I. CODE OF ETHICS AND PROFESSIONAL STANDARDS
-----------------------------------------
As professional organizations serving the public in the area of asset
management, all officers, directors and employees of the Adviser and the Fund
("CornerCap Personnel") must be guided in their actions by the highest ethical
and professional standards and subscribe to this Code of Ethics and Professional
Standards.
1. All CornerCap Personnel must at all times reflect the professional
standards expected of persons in the investment advisory business.
These standards require all Cornercap Personnel to be judicious,
accurate, objective and reasonable in dealing with both clients and
other parties so that their personal integrity is unquestionable.
2. All CornerCap Personnel must act within the spirit and the letter of
the federal, state and local laws and regulations pertaining to
investment advisers, investment companies and to the general conduct of
business.
3. At all times, the interest of our clients has precedence over personal
interests. This applies particularly in the case of purchases and sales
of stocks and other securities that are owned, purchased or sold in our
advisory and fiduciary accounts.
4. The Adviser and the Fund have adopted Insider Trader Policies which set
parameters for the establishment, maintenance and enforcement of
policies and procedures to detect and prevent the misuse of material
non-public information by CornerCap Personnel. The Insider Trading
Policies are a part of this Code of Ethics and Professional Standards.
5. The Adviser and the Fund have adopted Personal Trading Policies which
set parameters for the establishment, maintenance and enforcement of
policies and procedures to detect and prevent CornerCap Personnel from
taking advantage of their fiduciary relationship with our clients. The
Personal Trading Policies are a part of this Code of Ethics and
Professional Standards.
6. CornerCap Personnel will not accept compensation of any sort for
services from outside sources without the specific permission of the
Adviser's President.
7. When any CornerCap Personnel face a conflict between their personal
interest and the interests of our clients, he or she will report the
conflict to the Compliance Officer and/or the Adviser's President for
instruction regarding how to proceed.
8. The recommendations and actions of the Adviser and the Fund are
confidential and private matters. Accordingly, it is our policy to
prohibit, prior to general public release, the transmission,
distribution or communication of any information regarding securities
transactions of client accounts except to broker/dealers in the
ordinary course of business. In addition, no information obtained
during the course of employment regarding particular securities
(including internal reports and recommendations) may be transmitted,
distributed, or communicated to anyone who is not affiliated with the
Adviser or the Fund, without the prior written approval of the
Adviser's President.
9. The policies and guidelines set forth in this Code of Ethics must be
strictly adhered to by all CornerCap Personnel. Severe disciplinary
actions, including dismissal, may be imposed for violations of this
Code of Ethics and Professional Standards.
II. INSIDER TRADING
---------------
A. OVERVIEW AND PURPOSE
The purpose of the policies and procedures in this Section (the
"Insider Trading Policies") is to detect and prevent "insider
trading" by any person associated with the Adviser or the Fund. The
term "insider trading" is not defined in the securities laws, but
generally refers to the use of material, non-public information to
trade in securities or the communication of material, non-public
information to others.
B. GENERAL POLICY
1. PROHIBITED ACTIVItIES
All officers, directors and employees of the Adviser and the
Fund including contract, temporary, or part-time personnel, or
any other person associated with the Adviser or the Fund, are
prohibited from the following activities:
(a) trading or recommending trading in securities for any
account (personal or client) while in possession of
material, non-public information about the issuer of the
securities; or
(b) communicating material, non-public information about the
issuer of any securities to any other person.
The activities described above are not only violations of these
Insider Trading Policies, but also may be violations of
applicable law.
2. REPORTING OF MATERIAL, NON-PUBLIC INFORMATION
Any owner or employee who possesses or believes that she/he may
possess material, non-public information about any issuer of
securities must report the matter immediately to the Compliance
Officer. The Compliance Officer will review the matter and
provide further instructions regarding appropriate handling of
the information to the reporting individual.
