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Exhibit 2(r)(1)
BLUE CHIP VALUE FUND, INC.
(the "Company")
CODE OF ETHICS
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I. Legal Requirement.
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Rule 17j-1(b) under the Investment Company Act of 1940, as amended (the
"1940 Act"), makes it unlawful for any officer or director of the Company in
connection with the purchase or sale by such person of a security "held or to be
acquired" by the Company:
1. To employ any device, scheme or artifice to defraud the Company;
2. To make to the Company any untrue statement of a material fact or
omit to state to the Company a material fact necessary in order
to make the statements made, in light of the circumstances under
which they are made, not misleading;
3. To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the Company;
or
4. To engage in any manipulative practice with respect to the
Company's investment portfolio.
II. Purpose of the Code of Ethics.
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The Company expects that its officers and directors will conduct their
personal investment activities in accordance with (1) the duty at all times to
place the interests of the Company's shareholders first, (2) the requirement
that all personal securities transactions be conducted consistent with this Code
of Ethics and in such a manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust and responsibility,
and (3) the fundamental standard that investment company personnel should not
take inappropriate advantage of their positions.
In view of the foregoing, the provisions of Section 17(j) of the 1940 Act,
the Securities and Exchange Commission's 1940 Act Release No. 23958 "Personal
Investment Activities of Investment Company Personnel" (August 24, 1999), the
"Report of the Advisory Group on Personal Investing" issued by the Investment
Company Institute on May 9, 1994 and the Securities and Exchange Commission's
September 1994 Report on "Personal Investment Activities of Investment Company
Personnel," the Company has determined to adopt this Code of Ethics on behalf of
the Company to specify a code of conduct for certain types of personal
securities transactions which might involve conflicts of interest or an
appearance of impropriety, and to establish reporting requirements and
enforcement procedures.
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III. Definitions.
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A. An "Access Person" means: (1) each director or officer of the
Company; (2) each employee (if any) of the Company (or of any company
in a control relationship to the Company) who in connection with his
or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a security by
the Company or whose functions relate to the making of any
recommendations with respect to such purchases or sales; and (3) any
natural person in a control relationship to the Company who obtains
information concerning recommendations made to the Company with
regard to the purchase or sale of a security.
For purposes of this Code of Ethics, an "Access Person" does not
include any person who is subject to the securities transaction pre-
clearance requirements and securities transaction reporting
requirements of the Code of Ethics adopted by the Company's
investment adviser in compliance with Rule 17j-1 under the 1940 Act.
B. "Restricted Director" or "Restricted Officer" means each director or
officer of the Company who is not also a director, officer, partner,
employee or controlling person of the Company's investment adviser,
co-administrator, custodian or transfer agent.
C. An Access Person's "immediate family" includes a spouse, minor
children and adults living in the same household as the Access
Person.
D. A security is "held or to be acquired" if within the most recent 15
days it (1) is or has been held by the Company, or (2) is being or
has been considered by the Company or its investment adviser for
purchase by the Company. A purchase or sale includes the writing of
an option to purchase or sell and any security that is exchangeable
for or convertible into, any security that is held or to be acquired
by the Company.
E. An "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933, the issuer of which,
immediately before the registration, was not subject to the reporting
requirements of Sections 13 or 15(d) of the Securities Exchange Act
of 1934.
F. "Investment Personnel" of the Company means:
(i) Any employee of the Company (or of any company in a
control relationship to the Company) 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
Company.
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(ii) Any natural person who controls the Company and who
obtains information concerning recommendations made to the Company
regarding the purchase or sale of securities by the Company.
G. A "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section
4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506
under the Securities Act of 1933.
H. "Covered Security" means a security as defined in Section 2(a)(36) of
the 1940 Act, except that it does not include direct obligations of
the Government of the United States; bankers' acceptances; bank
certificates of deposit; commercial paper; high quality short-term
debt instruments (any instrument having a maturity at issuance of
less than 366 days and that is rated in one of the two highest rating
categories by a nationally recognized statistical rating
organization), including repurchase agreements; and shares of
registered open-end investment companies.
I. "De Minimis Security" means securities issued by any company included
in the Standard and Poor's 500 Stock Index and in an amount less than
$10,000.
IV. Policies of the Company Regarding Personal Securities Transactions.
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A. General Policy.
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No Access Person of the Company shall engage in any act, practice or
course of business that would violate the provisions of Rule 17j-1(b)
set forth above, or in connection with any personal investment
activity, engage in conduct inconsistent with this Code of Ethics.
B. Specific Policies.
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1. Restrictions on Personal Securities Transactions By Access
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Persons Other Than Restricted Directors and Restricted Officers.
