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Code of Ethics
While affirming its confidence in the integrity and good faith of all of its
employees, partners, and associates, Aronson+Partners (the "Adviser") recognizes
that certain of its personnel have or may have knowledge of present or future
portfolio transactions and, in certain instances, the power to influence
portfolio transactions made by or for its Advisory Clients, and that if such
individuals engage in personal transactions in Securities that are eligible for
investment by Advisory Clients, these individuals could be in a position where
their personal interests may conflict with the interests of the Advisory
Clients.
In view of the foregoing and of the provisions of Rule 17j-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), the Adviser has
determined to adopt this Code of Ethics to specify and prohibit certain types of
transactions deemed to create actual conflicts of interest, the potential for
conflicts, or the appearance of conflicts, and to establish reporting
requirements and enforcement procedures.
I. Statement of General Principles
In recognition of the trust and confidence placed in the Adviser by its Advisory
Clients and to give effect to the Adviser's belief that its operations should be
directed to the benefit of its Advisory Clients, the Adviser hereby adopts the
following general principles to guide the actions of its employees, partners,
and associates:
(1) The interests of the Advisory Clients are paramount. All of the Adviser's
personnel must conduct themselves and their operations to give maximum
effect to this tenet by assiduously placing the interests of the Advisory
Clients before their own.
(2) All personal transactions in Securities by the Adviser's personnel must be
accomplished so as to avoid even the appearance of a conflict of interest
on the part of such personnel with the interests of any Advisory Client.
(3) All of the Adviser's personnel must avoid actions or activities that allow
(or appear to allow) a person to profit or benefit from his or her position
with respect to an Advisory Client, or that otherwise bring into question
the person's independence or judgment.
II. Definitions
(1) "Access Person" shall mean (i) each associate or partner of the Adviser,
(ii) each employee of the Adviser (or of any company in a control
relationship to the Adviser) who, in connection with his or her regular
functions or
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duties, makes, participates in, or obtains information regarding the
purchase or sale of a Security by an Advisory Client, or whose functions
relate to the making of any recommendations with respect to such purchases
or sales, and (iii) any natural person in a control relationship to the
Adviser who obtains information concerning recommendations made by the
Adviser with respect to the purchase or sale of a Security by an Advisory
Client.
(2) "Advisory Client" means any individual, group of individuals, partnership,
trust or company, including, without limit, a Fund for whom the Adviser
acts as investment adviser or sub-adviser.
(3) "Beneficial Ownership" of a Security is to be determined in the same manner
as it is for purposes of Section 16 of the Securities Exchange Act of 1934
(the "1934 Act"). This means that a person should generally consider
himself or herself the beneficial owner of any Securities in which he or
she has a direct or indirect pecuniary interest. In addition, a person
should consider himself or herself the beneficial owner of Securities held
by (i) his or her spouse or minor children, (ii) a relative who shares his
or her home, or (iii) other persons by reason of any contract, arrangement,
understanding, or relationship that provides him or her with sole or shared
voting or investment power over the Securities held by such person.
(4) "Control" shall have the same meaning as that set forth in Section 2(a)(9)
of the 1940 Act. Section 2(a)(9) provides that "control" means the power to
exercise a controlling influence over the management or policies of a
company, unless such power is solely the result of an official position
with such company. Ownership of 25% or more of a company's outstanding
voting securities is presumed to give the holder of such Securities control
over the company. This is a rebuttable presumption, and it may be countered
by the facts and circumstances of a given situation.
(5) "Fund" means an investment company registered under the 1940 Act for which
the Adviser acts as adviser or sub-adviser.
(6) "Initial Public Offering" means an offering of securities registered under
the Securities Act of 1933 (the "1933 Act") the issuer of which,
immediately before the registration, was not subject to the reporting
requirements of Section 13 or Section 15(d) of the 1934 Act.