-2-
<PAGE>
C. MATERIAL INFORMATION, NON-PUBLIC INFORMATION, INSIDER TRADING AND
INSIDERS
1. MATERIAL INFORMATION. "Material information" generally
includes:
o any information that a reasonable investor would likely
consider important in making his or her investment
decision; or
o any information that is reasonably certain to have a
substantial effect on the price of a company's securities.
Examples of material information include the following:
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.
2. Non-Public Information. Information is "non-public" until it
has been effectively communicated to the market and the market
has had time to "absorb" the information. For example,
information found in a report filed with the Securities and
Exchange Commission, or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal or other
publications of general circulation would be considered public.
3. Insider Trading. While the law concerning "insider trading" is
not static, it generally prohibits: (1) trading by an insider
while in possession of material, non-public information; (2)
trading by non-insiders while in possession of material,
non-public information, where the information was either
disclosed to the non-insider in violation of an insider's duty
to keep it confidential or was misappropriated; and (3)
communicating material, non-public information to others.
4. Insiders. The concept of "insider" is broad, and includes all
employees of a company. In addition, any person may be a
temporary insider if she/he enters into a special,
confidential relationship with a company in the conduct of a
company's affairs and as a result has access to information
solely for the company's purposes. Any person associated with
the Adviser may become a temporary insider for a company it
advises or for which it performs other services. Temporary
insiders may also include the following: a company's
attorneys, accountants, consultants, bank lending officers and
the employees of such organizations.
D. PENALTIES FOR INSIDER TRADING
The legal consequences for trading on or communicating material,
non-public information are severe, both for individuals involved in such
unlawful conduct and their employers. A person can be subject to some or
all of the penalties below even if he/she does not personally benefit from
the violation. Penalties may include:
o civil injunctions
o jail sentences
o revocation of applicable securities-related registrations and
licenses
o fines for the person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the
person actually benefited; and
-3-
<PAGE>
o fines for the employee 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, the Adviser's management will impose serious sanctions on any
person who violates the Insider Trading Policies. These sanctions may
include suspension or dismissal of the person or persons involved.
III. GENERAL PERSONAL TRADING POLICIES
A. GENERAL PRINCIPLES
The pre-clearance procedures, trading restrictions and reporting
requirements in this Section III (the "Personal Trading Policies")
have been approved by the Compliance Officer. Transactions by covered
persons in covered accounts, as each of these terms is defined below,
must be conducted in accordance with the Personal Trading Policies.
In the conduct of any and all personal securities transactions, all
covered persons must act in accordance with the following general
principles:
(a) the interests of clients must be placed before personal
interests at all times;
(b) no covered person may take inappropriate advantage of his or her
position; and
(c) the Personal Trading Policies shall be followed in such a manner
as to avoid any actual or potential conflict of interest or any
abuse of a covered person's position of trust and
responsibility.
B. DEFINITIONS
1. COVERED PERSONS
All officers, interested directors, portfolio managers,
traders, and compliance personnel of the Adviser or the Fund
are "covered persons" under the Personal Trading Policies.
2. COVERED ACCOUNTS
A "covered account" under the Personal Trading Policies is any
account in which a covered person:
(a) has a direct or indirect interest, including an account of
a spouse, a minor child, a relative or a friend; or
(b) has direct or indirect control over purchase or sale of
securities.
3. ADDITIONAL DEFINITIONS
Additional definitions of terms used in the Personal Trading
Policies are set forth in Appendix A.
----------
4
<PAGE>
C. RESTRICTIONS ON TRADING
1. PROHIBITED TRADING PERIOD
Trades in any security 15 calendar days before and 15 calendar
days after any client account trades or considers trading the
same security are prohibited. The Compliance Officer will
determine which specific client accounts will be matched as to
each covered person on a case-by-case basis.