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a. Except as provided for below in paragraph IV.B.1.d., no
Access Person who is not a Restricted Director or Restricted
Officer may buy or sell Covered Securities for his or her
personal portfolio or the portfolio of a member of his or
her immediate family without obtaining oral authorization
from the Compliance Officer of the Company's investment
adviser prior to effecting such security transaction.
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A written authorization for such security transaction will
be provided by the investment adviser's Compliance Officer
to the person receiving the authorization (if granted) and
to the
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Company's co-administrator to memorialize the oral
authorization that was granted.
Note: If an Access Person has questions as to whether
purchasing or selling a security for his or her
personal portfolio or the portfolio of a member of his
or her immediate family requires prior oral
authorization, the Access Person should consult the
investment adviser's Compliance Officer for clearance
or denial of clearance to trade prior to effecting any
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securities transactions.
b. Pre-clearance approval under paragraph (a) will expire at
the close of business on the trading day after the date on
which oral authorization is received, and the Access Person
is required to renew clearance for the transaction if the
trade is not completed before the authority expires.
c. No clearance will be given to an Access Person other than a
Restricted Director or Restricted Officer to purchase or
sell any Covered Security (1) on a day when the Company has
a pending "buy" or "sell" order in that same Covered
Security until that order is executed or withdrawn or (2)
when the Compliance Officer has been advised by the
investment adviser that the same Covered Security is being
considered for purchase or sale by the Company.
d. The pre-clearance requirements contained in paragraph
IV.B.1.a, above, shall not apply to the following securities
("Exempt Securities"): i. Securities that are not Covered
Securities;
i. Securities that are not Covered Securities;
ii. De Minimis Securities;
iii. Securities purchased or sold in any account over which
the Access Person has no direct or indirect influence
or control.
iv. Securities purchased or sold in a transaction which is
non-volitional on the part of either the Access Person
or the Company.
v. Securities acquired as a part of an automatic dividend
reinvestment plan.
vi. Securities acquired upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
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securities, to the extent such rights were acquired
from such issuer, and sales of such rights so
acquired.
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vii. Securities which the Company is not permitted to
purchase under the investment objectives and policies
set forth in the Company's then current prospectus
under the Securities Act of 1933 or the Company's
registration statement on Form N-2.
e. The pre-clearance requirement contained in paragraph
IV.B.1.a, above, shall apply to all purchases of a
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beneficial interest in any security through an Initial
Public Offering or a Limited Offering by any Access Person
who is also classified as Investment Personnel. A record of
any decision and the reason supporting such decision to
approve the acquisition by Investment Personnel of Initial
Public Offerings or Limited Offerings shall be made by the
Compliance Officer.
2. Restrictions on Personal Securities Transactions by Restricted
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and Restricted Officers.
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The Company recognizes that a Restricted Director and a
Restricted Officer do not have on-going, day-to-day involvement
with the operations of the Company. In addition, it has been the
practice of the Company to give information about securities
purchased or sold by the Company or considered for purchase or
sale by the Company to Restricted Directors and Restricted
Officers in materials circulated more than 15 days after such
securities are purchased or sold by the Company or are
considered for purchase or sale by the Company. Accordingly, the
Company believes that less stringent controls are appropriate
for Restricted Directors and Restricted Officers, as follows:
a. The securities pre-clearance requirement contained in
paragraph IV.B.1.a. above shall only apply to a Restricted
Director or Restricted Officer if he or she knew or, in the
ordinary course of fulfilling his or her official duties as
a director or officer, should have known, that during the
fifteen day period before the transaction in a Covered
Security (other than an Exempt Security) or at the time of
the transaction that the Covered Security purchased or sold
by him or her other than an Exempt Security was also
purchased or sold by the Company or considered for the
purchase or sale by the Company.
b. If the pre-clearance provisions of the preceding paragraph
apply, no clearance will be given to a Restricted Director
or Restricted Officer to purchase or sell any Covered
Security (1) on a day when the Company has a pending "buy"
or "sell" order in that same Covered Security until that
order is executed or withdrawn or (2)
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when the Compliance Officer has been advised by the
investment adviser that the same Covered Security is being
considered for purchase or sale by the Company.
V. Procedures.
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In order to provide the Company with information to enable it to
determine with reasonable assurance whether the provisions of this
Code are being observed by its Access Persons:
A. Each Access Person of the Company other than a director who is not an
"interested person" of the Company (as defined in the 1940 Act) will
submit to the Company's co-administrator an Initial Holdings Report in
the form attached hereto as Exhibit A that lists all Covered
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Securities beneficially owned/1/ by the Access Person except as stated
below. This report must be submitted within ten days of becoming an
Access Person (or for persons already designated as an Access Person,
by no later than September 1, 2000), and must include the title of
each security, the number of shares held, and the principal amount of
the security. The Report must also include a list of any securities
accounts maintained with any broker, dealer or bank.
