JAMES C. EDWARDS & CO., INC.
STATEMENTS OF POLICY
I. POSSIBLE CONFLICTS OF INTEREST IN SECURITIES TRANSACTIONS
This policy statement consists of two parts: (A) A statement of principles
as to the avoidance of conflicts of interest with our clients; and (B) The
procedures to be followed by each investment counselor relating to his or her
transactions in securities.
A. CONFLICT-OF-INTEREST PRINCIPLES
The Securities & Exchange Commission has said:
"An investment adviser is a fiduciary. As such he owes his clients
undivided loyalty, should not engage in any activity in conflict with the
interest of any client, and should take the steps reasonably necessary to
fulfill his fiduciary obligations. Thus, an investment adviser must not only
refrain from effecting, on his own behalf securities transactions which are
inconsistent with his fiduciary obligations; he should also be reasonably
certain that persons associated with him are not improperly utilizing the
information which they obtain in the conduct of the investment advisory business
in such manner as to adversely affect the interest of clients or limit the
ability of the adviser to fulfill his fiduciary obligations."
Our Company accepts this definition of our fiduciary responsibilities,
believing that personal and corporate ethics must be above reproach. Actions
which might expose any of us or the Company to the suspicion of impropriety must
be avoided. When contemplating a transaction for the Company's account or an
account in which any Company personnel may have a direct or indirect personal or
family interest, we should ask ourselves: Can this be construed as in conflict
with the interests of the Company's clients?
Specific rules in this area are difficult, and in the final analysis, each
of us must make his or her own determination as to whether there is a conflict
with the interest of our clients. It is not possible to spell out all possible
cases of conflict of interest. Some general and specific rules and observations
are set forth as follows:
Company personnel should conduct their personal financial affairs in a
manner appropriate to our fiduciary relationship to clients. They should avoid
undue speculation and any actions or personal involvement with regard to their
investments that diminish our ability to serve clients or which may be
reasonably construed to diminish this ability.
Specifically, Company personnel are expected to observe the following
rules:
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1. No security (including an option to buy a security) should be
purchased while it is under consideration for addition to client
portfolios, or until it is believed that substantially all initial
client acquisition programs have been completed.
2. No security should be sold for a period of at least one month after
the initial client purchase programs have been completed.
3. No security should be sold or "put" on a security bought if the
security is under consideration for removal from client portfolios or
until substantially all client selling programs are completed.
4. During the periods specified above the affected securities will be
placed on a restricted list which will be made available to all
employees.
5. Company personnel shall not participate in an underwriting of a
security conducted by firms to which the Company directs brokerage
business on behalf of its clients if the security is being recommended
to clients until all client purchase orders are completed at the
offering price.
6. Company personnel shall not engage in short-term trading of securities
broadly held in client accounts, and are strongly discouraged from
engaging in short sales, margin trades, the writing of uncovered
options and short-term trading even if client-owned securities are not
involved.
B. REPORTS OF SECURITY TRANSACTIONS
Each investment counselor shall be required to make a
securities-transaction report within ten days after the end of each quarter,
whether or not any covered securities transactions were effected during such
quarter. All other Company personnel shall make a securities-transaction report
within ten days after the end of any quarter in which a covered securities
transaction was actually effected.
The report shall set forth every transaction in a security other than
United states Government obligations. The report shall cover every purchase,
sale or other acquisition or disposition with respect to covered securities.
Short sales and purchases or sales of options ("puts", "calls", "straddles",
etc.) must be reported. Company personnel shall report on transactions for their
own account and for the account of other members of their immediate family
(spouse, minor children and relatives sharing their home).Transactions for their
own account shall include transactions in which they have any direct or indirect
beneficial interest, unless they have no direct or indirect influence or control
over the account in question. Transactions in trust accounts for the benefit of
Company personnel or members of their family will not be reportable if such
personnel have no direct or indirect control over the investment of such
accounts.
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The securities-transaction report shall include the title and amount of the
security involved, the date and nature of the transaction (i.e., purchase, sale
or other acquisition or disposition), the price at which it was effected, the
name of the person for whose account the transaction was effected and the
relationship of such person to the party making the report (self, child, spouse,
parent, etc.), the name of the broker or dealer, and the brokerage discount
received, if any.
Report forms can be obtained from Margaret Hanlon. In addition to quarterly
reports as and when required, all Company personnel will be required to submit
an annual statement (in the month of January) to the effect that all
transactions during the previous year have been reported as required.
Securities-transaction reports shall be submitted to the President. Reports
shall be kept confidential and the contents thereof shall not be disclosed
except for the purpose of review by senior management or in accordance with
requirements of law.
II. RECEIPT AND USE OF MATERIAL NON-PUBLIC (INSIDE) INFORMATION
The following statement of policy relates to use of material non-public
information.
1. Court and SEC administrative decisions interpreting Rule 10b-5
promulgated under the Securities Exchange Act of 1934 make it unlawful for any
person to invest or recommend investing in securities on the basis of material
non-public information.
2. "Material" information is any information about a company or the market
for the company's securities which is likely to be considered important by
reasonable investors, including reasonable speculative investors, in determining
whether to buy sell or hold such securities or information which, if generally
known, would be likely to affect the market price of any of the company's
securities. Information should be presumed "material" if it relates to such
matters as dividend increases or decreases, earnings estimates, changes in
previously released earnings estimates, significant expansion or curtailment of
operations, a significant increase or decrease in orders, significant merger or
acquisition proposals or agreements, significant new products or discoveries,
extraordinary borrowing, major litigation, liquidity problems, extraordinary
management developments, purchase or sale of substantial assets, or similar
events. Among the factors considered in determining whether information is
material are the degree of its specificity, the extent to which it differs from
information previously publicly disseminated and its reliability in light of its
nature and source and the circumstances under which it was received.
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3. "Non-public" information is information which is not disseminated in a
manner making it generally available to the investing public. Information
received about a company under circumstances which indicate that it is not yet
in general circulation should be considered non-public information. Information
is not public until it has been adequately disseminated in a manner calculated
to reach the securities market place in general in the appropriate public media
(usually the newspapers, trade journals or broad tape) without favoring any
group, giving the public an opportunity to make informed investment decisions.
Phone calls by representatives of the company, phone calls from brokerage houses
or other security analysts, or other similar dissemination to limited groups of
people do not satisfy the public disclosure requirements of Rule l0b-5.
4. Company personnel receiving information about a company which is
believed to be material non-pubic information shall not invest or recommend
investment in securities of such company without first consulting with the
President or the Chairman. Such investment shall not be made or recommended
unless the President or Chairman is satisfied, after reviewing all relevant
factors (including the nature and source of the information and the degree to
which such information has been publicly disseminated), that the information
received is not material non-public information. If the President or Chairman
concludes that the information is material non-public information, he shall
instruct all Company personnel not to invest or recommend investment in the
company involved until the President or Chairman is satisfied that the
information has become public.
From time to time these Statements of policy may be revised in the light of
developments in the law and practical experience with their application. These
Statements of Policy will be distributed to all Company personnel and will be
explained to all new personnel at the time of their employment.
These Statements of Policy will be reviewed from time to time with all
affected personnel to discuss new developments in the law and to answer any
questions of interpretation or application. Personnel who have questions as to
the applicability or interpretation of these Statements of Policy should consult
a senior officer of the Company.
