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STRATEGIC FIXED INCOME, L.L.C.
1001 19TH STREET NORTH, SUITE 1720
ARLINGTON, VA 22209
703-812-8300
This Code of Ethics ("Code") has been adopted by Strategic Fixed Income,
L.L.C. ("Strategic") to comply with the requirements of Rule 17j-1 under the
Investment Company Act of 1940 ("Act"). In some respects, this Code imposes
obligations that go beyond those imposed by the Act, where Strategic believes it
appropriate to do so. The provisions of this Code apply to all employees of
Strategic.
Employees of Strategic must read and understand this Code and should
present any questions concerning the Code to Patricia Arcoleo, who is the Vice
President in charge of compliance matters ("Compliance Director"). Each employee
must sign and return the attached acknowledgement with respect to the Code to
the Compliance Director.
I. GENERAL STATEMENTS OF POLICY
A. The interests of Strategic's advisory clients, including any
registered investment company client (collectively "clients"),
supersede the interests of Strategic employees.
B. Personal investing of Strategic employees shall be conducted in a
manner to avoid actual or potential conflicts of interest with
Strategic's clients.
C. Strategic employees shall not use their position to the detriment of
Strategic's clients.
II. DEFINITIONS
A. For purposes of this Code:
1. An "IPO" 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.
2. 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, 505 or 506
thereunder.
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3. "Beneficial Ownership" has the meaning set forth in Attachment A
hereto.
4. A "security held or to be held" by any client means:
(i) any security which, within the most recent fifteen (15)
days, is or has been held by any client or is being or has
been considered by any client or by Strategic for purchase
by the client; and
(ii) any derivative of a security described in subparagraph
2(i), above, including any option, right, warrant, or
futures contract or any similar right having an exercise
or conversion privilege whose price or value is derived
from or based upon, in whole or in part, the price of such
security.
5. The term "security" 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 (including repurchase agreements), or
shares issued by registered open-end investment companies.
6. The term "Access Person" means
(i) The Manager of Strategic;
(ii) any director or officer of Strategic;
(iii) each Strategic employee, or employee of a company in a
control relationship to Strategic, who, in connection with
his or her regular functions or duties, makes,
participates in, or obtains information regarding the
purchase or sale of securities by any registered
investment company client of Strategic, or whose functions
relate to the making of any recommendations with respect
to such purchases or sales; and
(iv) each natural person in a control relationship with
Strategic who obtains information concerning
recommendations made to any registered investment company
client of Strategic regarding the purchase or sale of
securities by such client.
7. The term "Investment Employee" means
(i) any Strategic employee, or employee of a company in a
control relationship to Strategic, 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 any registered
investment company client of Strategic; and
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(ii) any natural person who controls Strategic and who obtains
information concerning recommendations made to any
registered investment company client of Strategic
regarding purchases or sales of securities by such client.
III. PROHIBITIONS
A. GENERAL PROHIBITION
1. No affiliated person of Strategic ("Affiliated Person"), including
any Strategic employee, in connection with the purchase or sale, directly or
indirectly, by such person of a security held or to be held by any client of
Strategic, shall:
(i) employ any device, scheme or artifice to defraud any
client;
(ii) make to any client any untrue statement of a material fact
or omit to state to such client a material fact necessary
in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(iii) engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon a
client; or
(iv) engage in any manipulative practice with respect to a
client.
B. AFFILIATED PERSON TRANSACTIONS
1. Except as set forth below, no Affiliated Person of Strategic shall
purchase or sell any security or derivative thereof (including any option,
right, warrant, or futures contract or any similar right having an exercise or
conversion privilege whose price or value is derived from or based upon, in
whole or in part, the price of any security) in which the Affiliated Person has,
or by reason of such transaction acquires, any direct or indirect beneficial
ownership, and that, to the Affiliated Person's actual knowledge at the time of
such purchase or sale, is a security held or to be held by any client of
Strategic. If the security is a corporate fixed-income security (which shall
include mortgage- and asset-backed securities of any kind issued by any issuer,
regardless of whether such issuer is a corporation), in certain cases the more
restrictive provisions set forth in Section IV.C, below, shall apply instead of
the provisions set forth in this Section III.B.
