EX-99.CODE ETH
CHESTNUT STREET EXCHANGE FUND
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
The Managing General Partners of The Chestnut Street Exchange Fund (the "Fund")
has adopted this Code of Ethics (the "Code") for certain senior officers of the
Fund to guide and remind such officers of their responsibilities to the Fund,
and shareholders of the Fund. Such officers are expected to act in accordance
with the guidance and standards set forth in this Code.
I. COVERED OFFICERS AND PURPOSE OF THE CODE
The Code applies to the Fund's President, who is the Fund's principal executive
officer, and the Treasurer, who is the Fund's principal financial officer, and
any persons performing similar functions on behalf of the Fund, regardless of
whether such persons are employed by the Fund or a third party (the "Covered
Officers") for the purpose of promoting:
- honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
- full, fair, accurate, timely and understandable disclosure in reports
and documents that the Fund files with, or submits to, the Securities
and Exchange Commission ("SEC") and in other public communications
made by the Fund*;
- compliance with applicable laws and governmental rules and
regulations;
- the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
- accountability for adherence to the Code.
Each Covered Officer is obligated to use his or her best efforts to promote the
factors listed above, should adhere to a high standard of business ethics and
should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
II. ETHICAL HANDLING OF ACTUAL AND APPARENT CONFLICTS OF INTEREST
A. CONFLICTS OF INTEREST - GENERAL
1. A "conflict of interest" occurs when a Covered
Officer's private interest interferes with the
interests of, or his or her service to, the Fund and
its shareholders, including if a Covered Officer, or
a member of his or her family, receives improper
personal benefits as a result of his or her position
with the Fund.
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* If a Covered Person becomes aware that information filed with the SEC or made
available to the public contains any false or misleading information or omits to
disclose necessary information, he or she shall promptly report it to the Audit
Committee.
2. A conflict of interest generally arises if a Covered
Officer, or a member of his or her family, directly
or indirectly participates in any investment,
interest, association, activity or relationship that
may impair or appear to impair the Covered Officer's
objectivity.
B. SCOPE
This Code does not, and is not intended to, repeat or replace
the following programs and procedures, and such conflicts that
fall outside of the parameters of this Code:
1. Certain conflicts of interest already are subject to
conflicts of interest provisions in the Investment
Company Act of 1940, as amended (the "1940 Act"), and
the Investment Advisers Act of 1940 (the "Advisers
Act").
2. The Fund's and the investment adviser's compliance
programs and procedures that are designed to prevent,
or identify and correct, violations of these
provisions.
C. TYPES OF CONFLICTS
1. CONTRACTUAL RELATIONSHIPS
Although typically not presenting an opportunity for improper
personal benefit, conflicts arise from, or as a result of, the
contractual relationship between the Fund, investment adviser,
or service providers of which the Covered Officers may also be
officers or employees. As a result, this Code recognizes that
the Covered Officers may, in the normal course of their duties
(whether formally for the Fund, for the investment adviser or
for the service providers), be involved in establishing
policies and implementing decisions that will have different
effects on the Fund, the adviser and the administrator. The
participation of the Covered Officers in such activities is
inherent in the contractual relationship between the Fund and
the investment adviser or administrator and is consistent with
the performance by the Covered Officers of their duties as
officers of the Fund. Thus, if performed in conformity with
the provisions of the 1940 Act and the Advisers Act, such
activities will be deemed to have been handled ethically.
2. OTHER INVESTMENT COMPANIES
In addition, it is recognized by the Fund's Managing General
Partners that the Covered Officers may also be officers or
employees of one or more other investment companies covered by
this or other codes.
3. ADDITIONAL CONFLICTS
Other conflicts of interest may be covered by the Code, even
if such conflicts of interest are not subject to provisions in
the 1940 Act and the Advisers Act.
D. PERSONAL INTERESTS
The major principle of this Code is that the personal interest of a
Covered Officer should not be placed improperly before the interest of
the Fund. The following list provides examples of conflicts of interest
under the Code, but Covered Officers should keep in mind that this list
is not exhaustive.
Each Covered Officer must:
- not use his or her personal influence or personal
relationships improperly to influence investment decisions or
financial reporting by the Fund whereby the Covered Officer
would benefit personally to the detriment of the Fund;
- not cause the Fund to take action, or fail to take action, for
the individual personal benefit of the Covered Officer rather
than the benefit the Fund;
- not use material non-public knowledge of portfolio
transactions made or contemplated for the Fund to trade
personally or cause others to trade personally in
contemplation of the market effect of such transactions; and
- report at least annually affiliations or other relationships
with the Fund, the investment adviser or the distributor,
including any related conflict of interest.
E. REPORTING OF CONFLICTS
1. Required Disclosures
If certain conflict of interest situations are
engaged in by Covered Officers or by members of their
family, these conflicts of interest must be promptly
discussed with the Audit Committee. These conflicts
of interest include:
- service as a director on the board of any
public or private company;
- the receipt of any non-nominal gifts in
excess of $250.00;
- the receipt of any entertainment from any
company with which the Fund has current or
prospective business dealings unless such
entertainment is business-related,
reasonable in cost, appropriate as to time
and place, and not so frequent as to raise
any question of impropriety;
- any ownership interest in, or any consulting
or employment relationship with, any of the
Fund's service providers, other than its
investment adviser, principal underwriter,
administrator or any affiliated person
thereof;
- a direct or indirect financial interest in
commissions, transaction charges or spreads
paid by the Fund for effecting portfolio
transactions or for selling or redeeming
shares other than an interest arising from
the Covered Officer's employment, such as
compensation or equity ownership; and
- any other interest, relationship or matter
that a Covered Person or the Managing
General Partners determine, in his or her
reasonable judgement, warrants disclosure.