NOTE:
DE MINIMIS EXEMPTION. A pre-clearance request to trade 1,000 or
fewer shares of an issuer that has at least $1 billion in
market capitalization is not subject to the Prohibited Trading
Period. A pre-clearance request to trade 250 or fewer shares of
an issuer that has between $250 million and $1 billion in
market capitalization is not subject to the Prohibited Trading
Period. Such de minimis trading requests will be granted by the
Compliance Officer subject to the other Restrictions on Trading
and the following conditions:
(a) De minimis exemption grants are only valid for 20 business
days; and (b) Permission under the de minimis exemption may be
granted for a particular security
only once per covered person every 20 business days.
2. RESTRICTED LIST SECURITIES
It is recognized that a covered person may from time to time
have a special relationship with an issuer (such as being a
director, officer, consultant, significant shareholder,
receiving material, non-public information, etc. of an issuer).
In such cases, the covered person must notify the Compliance
Officer of that relationship. The Compliance Officer will
review the relationship and will determine whether or not to
place the securities of the issuer on a Restricted Securities
List. Trades in any security on the Restricted Securities List
maintained by the Compliance Officer are prohibited.
3. SHORT-TERM TRADING
Conducting an opposite trade in the same security within 60
days of a purchase or sale of a security is prohibited.
Note: Options trading is generally not subject to the 60-day
Short-Term Trading restriction, but options trading may not be
used to circumvent the 60-day Short-Term Trading restriction.
4. INITIAL PUBLIC OFFERINGS (IPOS)
Investing in IPOs is prohibited.
5
<PAGE>
5. OPTIONS
Covered persons are prohibited from buying or selling an option
for 15 calendar days before and 15 calendar days after a client
account trades the same option or the underlying security.
6. SHORT SALES
Short sales of securities are prohibited.
7. CERTAIN PUBLIC COMPANY SECURITIES
Purchases of restricted securities issued by public companies
are generally prohibited. However, an exception may be made if
the Compliance Officer determines that the contemplated
transaction will raise no actual, potential or apparent
conflict of interest.
8. PRIVATE PLACEMENTS AND HEDGE FUNDS
Purchase or sale of a security obtained through a private
placement, including purchase of any interest in a hedge fund,
requires approval by the Compliance Officer. Approval is
contingent upon the Compliance Officer determining that the
contemplated transaction will raise no actual, potential or
apparent conflict of interest.
Note: If a covered person who owns a security in a private
company knows that the company is about to engage in an IPO,
she/he must disclose this information to the Compliance
Officer.
9. INVESTMENT CLUBS
Participation in an investment club requires approval by the
Compliance Officer. Pre-clearance may be granted on written
request if the covered person's participation does not create
any actual, potential or apparent conflict of interest.
D. EXCEPTIONS TO THE PERSONAL TRADING POLICIES
1. CERTAIN TYPES OF SECURITIES AND RELATED INSTRUMENTS
Transactions involving any of the following securities are not
subject to any of the Prohibitions on Trading above and do not
require pre-clearance by or reporting to the Compliance
Officer:
(a) Open-End Management Mutual Funds and Unit Investment Trusts
(not closed-end mutual funds).
(b) United States Government Securities (e.g., U.S. Treasury
Bonds).
(c) Money Market Instruments (e.g., bankers' acceptances,
Certificates of Deposit, and repurchase agreements).
(d) Variable annuities issued by insurance company separate
accounts.
2. REPORTING REQUIRED, BUT NO PRE-CLEARANCE REQUIRED
(a) Purchases or sales of shares of any CornerCap Fund
6
<PAGE>
(b) Automatic Dividend Reinvestment Purchases.
(c) Receipt or exercise of rights and warrants issued by a
company on a pro rata basis to all holders of a class of
security.
(d) Transactions by Disinterested Fund Directors
(e) Futures or options in a stock market index, foreign
currency, commodities, etc.
(f) Closed-end investment company securities.