B. Each Access Person of the Company other than a director who is not an
"interested person" of the Company (as defined in the 1940 Act) will
also submit to the Company's co-administrator an Annual Holdings
Report attached hereto as Exhibit A no later than thirty days after
the end of the calendar year. Except as stated below, the Annual
Holdings Report must list all Covered Securities beneficially owned by
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the Access Person, the title of each security, the number of shares
held, and the principal amount of the security, as well as a list of
any securities accounts maintained with any broker, dealer or bank.
C. Each Access Person of the Company other than a Restricted Director or
Restricted Officer shall direct his or her broker to supply to the
Company's co-administrator,
____________________
1. You will be treated as the "beneficial owner" of a security under this
policy only if you have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the transaction.
(b) An indirect pecuniary interest is any nondirect financial interest,
but is specifically defined in the rules to include securities held by
members of your immediate family sharing the same household;
securities held by a partnership of which you are a general partner;
securities held by a trust of which you are the settlor if you can
revoke the trust without the consent of another person, or a
beneficiary if you have or share investment control with the trustee;
and equity securities which may be acquired upon exercise of an option
or other right, or through conversion.
For interpretive guidance on this test, you should consult counsel.
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on a timely basis, duplicate copies of confirmations of all securities
transactions in which the person has, or by reason of such transaction
acquires any direct or indirect beneficial ownership and copies of
periodic statements for all securities accounts.
D. Except as stated below, each Access Person of the Company, other than
a director who is not an "interested person" (as defined in the 1940
Act), shall submit reports in the form attached hereto as Exhibit B to
the Company's co-administrator, showing all transactions in Covered
Securities in which the person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership, as well as all
accounts established with brokers, dealers or banks during the quarter
in which any Covered Securities were held for the direct or indirect
beneficial interest of the Access Person/2/ Such reports shall be
filed no later than 10 days after the end of each calendar quarter. An
Access Person of the Company need not make a quarterly transaction
report under this paragraph if all of the information required by this
paragraph V.D. is contained in the brokerage confirmations or account
statements required to be submitted under paragraph V. C. and is
received by the co-administrator in the time period stated above.
E. Each director who is not an "interested person" of the Company need
not make an initial or annual holdings report but shall submit the
same quarterly report as required under paragraph V.D. to the
Company's co-administrator, but only for a transaction in a Covered
Security (except as stated below) where he or she knew at the time of
the transaction or, in the ordinary course of fulfilling his or her
official duties as a director, should have known that during the 15-
day period immediately preceding or after the date of the transaction,
such Covered Security is or was purchased or sold, or considered for
purchase or sale, by the Company.
F. The reporting requirements of this Section V do not apply to
securities transactions effected for, and any Covered Securities held
in, any account over which an Access Person does not have any direct
or indirect influence or control.
G. The co-administrator of the Company shall notify each Access Person of
the Company who may be subject to the pre-clearance requirement or
required to make reports pursuant to this Code that such person is
subject to the pre-clearance or reporting requirements and shall
deliver a copy of this Code to each such person.
H. The co-administrator of the Company shall review the initial holdings
reports, annual holdings reports, and quarterly transaction reports
received, and as appropriate compare the reports with the pre-
clearance authorization received, and report to the Company's Board of
Directors:
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/2/. See footnote 1 above.
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a. with respect to any transaction that appears to evidence a
possible violation of this Code; and
b. apparent violations of the reporting requirement stated
herein.
I. The Board shall consider reports made to it hereunder and shall
determine whether the policies established in Sections IV and V of
this Code of Ethics have been violated, and what sanctions, if any,
should be imposed on the violator, including but not limited to a
letter of censure, suspension or termination of the employment of the
violator, or the unwinding of the transaction and the disgorgement of
any profits to the Company. The Board shall review the operation of
this Code of Ethics at least once a year.
J. The Company's investment adviser shall adopt, maintain and enforce
separate codes of ethics with respect to their personnel in compliance
with Rule 17j-1 under the 1940 Act, and shall forward to the Company's
co-administrator and the Company's counsel copies of such codes and
all future amendments and modifications thereto. The Board of
Directors, including a majority of the directors who are not
"interested persons" of the Company (as defined in the 1940 Act),
shall approve this Code of Ethics, and the codes of ethics of the
investment adviser of the Company, and any material amendments to such
codes. Such approval must be based on a determination that such codes
contain provisions reasonably necessary to prevent Access Persons of
the Company from engaging in any conduct prohibited under such codes
and under Rule 17j-1 under the 1940 Act. The Board shall review and
approve such codes at least once a year. Furthermore, any material
changes to the investment adviser's code will be approved by the Board
at the next scheduled quarterly board meeting and in no case more than
six months after such change. Before approving any material amendments
to the investment adviser's code of ethics, the Board must receive a
certification from the investment adviser that it has adopted
procedures reasonably necessary to prevent Access Persons from
violating its code of ethics and under Rule 17j-1 under the 1940 Act.
