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COMBINED CODE OF ETHICS
ADOPTED UNDER RULE 17j-1
COVERING THE FOLLOWING COMPANIES:
RYDEX DYNAMIC FUNDS
RYDEX SERIES FUNDS
RYDEX VARIABLE TRUST
RYDEX ETF TRUST
PADCO ADVISORS, INC.
PADCO ADVISORS II, INC.
RYDEX DISTRIBUTORS, INC.
RYDEX FUND SERVICES, INC.
EFFECTIVE JANUARY 1, 1999
AS REVISED AUGUST 6, 2003
Rydex Dynamic Funds, Rydex Series Funds, Rydex Variable Trust, Rydex ETF
Trust, PADCO Advisors, Inc., PADCO Advisors II, Inc., Rydex Distributors, Inc.
and Rydex Fund Services, Inc. (the "Companies") are confident that their
officers, trustees, directors and employees act with integrity and good faith.
The Companies recognize, however, that personal interests may conflict with a
Company's interests where officers, directors, trustees or employees:
- Know about present or future portfolio transactions or
- Have the power to influence portfolio transactions; and
- Engage in personal transactions in securities.
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In an effort to prevent these conflicts from arising and in accordance
with Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the "1940 Act"),
the Companies have adopted this Code of Ethics (the "Code") to prohibit
transactions that create, may create, or appear to create conflicts of interest,
and to establish reporting requirements and enforcement procedures. Each
officer, director, trustee and employee of the Companies should carefully read
and review this Code.
I. ABOUT THE RYDEX FUNDS.
Rydex Dynamic Funds, Rydex Series Funds, Rydex Variable Trust, and Rydex
ETF Trust (the "Trusts") are separately registered open-end management
investment companies. Each Trust may consist of multiple investment portfolios
(the "Rydex Funds"). The Rydex Funds may be grouped primarily into three broad
categories: (1) Benchmark Funds, (2) Sector Funds, and (3) Strategic Funds. In
addition, there is a Money Market Fund.
PADCO Advisors, Inc. and PADCO Advisors II, Inc. (the "Advisors") are
each investment advisers. PADCO Advisors, Inc. is the investment adviser for
Rydex Dynamic Funds and for Rydex Series Funds and PADCO Advisors II, Inc. is
the investment adviser for Rydex Variable Trust and Rydex ETF Trust. Rydex
Distributors, Inc. serves as the distributor of the Rydex Funds. Rydex Financial
Services, Inc. provides general administrative services to the Rydex Funds, and
serves as the transfer agent to the Rydex Series Funds, Rydex Dynamic Funds and
Rydex Variable Trust.
II. ABOUT THIS CODE OF ETHICS.
(1) TRANSACTION-RELATED AND REPORTING PROVISIONS.
This Code sets forth specific prohibitions relating to SECURITIES
transactions and also sets out certain reporting requirements. They cover the
persons identified below:
- All Company officers and directors;
- Portfolio Management Persons, Fund Accounting Persons and all
other employees who regularly obtain information concerning
recommendations made to a Fund about the PURCHASE OR SALE of
a security (herein called ACCESS EMPLOYEES);
- All Trustees of the Trusts, both INTERESTED and INDEPENDENT;
and
- Natural persons in a CONTROL relationship with a Company who
obtain information concerning recommendations made to a Fund
about the PURCHASE OR SALE of a SECURITY AND ARE NOT
SPECIFICALLY COVERED BY ANY OTHER SECTION OF THE CODE.
For the prohibitions and reporting requirements that apply to you,
please refer to Parts A-D, as indicated below. (Definitions of UNDERLINED terms
are included in Appendix A.)
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- Independent Trustees of the Trusts Part A
- Interested Trustees Part B
- Company officers, directors and ACCESS EMPLOYEES Part C
- Natural CONTROL persons Part D
(2) OTHER PROVISIONS.
The remainder of this Code sets forth general principles (Section III),
required course of conduct (Section IV), reporting obligations (Section V), the
Companies' review, enforcement and recordkeeping responsibilities (Sections VI,
VII and VIII) and miscellaneous information (Section IX).
III. STATEMENT OF GENERAL PRINCIPLES.
In recognition of the trust and confidence placed in the Companies by
shareholders of the Trusts, and because the Companies believe that their
operations should benefit shareholders, the Companies have adopted the following
universally applicable principles.
(1) Shareholders' interests are paramount. You must place
shareholder interests before your own.
(2) You must accomplish all personal SECURITIES transactions in a
manner that avoids even the appearance of a conflict of your
personal interests with those of a Trust and its shareholders.
(3) You must avoid actions or activities that allow (or appear to
allow) you or your family to profit or benefit from your position
with a Company, or that bring into question your independence or
judgment.
IV. REQUIRED COURSE OF CONDUCT.
(1) PROHIBITION AGAINST FRAUD, DECEIT AND MANIPULATION.
You cannot, in connection with the PURCHASE OR SALE, directly or
indirectly, of a SECURITY HELD OR TO BE ACQUIRED by any Fund:
(A) employ any device, scheme or artifice to defraud the Fund;
(B) make to the Fund any untrue statement of a material fact or
omit to state to the Fund 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 which would
operate as a fraud or deceit upon the Fund; or
(D) engage in any manipulative practice with respect to the Fund.