(7) "Investment Personnel" means all Access Persons who, with respect to an
Advisory Client, occupy the position of account or portfolio manager (or
who serve on an investment committee that carries out the investment
management function), all Access Persons who provide or supply information
and/or advice to any such manager (or committee), or who execute or help
execute any such manager's (or committee's) decisions, and
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all Access Persons who, in connection with their regular functions,
obtain contemporaneous information regarding the purchase or sale of a
Security by or for an Advisory Client.
(8) A "Limited Offering" means an offering that is exempt from registration
under the 1933 Act pursuant to Section 4(2) or Section 4(6) or pursuant
to Rule 504, Rule 505, or Rule 506 under the 1933 Act.
(9) An Access Person's "Personal Account" means any Securities Account in
which such Access Person has direct or indirect Beneficial Ownership.
(10) "Purchase or sale of a Security" includes, among other things, the
writing of an option to purchase or sell a Security.
(11) "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the 1940 Act, except that it shall not include securities
issued by the Government of the United States or an agency thereof,
bankers' acceptances, bank certificates of deposit, commercial paper,
high-quality short-term debt instruments (i.e., any instrument that has
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) such as repurchase agreements, and shares of
registered open-end mutual funds.
(12) A "Security held or to be acquired" by an Advisory Client means any
Security which, within the most recent 15 days, (i) is or has been held
by an Advisory Client or (ii) is being or has been considered by the
Adviser for purchase by an Advisory Client. A "Security held or to be
acquired" also includes any option to purchase or sell, and any Security
convertible into or exchangeable for, Securities held or considered for
purchase under (i) or (ii).
(13) A Security is "being purchased or sold" by an Advisory Client from the
time when a recommendation has been communicated to the person who
places the buy and sell orders for an Advisory Client until the time
when such program has been fully completed or terminated.
(14) The designated "Review Officer" is Paul Dodge.
III. Prohibited Purchases and Sales of Securities
(1) No Access Person shall, in connection with the purchase or sale,
directly or indirectly, by such person of a Security held or to be
acquired by any Advisory Client:
(A) employ any device, scheme, or artifice to defraud such Advisory
Client;
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(B) make to such Advisory Client any untrue statement of a material
fact or omit to state to such Advisory Client a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(C) engage in any act, practice or course of business that would
operate as a fraud or deceit upon such Advisory Client; or
(D) engage in any manipulative practice with respect to such Advisory
Client.
(2) Subject to Sections V(3) and V(4) of this Code, no Access Person may
purchase or sell, directly or indirectly, any Security in which he or
she had or by reason of such transaction acquired any Beneficial
Ownership, within 24 hours (seven days, in the case of Investment
Personnel) before or after the time that the same (or a related)
Security is being purchased or sold by any Advisory Client. Any profits
realized on trades within these proscribed periods will be disgorged.
(3) No Investment Personnel may acquire Securities as part of an Initial
Public Offering.
(4) No Access Person shall purchase a Security offered in a Limited
Offering without the specific, prior written approval of the Adviser's
designated Review Officer.
(5) No Access Person shall profit from the purchase and sale, or sale and
purchase, of the same (or equivalent) Security within a 60-day period.
Profit due to any such short-term trades will be disgorged. Exceptions
to this policy are permitted only with the approval of the Review
Officer and then only in the case of emergency or extraordinary
circumstances.
IV. Policy Statement on Insider Trading
The Adviser forbids any partner, associate, or employee from trading, either
personally or on behalf of others, including accounts managed by the Adviser, on
material nonpublic information or communicating material nonpublic information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." The Adviser's policy applies to every partner, associate, and
employee and extends to activities within and outside their duties at the
Adviser. Any questions regarding the Adviser's policy and procedures should be
referred to the Review Officer.
