those Directors of the Fund having no pecuniary interest in the
purchase or sale transaction after full disclosure to the Directors of
all material facts concerning the transaction, and after such
Directors determine that the transaction is only remotely potentially
harmful to the Fund because such purchases or sales would be unlikely
to affect the market in such Security, or because such purchases or
sales clearly are not related economically to the Securities to be
purchased, sold or held by the Fund.
<PAGE>
3. PROHIBITED PURCHASES AND SALES FOR ALL ACCESS PERSONS
(a) For the lesser of one business day or three calendar days after
acquiring such actual knowledge, no Access Person shall purchase or
sell, directly or indirectly, any security in which such Access Person
has, or by reason of such transaction would acquire, any direct or
indirect beneficial ownership, if such Access Person has actual
knowledge that, at the time of such purchase or sale, the security
either:
(i) is being considered for purchase or sale by the Fund; or
(ii) is being purchased or sold by the Fund; provided, however, that
the waiting periods prescribed in this paragraph (a) shall not be
applicable once the Fund has disposed of its entire position in
the Security in question.
(b) The receipt of any gift or other thing of more than de minimus value
from any person or entity that does business with or on behalf of the
investment company.
(c) No Access Person shall, in connection with the direct or indirect
purchase or sale by such Access Person of a Security held or to be
acquired by the Fund:
(i) employ any device, scheme or artifice to defraud the Fund;
(ii) make to the Fund any untrue statement of a material fact or omit
to state to the Fund a material fact necessary in order to make
the statements made, in light of the circumstances under which
they were made, not misleading;
(iii)engage in any act, practice or course of business which would
operate as a fraud or deceit upon the Fund; or
(iv) engage in any manipulative practice with respect to the Fund.
(d) Investment Personnel must obtain approval from the Fund before
directly or indirectly acquiring beneficial ownership in any
securities in (1) an offering of securities registered under the
Securities Act of 1933, where the issuer immediately before the
registration was not subject to the reporting requirements of Sections
13 or 15 (d) of the Securities Exchange Act of 1934, or (2) an
offering exempt from registration under the Securities Act, pursuant
to Section 4(2) or 4(6) thereunder, or pursuant to Rule 504, 505 or
506 thereunder.
4. PROHIBITED TRANSACTIONS AND ASSOCIATIONS FOR ADVISORY PERSONS
Advisory Persons are prohibited form engaging in the following types of
transactions:
(a) Initial public offerings of securities, including securities which
otherwise may be permissible for purchase in "Exempt Transactions", as
specified in Section 2.
<PAGE>
(b) Private placements of any security, including securities which
otherwise may be permissible for purchase in "Exempt Transactions", as
specified in Section 2, except upon the prior approval of at least two
Disinterested Directors of the Fund.
(c) Serving as a director, trustee or in a similar capacity with or for
any publicly traded company.
(d) No Advisory Person shall engage in any securities transaction for any
account in which such Advisory Person has a direct or indirect
beneficial ownership, other than for the Fund or purchases or
redemptions of Fund shares, unless (i) [as to Advisory Persons other
than the Compliance Officer of the Fund] permission for engaging in
such transaction has first been obtained from the Compliance Officer
of the Fund, or (ii) in the case of the Compliance Officer of the Fund
permission for engaging in such transaction has first been sought from
the President of the Fund and either such permission has been granted
or at least 24 hours have elapsed from the time of submission of the
request to the President, and the President has not denied such
permission.
5. DISCOURAGED TRANSACTIONS FOR ADVISORY PERSONS
Short-term trading, which shall be defined as the purchase and sale of the
same or equivalent securities within the same 60-day period, except for
securities which may be permissible for purchase and sale in "Exempt
Transactions", as specified in Section 2.
6. REPORTING
(a) Subject to (b), below, every Access Person shall report to the Fund
the information described in Section 6(c) of this Code with respect to
transactions in any security in which such Access Person has, or by
reason of such transaction acquires, any direct or indirect beneficial
ownership in the security; provided, however, that an Access Person
shall not be required to make a report with respect to transactions
effected for any account over which such person does not have any
direct or indirect influence.
(b) No Disinterested Director of the Fund shall be required to make any
report pursuant to this section, except where the Disinterested
Director knew, or in the ordinary course of fulfilling his official
duties as a director of the Fund, should have known that at the time
of such transaction such security was being purchased or sold by the
Fund or was being considered for purchase or sale by the Fund, then
the director must make a quarterly transaction report pursuant to this
Code of Ethics.
<PAGE>
(c) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(i) The date of the transaction, the title and number of shares, and
the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The name of any broker, dealer or bank with whom the Access
Person established an account in which any securities were held
during the previous quarter for the direct or indirect benefit
of the Access Person, and the date the account was established.