2. Recommended Disclosures
There are potential conflict of interest situations,
which may be engaged in by Covered Officers or by
members of their family, that should be discussed
with the Audit Committee. A Covered Person should use
reasonable judgement to determine if a conflict,
other than conflicts listed under section E(1), is
material and warrants disclosure to the Audit
Committee.
III. COMPLIANCE AND DISCLOSURE
A. COMPLIANCE
Each Covered Officer should:
1. familiarize himself or herself with the disclosure
requirements generally applicable to the Fund;
2. not knowingly misrepresent, or cause others to misrepresent,
facts about the Fund to others, whether within or outside the
Fund, including to the Fund's directors and auditors,
governmental regulators and self-regulatory organizations and
any other organization;
3. to the extent appropriate within his or her area of
responsibility, consult with other officers and employees of
the Fund, investment adviser and other service providers
with the goal of promoting full, fair, accurate, timely and
understandable disclosure in the reports and documents the
Fund files with, or submits to, the SEC and in other public
communications made by the Fund; and
4. promote compliance with the standards and restrictions imposed
by applicable laws, rules and regulations.
B. DISCLOSURE
Unless otherwise required by law, this Code shall be disclosed
as required by the SEC.
IV. ACCOUNTABILITY
Each Covered Officer must:
- upon adoption of the Code (or thereafter as applicable, upon
becoming a Covered Officer), affirm in writing to the Managing
General Partners on the certification attached hereto as
Appendix A that he or she has received, read, and understands
the Code;
- annually thereafter affirm to the Managing General Partners
that he or she has complied with the requirements of the Code
and reported any violations of the Code;
- not retaliate against any other Covered Officer or any
employee of the Fund or their affiliated persons or the Fund's
service providers for reports of potential violations that are
made in good faith; and
- notify the Chairman of the Audit Committee promptly if he or
she knows of any violation of this Code. Failure to do so is
itself a violation of this Code.
V. REPORTING PROCEDURES
1. RESPONSIBILITY**
- The Fund's Audit Committee is responsible for
applying this Code to specific situations in which
questions are presented under it and has the
authority to interpret this Code in any particular
situation.
- The Fund's Audit Committee may consult Fund counsel
in order to effectively discharge its
responsibilities.
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** The Audit Committee may delegate its reporting procedures, responsibilities
and investigation procedures to the Chairman of the Audit Committee.
2. INVESTIGATION PROCEDURES**
The Fund will follow these procedures in investigating and
enforcing the Code:
- The Audit Committee will take all appropriate action
to investigate any potential violations of the Code;
- If, after such investigation, the Audit Committee
believes that no violation has occurred, the Audit
Committee is not required to take any further action;
- Any matter that the Audit Committee believes is a
violation of this Code will be reported to the
Managing General Partners; and
- If the Managing General Partners concur that a
violation has occurred, it will take action which it
considers appropriate. Such action may include a
review of, and appropriate modifications to,
applicable policies and procedures; notification to
appropriate personnel of each service provider or its
governing body; or a recommendation to dismiss the
Covered Officer.
3. WAIVERS
Any approvals or waivers, implicit or otherwise, sought by a
Covered Person will be considered by the Audit Committee. Such
Committee will be responsible for granting waivers, as
appropriate; and any changes to or waivers of this Code will,
to the extent required, be disclosed as provided by SEC rules.
A waiver is the approval of a material departure from a
provision of this Code. An implicit waiver is the Fund's
failure to take action within a reasonable period of time
regarding a material departure from a provision of this Code
that has been made known to the Managing General Partners of
the Fund.
V. OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by the Fund for purposes of
Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to
registered investment companies thereunder. Insofar as other policies or
procedures of the Fund, the investment adviser, distributor, or other service
providers govern or purport to govern the behavior or activities of the Covered
Officers who are subject to this Code, they are superseded by this Code to the
extent that they overlap or conflict with the provisions of this Code. The
Fund's and its investment adviser's and distributor's codes of ethics under Rule
17j-1 under the 1940 Act (see Exhibit A for a list of the investment adviser and
distributor of the Fund) are separate requirements applying to the Covered
Officers and others, and are not part of this Code.
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VI. AMENDMENTS
Any amendments to this Code, other than amendments to Exhibit A, must be
approved or ratified by a majority vote of the Managing General Partners.
VII. CONFIDENTIALITY AND RECORDKEEPING
All reports and records prepared or maintained pursuant to this Code will be
considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than the Audit Committee.
Subject to the confidentiality provisions above, the Fund will maintain and
preserve for a period of not less than six (6) years from the date of submission
or action is taken, the first two (2) years in an easily accessible place, a
copy of the Covered Officer's annual certifications and any information or
materials supplied to the Audit Committee that provided the basis for any
amendment or waiver to this Code or relating to any violation of the Code and
sanctions imposed for such violation, together with a written record of the
approval or action taken by the Managing General Partners.
VIII. INTERNAL USE
The Code is intended solely for the internal use by the Fund and does not
constitute an admission, by or on behalf of any Fund, as to any fact,
circumstance, or legal conclusion.
Adopted: September 18, 2003
EXHIBIT A
List of Advisers and Distributor
BlackRock Institutional Management Corporation (no code)
BlackRock Financial Management, Inc.
PFPC Distributors, Inc.