2. The restrictions described in this Subsection B shall not apply
to:
(i) purchases or sales effected in any account over which the
Affiliated Person has no direct or indirect influence or
control;
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(ii) purchases or sales that are non-volitional on the part of
the Affiliated Person;
(iii) purchases that are part of an automatic dividend
reinvestment plan;
(iv) 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 that such rights were acquired
from the issuer, and sales of such rights so acquired; or
(v) any purchase or sale (or series of related purchases or
sales) of a security involving 500 shares or fewer in the
aggregate, if the issuer of the security has a market
capitalization (I.E., outstanding shares multiplied by the
current price per share) greater than $1 billion.
C. CERTAIN INVESTMENT EMPLOYEE TRANSACTIONS--CORPORATE FIXED-INCOME
SECURITIES
The following restrictions relate to the purchase and sale by certain
Investment Employees of corporate fixed-income securities. In the event the
following restrictions do not apply to a particular employee or a particular
transaction, the restrictions set forth above in Section III.B shall apply
instead.
1. No Investment Employee who is a portfolio manager, analyst, or a
trader who provides information and advice to a portfolio manager
or helps execute a portfolio manager's decisions ("Qualified
Investment Employee") shall acquire any corporate fixed-income
security in an IPO.
2. No Qualified Investment Employee shall acquire any corporate
fixed-income security, whether in the open market or in a limited
offering, or dispose of any such security without express prior
approval of the Compliance Director. In determining whether to
approve such an acquisition or disposition, the Compliance
Director will take into account, among other factors, whether the
investment opportunity, or the opportunity to dispose of the
security, should be reserved for one or more of Strategic's
clients, and whether the opportunity is being offered to the
Qualified Investment Employee by virtue of his or her position
with respect to any client.
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3. No Qualified Investment Employee shall purchase or sell any
corporate fixed-income security in which such employee has, or by
reason of such transaction acquires, any direct or indirect
beneficial ownership (i) on a day during which, to the actual
knowledge of such employee, any advisory client has a pending
"buy" or "sell" order in that same security until that order is
executed or withdrawn, or (ii) if the employee has actual
knowledge of plans to effect a trade in that security on behalf
of any client, within fifteen (15) days of the proposed date of
such trade, or, if the employee has actual knowledge that such a
trade has been effected, within fifteen (15) days after any such
trade. Any profits realized by a Qualified Investment Employee on
a trade proscribed by the foregoing will be required to be
disgorged.
4. No Qualified Investment Employee shall personally profit from the
purchase and sale, or sale and purchase, of the same (or
equivalent) corporate fixed-income securities within sixty (60)
calendar days. Any profits realized by the employee in violation
of the foregoing will be required to be disgorged.
5. The restrictions described in paragraphs of this III.C shall not
apply to:
(A) purchases or sale effected in any account over which the
employee has no direct or indirect influence or control;
or
(B) purchases or sales that are non-volitional on the part of
the employee.
6. Each Qualified Investment Employee shall direct his or her broker
in writing to supply to the Compliance Director, on a timely
basis, duplicate copies of all personal securities transactions
involving corporate fixed-income securities and copies of
periodic statements for all personal securities accounts, to the
extent such statements relate to corporate fixed-income
securities, and shall supply a copy of that directive to the
Compliance Director. No such employee shall revoke or alter such
directive without notifying the Compliance Director of that fact.
D. GIFTS
No Investment Employee of Strategic shall receive any gift or other thing
of value of more than DE MINIMIS VALUE ($100.00) from any person or entity that
does business with or on behalf of any client of Strategic.
E. SERVICE AS DIRECTOR
No Investment Employee of Strategic shall serve on the board of directors
of any publicly traded company absent prior authorization of the Compliance
Director, which authorization shall not be given unless the Compliance Director
first determines that board service would be consistent with the interests of
Strategic's clients, including particularly registered investment company
clients and their shareholders. Where board service is authorized, Strategic
will formulate and implement appropriate "Chinese Wall" or other procedures to
isolate the Investment Employee serving on the board from Strategic employees
engaged in making decisions for Strategic's registered investment company
clients.
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F. PRE-APPROVAL REQUIREMENT CONCERNING INVESTMENTS
IN IPOS AND LIMITED OFFERINGS BY INVESTMENT EMPLOYEES
1. No Investment Employee shall directly or indirectly acquire
beneficial ownership in any securities in an IPO or in a limited offering
without first obtaining prior written approval from the Compliance Director.