3. DELEGATED DISCRETION ACCOUNTS
Pre-clearance is not required on trades in a covered account
over which a covered person has no discretion if:
(a) the covered person provides to the Compliance Officer a
copy of the written contract pursuant to which investment
discretion for the account has been delegated in writing to
a fiduciary;
(b) the covered person certifies in writing that she/he has not
and will not discuss potential investment decisions with
the independent fiduciary; and
(c) the covered person ensures that duplicate broker-dealer
trade confirmations and monthly/quarterly statements of the
discretionary account holdings are provided to the Adviser.
4. CASE-BY-CASE EXEMPTIONS
Because no written policy can provide for every possible
contingency, the Compliance Officer may consider granting
additional exceptions to the Prohibitions on Trading on a
case-by-case basis. Any request for such consideration must be
submitted by the covered person in writing to the Compliance
Officer. Exceptions will only be granted in those cases in
which the Compliance Officer, subject to the oversight of the
President or designee, determines that granting the request
will create no actual, potential or apparent conflict of
interest.
E. PRE-CLEARANCE PROCEDURES
(a) The covered person completes and submits a Pre-Clearance
Request Form to the Compliance Officer.
(b) The Compliance Officer reviews and approves or rejects the
request, communicating its decision to the covered person.
(c) The Compliance Officer will time-stamp its approval or denial
on the request form.
(d) The covered person must execute any approved trade no later
than one trading day following the time-stamp reflected on the
approved request.
F. REPORTING REQUIREMENTS
1. INITIAL ACCOUNT AND SECURITIES HOLDINGS LIST
Within 10 days of beginning employment, each covered person
must provide a list of brokerage accounts and securities owned
by the covered person, the covered person's spouse or minor
children, or any other person or entity in which the covered
person may have a beneficial interest or derive a direct or
indirect benefit.
2. ANNUAL UPDATE AND CERTIFICATION
Each covered person must file an annual account statement that
reports the covered person's accounts and securities holdings
(list of brokerage accounts and securities in which the covered
7
<PAGE>
person has a direct or indirect beneficial interest as of
December 31) and execute a certification regarding compliance
with the Personal Trading Policies and applicable laws by
February 1 each year.
3. QUARTERLY AND MONTHLY TRANSACTION REPORTs
To the extent required by the SEC, each covered person must
file or cause to be filed with the Compliance Officer a
Quarterly Transaction Report within 10 days after the end of
each quarter.
4. IMMEDIATE TRADE CONFIRMATIONS
Each covered person must file or cause to be filed with the
Compliance Officer a duplicate broker-dealer confirmation of
each trade conducted by the covered person within 10 days after
the trade is completed. If no broker is involved in a trade by
a covered person, the covered person shall provide a
transaction report within 10 days of the trade.
G. PENALTIES FOR VIOLATIONS
Covered persons who violate the Personal Trading Policies may be
subject to sanctions, which may include, among other things,
education or formal censure; a letter of admonition; disgorgement of
profits; restrictions on such person's personal securities
transactions; fines, suspension, reassignment, demotion or
termination of employment; or other significant remedial action.
All disciplinary responses to violations of the Personal Trading
Policies shall be administered by the applicable business unit's
Compliance Department, subject to the overview of the applicable
business unit's Chief Executive Officer or other designee.
Determinations regarding appropriate disciplinary responses will be
administered on a case-by-case basis.
8
<PAGE>
APPENDIX A
----------
DEFINITIONS FOR THE PERSONAL SECURITIES TRADING POLICIES
The definitions set forth below shall apply to the terms used in the Personal
Securities Trading Policies:
1. "CLIENT ACCOUNT" means any person who the Management Committee or the
Management Committee's designee determines is appropriate.
2. "INITIAL PUBLIC OFFERING" ("IPO") means any security which is being offered
for the first time on a Recognized Stock Exchange.
3. "PART-TIME EMPLOYEES" means employees of a business unit employed on a
permanent basis, but obligated to work less than a full (i.e., forty-hour)
work week.
4. "SECURITY" includes stock, notes, bonds, debentures and other evidences of
indebtedness (including loan participations and assignments), limited
partnership interests, investment contracts, and all derivative
instruments, such as options and warrants.
9