K. At each quarterly Board of Directors' meeting the Company's co-
administrator (on behalf of the Company) and investment adviser shall
provide a written report to the Company's Board of Directors stating:
a. any reported securities transaction that occurred during the
prior quarter that may have been inconsistent with the
provisions of the codes of ethics adopted by the Company's
investment adviser; and
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b. all disciplinary actions/3/ taken in response to such
violations.
L. At least once a year, the Company's co-administrator shall
provide to the Board with respect to this Code of Ethics, and the
Company's investment adviser shall provide to the Board with
respect to its code of ethics, a written report which contains:
(a) a summary of existing procedures concerning personal
investing by advisory persons and any changes in the procedures
during the past year; (b) an evaluation of current compliance
procedures and a report on any recommended changes in existing
restrictions or procedures based upon the Company's experience
under this Code of Ethics, industry practices, or developments in
applicable laws and regulations; (c) a description of any issues
arising under the code of ethics or procedures since the last
report, including but not limited to, information about material
violations of the code or procedures and sanctions imposed in
response to material violations; and (d) a certification that the
procedures which have been adopted are those reasonably necessary
to prevent Access Persons from violating the respective Codes of
Ethics.
M. This Code, the code of the investment adviser, a record of any
violation of such codes and any action taken as a result of the
violation, a copy of each report by an Access Person, any written
report hereunder by the Company's co-administrator or investment
adviser, records of approvals relating to Initial Public
Offerings and Limited Offerings, lists of all persons required to
make reports and a list of all persons responsible for reviewing
such reports shall be preserved with the Company's records for
the period and in the manner required by Rule 17j-1.
VI. Certification.
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Each Access Person will be required to certify annually that he or she has
read and understood this Code of Ethics, and will abide by it. Each Access
Person will further certify that he or she has disclosed or reported all
personal securities transactions required to be disclosed or reported under the
Code of Ethics. A form of such certification is attached hereto as Exhibit B.
The Board of Directors of Blue Chip Value Fund, Inc.
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/3/. Disciplinary action includes but is not limited to any action that has a
material financial effect upon the employee, such as fining, suspending, or
demoting the employee, imposing a substantial fine or requiring the disgorgement
of profits.
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Exhibit A
BLUE CHIP VALUE FUND, INC.
Holdings Report
For the Year/Period Ended _______________________
(month/day/year)
[_] Check Here if this is an Initial Holdings Report
To: Barbara Brewer, as Co-administrator of the
above listed Fund
As of the calendar year/period referred to above, I have a direct or
indirect beneficial ownership interest in the securities listed below which are
required to be reported pursuant to the Code of Ethics of the Company:
Title of Number Principal
Security of Shares Amount
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The name of any broker, dealer or bank with whom I maintain an account
in which my securities are held for my direct or indirect benefit are as
follows:
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Date:_____________ Signature:___________________________
Print Name:__________________________
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Exhibit B
BLUE CHIP VALUE FUND, INC.
Securities Transaction Report
For the Calendar Quarter Ended _______________________
(month/day/year)
To: Barbara Brewer , as Co-administrator of the
above listed Fund
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transactions
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics of the Company:
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<CAPTION>
Nature of Broker/Dealer
Interest Rate Transaction or Bank
Date of Number of Principal and Maturity (Purchase, Through Whom
Security Transaction Shares Amount Date (if applicable) Sale, Other) Price Effected
--------- ----------- ------ ------ -------------------- ------------ ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
During the quarter referred to above, I established the following
accounts in which securities were held during the quarter for my direct or
indirect benefit:
1. The name of the broker, dealer or bank with whom I
established the account:
2. The date the account was established:
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Date:_____________ Signature:___________________________
Print Name:__________________________
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Exhibit C
BLUE CHIP VALUE FUND, INC.
ANNUAL CERTIFICATE
Pursuant to the requirements of the Code of Ethics of Blue Chip Value
Fund, Inc., the undersigned hereby certifies as follows:
1. I have read the Company's Code of Ethics.
2. I understand the Code of Ethics and acknowledge that I am subject
to it.
3. Since the date of the last Annual Certificate (if any) given
pursuant to the Code of Ethics, I have reported all personal
securities transactions and provided any securities holding
reports required to be reported under the requirements of the
Code of Ethics.
Date: ___________________________________
Print Name
____________________________________
Signature