2. The Compliance Director, in most circumstances, will make a
decision concerning any request submitted in accordance with paragraph F.1
above, within two (2) business days after the request is made. The Compliance
Director will retain a record of the approval of, and rationale supporting, any
acquisition of securities in an IPO or a limited offering.
G. DISCLOSURE OF CONFLICTS OF INTEREST
Each Investment Employee should consider whether he or she has a conflict
of interest, including a material ownership interest in any issuer, whose
securities are held or to be held or to be sold by a client, that might require
disclosure to such client, and should discuss such conflict with the Compliance
Director. The Compliance Director will keep a record of such discussion
concerning the employee's conflict. The Compliance Director may provide for
review, in appropriate circumstances, of any investment decisions being made
such employee by other Strategic Investment Employees who are not subject to any
conflict with respect to such client's investment decision. The Compliance
Director may, in her own discretion, elect to prohibit the employee with such
conflict from participating in the investment recommendation.
IV. REPORTING
A. TRANSACTIONS IN GENERAL
1. Each Access Person of Strategic is required to report to the
Compliance Director certain information about such Access Persons's securities
holdings and about each transaction in which such Access Person acquires any
direct or indirect beneficial ownership of a security, except with respect to a
transaction effected for, and securities held in, any account over which the
Access Person does not have any direct or indirect influence or control. The
reports that are required to be submitted are as follows:
(a) INITIAL HOLDINGS REPORTS. Every Access Person must file an
Initial Holdings Report no later than ten (10) days after
the person becomes an Access Person. The Initial Holdings
Report must contain the following information:
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(i) The title, number of shares and principal amount of
each security in which the Access Person had any
direct or indirect beneficial ownership when the
person became an Access Person;
(ii) 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
(iii) The date that the report is submitted by the Access
Person.
(b) QUARTERLY TRANSACTION REPORTS. Every Access Person must
file a Quarterly Transaction Report no later than ten (10)
days after the end of a calendar quarter. The Quarterly
Transaction Report must contain the following information:
(i) With respect to any transaction during the quarter
in a security in which the Access Person had any
direct or indirect beneficial ownership:
(1) The date of the transaction, the title, the
interest rate and maturity date (if
applicable), the number of shares and the
principal amount of each security involved;
(2) The nature of the transaction (I.E., purchase,
sale or any other type of acquisition or
disposition);
(3) The price of the security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or
through which the transaction was effected; and
(5) The date that the report is submitted by the
Access Person.
(ii) With respect to any account established by the
Access Person in which any securities were held
during the quarter for the direct or indirect
benefit of the Access Person:
(1) The name of the broker, dealer or bank with
whom the Access Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the
Access Person.
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(c) ANNUAL HOLDINGS REPORTS. Every Access Person must file an
Annual Holdings Report, which must include the following
information (which information must be current as of a
date no more than thirty (30) days before the report is
submitted):
(i) The title, number of shares and principal amount of
each security in which the Access Person had any
direct or indirect beneficial ownership;
(ii) 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
(iii) The date that the report is submitted by the Access
Person.
2. To the extent necessary, Compliance Director will designate
certain employees of any company in a control relationship with Strategic and
natural persons in a control relationship with Strategic as Access Persons for
purposes of this Section IV and will notify them of their obligations hereunder.
3. Each Strategic employee who is not an Access Person, and thus not
subject to the reporting obligations of paragraph A.1 above, is nevertheless
required to report to the Compliance Director certain information about each
transaction in which such employee acquires any direct or indirect beneficial
ownership of a security, except with respect to a transaction effected for an
account over which the employee does not have any direct or indirect influence
or control. The reports required to be submitted are those described in the
Memorandum to New Staff/Temporary Employees from the Compliance Director dated
August 23, 1993, concerning Quarterly Reports of Personal Securities
Transactions (a copy of which is attached as Attachment B hereto).
4. Access Persons and all Strategic employees should note that the
reports described above must be provided with respect to transactions in any
security which the Access Person or the employee has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership in the
security. These reports will be reviewed by the Compliance Director to determine
whether there is any reason to believe that any provision of this Code has been
violated by the Access Person or the employee, in which case further inquiry may
be made with respect to one or more particular transaction. Additional
requirements apply with respect to corporate fixed-income securities.