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The term "insider trading" is not defined in the federal securities laws but
generally is used to refer to the use of material nonpublic information to trade
in securities (whether or not one is an "insider") or to communications of
material nonpublic information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(1) trading by an insider, while in possession of material nonpublic
information, or
(2) trading by a non-insider, while in possession of material nonpublic
information, where the information either was disclosed to the non-
insider in violation of an insider's duty to keep it confidential or
was misappropriated, or
(3) communicating material nonpublic information to others.
The concept of "insider" is broad. It includes partners, associates, and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, the Adviser may become a temporary insider of a
company it advises or for which it performs other services. For that to occur,
the company must expect the Adviser to keep the disclosed nonpublic information
confidential and the relationship must at least imply such a duty before the
Adviser will be considered an insider.
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that partners, associates, and
employees should consider material includes, but is not limited to: 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.
Information is nonpublic until it has been effectively communicated to the
marketplace. One must be able to point to some fact to show that the information
is generally public. For example, information found in a report filed with the
SEC, or appearing in Dow Jones, Reuters Economic Services, The Wall Street
Journal, or other publications of general circulation would be considered
public.
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Before trading for yourself or others in the securities of a company about which
you may have potential inside information, ask yourself the following questions:
(1) Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially effect the market price
of the securities if generally disclosed?
(2) Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace?
If, after consideration of the above, you believe the information is material
and nonpublic, or if you have questions as to whether the information is
material and nonpublic, you should take the following steps.
(1) Report the matter immediately to the Review Officer.
(2) Do not purchase or sell the securities on behalf of yourself or
others.
(3) Do not communicate the information inside or outside the Adviser,
other than to the Review Officer.
(4) After the Review Officer has reviewed the issue, you will be
instructed to continue the prohibitions against trading and
communication, or you will be allowed to trade and communicate the
information.
Information in your possession that you identify as material and nonpublic may
not be communicated to anyone, including persons within the Adviser, except as
provided above. In addition, care should be taken so that such information is
secure. For example, files containing material nonpublic information should be
sealed; access to computer files containing material nonpublic information
should be restricted.
The role of the Review Officer is critical to the implementation and maintenance
of the Adviser's policy and procedures against insider trading. The Adviser's
Supervisory Procedures can be divided into two classifications -- prevention of
insider trading and detection of insider trading.
To prevent insider trading, the Adviser will:
(1) provide, on a regular basis, an educational program to familiarize
partners, associates, and employees with the Adviser's policy and
procedures, and
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(2) when it has been determined that a partner, associate, or employee of
the Adviser has material nonpublic information,
(A) implement measures to prevent dissemination of such information,
and
(B) if necessary, restrict partners, associates, and employees
from trading the securities.
To detect insider trading, the Review Officer will:
(1) review the trading activity reports filed by each partner, associate,
and employee, and
(2) review the trading activity of accounts managed by the Adviser.
V. Preclearance of Transactions
(1) Except as provided in Section V(3), each Access Person must pre-clear each
proposed transaction in Securities with the Review Officer prior to
proceeding with the transaction. No transaction in Securities shall be
effected without the prior written approval of the Review Officer. In
determining whether to grant such clearance, the Review Officer shall refer
to Section V(4), below. Preclearance of a Securities transaction is valid
for 48 hours.
(2) In determining whether to grant approval for the purchase of a Security
offered in a Limited Offering by an Access Person, the Review Officer shall
take into account, among other factors, whether the investment opportunity
should be reserved for an Advisory Client, and whether the opportunity is
being offered to the Access Person by virtue of his or her position with
the Adviser. (Cross-reference to Article VII, Section 6.)
(3) The preclearance requirements of Section V(1) shall not apply to the
following transactions:
(A) Purchases or sales over which the Access Person has no direct or
indirect influence or control.
(B) Purchases or sales that are non-volitional on the part of the Access
Person, including purchases or sales upon exercise of puts or calls
written by the Access Person and sales from a margin account pursuant
to a bona fide margin call.
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(C) Purchases that are part of an automatic dividend reinvestment
plan.
(D) 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.
