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.
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
BlackRock Institutional Management Corporation (no code)
BlackRock Financial Management, Inc.