(d) No later than ten days after a person becomes an Access Person, such
person shall provide (1) the title, number of shares and principal
amount of each Covered Security in which the Access Person had any
direct or indirect beneficial ownership as of the date the person
became an Access Person, (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 as of the date the person became an Access Person, and (3) the
date the report is submitted by the Access Person.
(e) No later than 30 days after the end of the calendar year, each Access
Person shall provide (1) the title, number of shares and principal
amount of each Covered Security in which the Access Person had any
direct or indirect beneficial ownership as of the end of the calendar
year, (2) the name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities were held as of
the end of the calendar year for the direct or indirect benefit of the
Access Person, and (3) the date the account was established.
(f) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has
any direct or indirect beneficial ownership in the security to which
the report relates.
(g) Prior to each meeting of the Fund's Board of Directors which next
follows the filing of the reports, the compliance officer of the Fund
shall review each of the reports filed for the preceding fiscal
quarter to ascertain (i) that all reports required to be filed were
filed, and (ii) whether each transaction reflected in each report was
<PAGE>
made in compliance with the Code of Ethics. Prior to each such meeting
of the Fund's Board of Directors, the Compliance Officer shall report
to the President of the Fund as to (1) whether all reports required to
be filed for that period have been filed, (2) whether any material
violation of any provision of the Fund's Code of Ethics took place and
actions taken in reponse thereto, and (3) any other matter deemed
appropriate by the Compliance Officer for report. A copy of the
Compliance Officer's report shall be furnished to each member of the
Fund's Board of Directors at the next succeeding meeting.
(h) With respect to those Access Persons of the Fund who also are officers
of the Fund's Administrator, the provisions of this section may be
satisfied by their compliance with the reporting provisions of the
Administrator's Code of Ethics.
7. COMPLIANCE PROCEDURES
In order to assure compliance with this Code of Ethics, the following shall
also be required of all Advisory Persons and/or Access Persons:
(a) Upon commencement of employment, all Advisory Persons shall direct the
broker or dealer who executes transaction for any account in which
such Advisory Person has a direct or indirect beneficial ownership to
furnish a copy of all confirmations of transactions for such accounts
directly to the compliance officer of the Fund, in the case of
confirmations for a brokerage account maintained by or on behalf of
the compliance officer of the Fund. In the event any such
broker/dealer consistently fails to transmit copies of such
confirmations of transactions to the designated person at the Fund on
a timely basis, the Fund may require, as a condition of continued
employment with the Fund, that such Advisory Person close all accounts
maintained by or on behalf of such Advisory Person with such
broker/dealer.
(b) Each Access Person shall certify annually that (i) he/she has read and
understands this Code of Ethics, and recognizes that he is subject to
the provisions and requirements of this Code of Ethics, (ii) that
he/she has complied with this Code of Ethics, and (iii) that he/she
has disclosed or reported all securities transactions required to be
disclosed or reported.
(c) The Compliance Officer of the Fund shall notify all Access persons of
their reporting obligations under this Code of Ethics.
(d) The Fund shall maintain in an easily accessible place, the following
with respect to the last five years: (i) a copy of this Code of Ethics
(and any such code in effect at any time in the past five years), (ii)
a record of any violation of this Code of Ethics and any action taken
as a result, (iii) a copy of each report made by an Access Person
under this Code, (iv) a record of all persons who are or were required
to make reports under this Code of Ethics, (v) any certification or
report provided to the board of directors of the Fund pursuant to this
<PAGE>
Code of Ethics, and (vi) any record of any decision, and the reasons
supporting the decision, to approve the acquisition by Investment
Personnel of Securities under Section 4(b) hereunder.
8. REPORTS AND RECORDS
The Compliance Officer of the Fund no less than annually shall prepare and
submit to the Fund's Board of Directors a report which, at a minimum (i)
summarizes the procedures under this Code of Ethics and any changes made
during the preceding period, (ii) identifies any violations during the
preceding period, (iii) identifies any recommended changes based upon
experience, industry practice or other developments, and (iv) certifies
that the Fund has adopted procedures reasonably necessary to prevent Access
Persons from violating this Code of Ethics.
9. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors of the
Fund may impose such sanctions as it deems appropriate, including, inter
alia, a letter of censure, or suspension or termination of the employment
of the violator. Upon discovering any violation of any prohibition (i.e.,
initial public offerings) or of any restriction (private placements or
blackout periods), the Board of Directors may require disgorgement of any
profits realized by the violator, with such disgorged profits to go to such
charitable organization as may be designated by the Board of Directors.
Dated: Yardley, Pennsylvania
March 7, 1997
(Revised September 12, 2000)