(4) The following transactions shall be entitled to clearance by the
Review Officer:
(A) Transactions which appear upon reasonable inquiry and
investigation to present no reasonable likelihood of harm to any
Advisory Client and which are otherwise in accordance with Rule
17j-1. Such transactions would normally include purchases or
sales of up to 1,000 shares of a Security that is being
considered for purchase or sale by an Advisory Client (but not
then being purchased or sold) if the issuer has a market
capitalization of over $1 billion.
(B) Purchases or sales of Securities that are not eligible for
purchase or sale by any Advisory Client as determined by
reference to the 1940 Act and blue sky laws and regulations
thereunder, the investment objectives and policies and investment
restrictions of the Advisory Client and any undertakings made to
regulatory authorities.
(C) Transactions that the partners of the Adviser, as a group and
after consideration of all the facts and circumstances, determine
to be in accordance with Section III and to present no reasonable
likelihood of harm to an Advisory Client.
VI. Additional Restrictions and Requirements
(1) No Access Person shall accept or receive any gift of more than de
minimis value from any person or entity that does business with or on
behalf of the Adviser or an Advisory Client.
(2) No Investment Personnel shall accept a position as a director,
trustee, or general partner of a publicly traded company or
partnership unless the acceptance of such position has been approved
by the Review Officer as consistent with the interests of the Advisory
Clients. If board service is authorized, Investment Personnel serving
as directors normally should be isolated from those making investment
decisions through "Chinese Wall" or other procedures.
(3) Each Access Person must direct each brokerage firm or bank at which
the Access Person maintains a Securities account to promptly send
duplicate copies of such person's account statement and brokerage
confirmations to the Review Officer. Compliance with this provision
can be effected by the
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Access Person's providing duplicate copies of all such statements and
confirmations directly to the Review Officer within two business days
of receipt by the Access Person.
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VII. Reporting Obligations
(1) Initial Holdings Reports. Each Access Person shall report to the
Review Officer not later than 10 days after the person becomes an
Access Person the following information:
(A) 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;
(B) 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
(C) The date the report is submitted by the Access Person.
(2) Quarterly Transaction Reports. Each Access Person shall report all
Security transactions, and any new Personal Accounts opened, to the
Review Officer each quarter. In the event no reportable transactions
occurred during the quarter, the report should be so noted and
returned signed and dated. Every report shall be made not later than
10 days after the end of a calendar quarter and shall contain the
following information:
(A) With respect to any transaction during the quarter in a Security
in which the Access Person had any indirect or indirect
Beneficial Ownership:
(i) The date of the transaction, title, number of shares, and
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 of the Security 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 date the report is submitted by the Access Person.
(B) With respect to any Personal Account established during the
quarter by the Access Person in which any Securities were held
for the direct or indirect benefit of the Access Person:
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(i) The name of the broker, dealer, or bank with whom the
Access Person established the account;
(ii) The date the account was established; and
(iii) The date the report is submitted by the Access Person.
(3) Annual Holdings Reports. Each Access Person shall report to the
Review Officer not later than January 30 each year the following
information:
(A) The title, number of shares, and principal amount of each
Security held for the direct or indirect beneficial ownership of
the Access Person as of December 31 the prior year;
(B) The name of any broker, dealer or bank with whom the Access
Person maintains a Personal Account in which any Securities were
held for the direct or indirect benefit of the Access Person;
and
(C) The date the report was submitted by the Access Person.
(4) Annual Certification. Every Access Person shall certify annually that
he or she:
(A) has read and understands this Code;
(B) recognizes that he or she is subject to the Code;
(C) has complied with the Code; and
(D) has disclosed and reported all personal Securities transactions
and holdings required to be disclosed or reported.
(5) Every Access Person shall report the name of any publicly traded
company (or any company anticipating a public offering of its equity
Securities) and the total number of its shares Beneficially Owned by
him or her if such total ownership is more than 1/2 of 1% of the
company's outstanding shares.