SEE Section III.C above.
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V. SANCTIONS
Upon discovering that an employee has not complied with the requirements
of this Code, Strategic may impose upon that person whatever sanctions Strategic
deems appropriate, including, among other things, censure, suspension, or
termination of employment.
VI. OTHER LAWS, RULES AND STATEMENTS OF POLICY
Nothing contained in this Code shall be interpreted as relieving any
employee of Strategic from acting in accordance with the requirements of any
law, rule, regulation or other statement of policy or procedure governing the
conduct of such employee adopted by Strategic, including the Insider Trading
Policy.
VII. ANNUAL APPROVAL REQUIREMENT
The Code must be approved by the board of directors of each registered
investment company client of Strategic. Any material change to the Code must be
approved by the board of each registered investment company client of Strategic
no later than six (6) months after adoption of the material change. Strategic is
required to furnish to any such board of directors an annual written report that
contains the following information:
(A) description of any issues arising under the Code since the last
report to the board of directors, including, but not limited to,
information about material violations of the Code and sanctions
imposed in response to the material violations; and
(B) certification that Strategic has adopted procedures reasonably
necessary to prevent its employees from violating the Code.
The Compliance Director will be responsible for furnishing such written reports.
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ATTACHMENT A
BENEFICIAL OWNERSHIP
The term "beneficial ownership" as used in Strategic's Code is to be
interpreted by reference to Rule 16a-1 under the Securities Exchange Act of 1934
("Rule"), except that the determination of direct or indirect beneficial
ownership for purposes of the Code must be made with respect to all securities
that an employee has or acquires. Under the Rule, a person is generally deemed
to have beneficial ownership of securities if: (i) the person, directly or
indirectly, through any contract, arrangement, understanding, relationship or
otherwise, has or shares (a) voting power, which includes the power to vote, or
to direct the voting of, the securities and/or (b) investment power, which
includes the power to dispose of, or to direct the disposition of, the
securities; and (ii) the person, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares a direct or
indirect pecuniary interest in the securities. A person is deemed to have voting
and/or investment power with respect to securities within the meaning of the
Rule if the person has the right to acquire beneficial ownership of the security
within sixty (60) days, including any right to acquire the security through the
exercise of any option, warrant or right; through the conversion of a security,
pursuant to the power to revoke a trust, discretionary account or similar
arrangement -- or pursuant to the automatic termination of a trust,
discretionary account or similar arrangement.
The term "pecuniary interest" in particular securities is generally
defined in the Rule to mean the opportunity, directly or indirectly, to profit
or share in any profit derived from a transaction in the securities. A person is
deemed to have an "indirect pecuniary interest" within the meaning of the Rule
in any securities held by members of the person's immediate family sharing the
same household, the term "immediate family" including any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, as
well as adoptive relationships. Under the Rule, an indirect pecuniary interest
also includes, among other things, a general partner's proportionate interest in
the portfolio securities held by a general or limited partnership; a person's
right to dividends that is separated or separable from the underlying
securities; a person's interest in certain trusts; and a person's right to
acquire equity securities through the exercise or conversion of any derivative
security, whether or not presently exercisable, the term "derivative security"
being generally defined as any option, warrant, convertible security, stock
appreciation right, or similar right with an exercise or conversion privilege at
a price related to an equity security, or similar securities with, or value
derived from, the value of an equity security. For purposes of the Rule, a
person who is a shareholder of a corporation or similar entity is not deemed to
have a pecuniary interest in portfolio securities held by the corporation or
entity, so long as the shareholder is not a controlling shareholder of the
corporation or the entity and does not have or share investment control over the
corporation's or the entity's portfolio.
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ACKNOWLEDGEMENT
The undersigned, ______________________, an employee of Strategic Fixed
Income, L.L.C. (or a non-employee who has been notified that he or she is
regarded as an "Access Person" of Strategic), certifies that he or she (1)
has read and understands the Code of Ethics ("Code") of Strategic Fixed
Income, L.L.C.; (2) recognizes that he or she is subject to the Code; (3) has
complied with all the requirements of the Code applicable to him or her; and
(4) has disclosed or reported all personal security transactions and security
holdings required to be disclosed or reported by him or her pursuant to the
Code. The undersigned further recognizes that he or she will be required to
make the foregoing certification on an annual basis.
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Dated: ________________________