(6) Every Access Person who owns Securities acquired in a Limited
Offering shall disclose such ownership to the Review Officer if such
person is involved in any subsequent consideration of an investment
in the issuer by an Advisory Client. The Adviser's decision to
recommend the purchase of such issuer's Securities to any Advisory
Client will be subject to independent review by Investment Personnel
with no personal interest in the issuer.
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(7) The Review Officer shall submit confidential quarterly and annual
reports with respect to his or her own personal Securities
transactions and holdings to a partner designated to receive his or
her reports ("Alternate Review Officer"), who shall act in all
respects in the manner prescribed herein for the Review Officer.
VIII. Review and Enforcement
(1) The Adviser shall create and thereafter maintain a list of all
Access Persons.
(2) The Review Officer shall review all transactions and holdings
reports submitted by Access Persons. The Review Officer shall
compare all reported personal Securities transactions with completed
portfolio transactions of the Access Persons and a list of
Securities being considered for purchase or sale by the Adviser to
determine whether a violation of this Code may have occurred. Before
making any determination that a violation has been committed by any
person, the Review Officer shall give such person an opportunity to
supply additional explanatory material.
(3) If the Review Officer determines that a violation of this Code may
have occurred, he or she shall submit his or her written
determination, together with the confidential quarterly report and
any additional explanatory material provided by the individual, to
our attorneys, Drinker, Biddle & Reath, who shall make an
independent determination as to whether a violation has occurred.
(4) If Drinker, Biddle & Reath finds that a violation has occurred, the
Adviser's managing partner and other partners shall impose upon the
individual such sanctions as they deem appropriate.
(5) No person shall participate in a determination of whether he or she
has committed a violation of this Code or of the imposition of any
sanction against himself or herself. If a Securities transaction of
the Review Officer is under consideration, Theodore R. Aronson shall
act in all respects in the manner prescribed herein for the Review
Officer.
IX. Records
The Adviser shall maintain records in the manner and to the extent set
forth below, which records shall be available for examination by
representatives of the Securities and Exchange Commission.
(1) A copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved in
an easily accessible place;
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(2) A record of any violation of this Code, and of any action taken as a
result of such violation, shall be preserved in an easily accessible
place for a period of not less than five years following the end of
the fiscal year in which the violation occurs;
(3) A copy of each report made by an Access Person pursuant to this Code
shall be preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two years in an
easily accessible place;
(4) A record of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code or are required
to review these reports shall be maintained in an easily accessible
place;
(5) A copy of each report required in Section X below must be maintained
for at least five years following the end of the fiscal year in which
it is made, the first two years in an easily accessible place; and
(6) The Adviser shall maintain a record of any decision, and the reasons
supporting the decision, to approve the acquisition by Access Persons
of Limited Offerings for at least five years after the end of the
fiscal year in which the approval is granted.
X. Miscellaneous
(1) All reports of Securities transactions and any other information
filed with the Adviser pursuant to this Code shall be treated as
confidential.
(2) The Adviser may from time to time adopt such interpretations of this
Code as it deems appropriate.
(3) The Review Officer of the Adviser shall report to the Adviser and to
the Board of Trustees of each Advisory Client at least annually as to
the operation of this Code and shall address in any such report any
violations requiring significant remedial action and the need (if
any) for further changes or modifications to this Code.
(4) Before this Code is approved by a Fund that is an Advisory Client,
and no less frequently than annually, the Review Officer of the
Adviser shall certify to the Board of Trustees of the Fund that the
Adviser has adopted procedures reasonably necessary to prevent Access
Persons from violating the Adviser's Code of Ethics.
(5) Each Fund that is an Advisory Client must approve this Code, and all
material changes to this Code shall be submitted to each Fund for
review
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and approval no later than six months following the date of
implementation of such material changes.
Adopted this 20th day of February 1996 (amended Section IV on January 15,
1999, and Section VII on September 26, 2000).
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