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Two of the most common risks associated with personal SECURITIES
transactions are front-running and trading opposite a Fund. For
example, front-running would include the purchase of a SECURITY
any time within seven days ahead of when a Fund purchases the same
SECURITY or the sale of a SECURITY any time within seven days
ahead of when a Fund sells the same SECURITY. An example of
trading opposite a Fund would include the sale of a SECURITY any
time within seven days after a Fund purchases the same SECURITY or
the purchase of a security any time within seven days after a Fund
sells the same SECURITY.
(2) LIMITS ON ACCEPTING OR RECEIVING GIFTS.
Officers of the Advisors and Portfolio Management Personnel cannot
accept or receive any gift of more than DE MINIMIS value from any
person or entity that does business with or on behalf of a
Company. THIS PROVISION DOES NOT INCLUDE:
- occasional meals, tickets to a sporting event or the
theater, or normal business entertainment; and
- any payment or reimbursement for professional training
or educational meetings.
V. REPORTING OBLIGATIONS.
See Parts A, B, C or D as appropriate, for your specific reporting
obligations.
VI. REVIEW AND ENFORCEMENT OF THE CODE.
Each Company shall appoint a Compliance Officer. However, with respect
to the Trusts, the Compliance Officer shall be the President of the Trust or his
designee.
(1) COMPLIANCE OFFICER. The Compliance Officer will perform the
following duties:
(A) The Compliance Officer will, on a quarterly basis, compare
all reported personal SECURITIES transactions with the Trusts'
completed portfolio transactions and a list of securities being
considered for purchase or sale by the Advisors to determine
whether a Code violation may have occurred. The Compliance Officer
may request additional information or take any other appropriate
measure that the Compliance Officer decides is necessary to aid in
this determination. Before determining that a person has violated
the Code, the Compliance Officer must give the person an
opportunity to supply explanatory material.
(B) If the Compliance Officer determines that a Code violation
may have occurred, the Compliance Officer must submit the
determination, together with the confidential quarterly report and
any explanatory material provided by the person, to the President
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and fund counsel. The President of the Trusts and counsel to the
Rydex Funds (the "Fund Counsel") will independently determine
whether the person violated the Code.
(C) No person is required to participate in a determination of
whether he or she has committed a Code violation or of the
imposition of any sanction against himself or herself. If a
securities transaction of the President is under consideration, a
Vice President will act for the President for purposes of this
Section VI.
(2) SANCTIONS.
If the President and Fund Counsel find that the person violated
the Code, the President will impose upon the person sanctions that
the President deems appropriate and will report the violation and
the sanction imposed to the Board of Trustees of the Rydex Funds
at the next regularly scheduled board meeting unless, in the sole
discretion of the Trusts' President, circumstances warrant an
earlier report.
(3) EXCEPTIONS.
The Compliance Officer, in his or her discretion, may exempt any
person from any specific provision of the Code, if the Compliance
Officer determines that (a) the services of the person are
valuable to the Rydex Funds; (b) the failure to grant this
exemption will result in an undue burden on the person or prevent
the person from being able to render services to the Rydex Funds;
and (c) granting the exemption does not detrimentally affect the
shareholders of the Rydex Funds. The Compliance Officer will
prepare a report documenting the nature of any exemption granted,
the persons involved and the reasons for granting such exemption.
Any person granted an exemption with respect to a particular
transaction must furnish the Compliance Officer with a written
report concerning that transaction within three (3) days of the
transaction.
VII. ANNUAL WRITTEN REPORT TO THE BOARD.
At least once a year, the Compliance Officer, on behalf of each Company,
will provide the Board of Trustees of each Trust a WRITTEN report that includes:
(1) ISSUES ARISING UNDER THE CODE.
The Report will describe any issue(s) that arose during the
previous year under the Code, including any material Code
violations, and any resulting sanctions.
(2) CERTIFICATION.
The Report will certify to the Board of Trustees that each Company
has adopted measures reasonably necessary to prevent its personnel
from violating the Code currently and in the future.
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VIII. RECORDKEEPING.
The Companies will maintain records as set forth below. These records
will be maintained in accordance with Rule 31a-2 under the 1940 Act and will 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 will be preserved
in an easily accessible place;
(2) A list of all persons who are, or within the past five years have
been, required to submit reports under this Code will be
maintained in an easily accessible place;
(3) A copy of each report made by a person under this Code will 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 any Code violation and of any sanctions taken will 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 occurred;
(5) A copy of each annual report to the Board of Trustees will be
maintained for at least five years from the end of the fiscal year
in which it is made, the first two years in an easily accessible
place; and
(6) The Companies will maintain a record of any decision, and the
reasons supporting the decision, to approve the acquisition of
SECURITIES in an INITIAL PUBLIC OFFERING ("IPO") or a PRIVATE
PLACEMENT, for at least five years after the end of the fiscal
year in which the approval is granted.
IX. MISCELLANEOUS.
(1) CONFIDENTIALITY. All personal SECURITIES transactions reports and
any other information filed with a Company under this Code will be
treated as confidential, provided that such reports and related
information may be produced to the Securities and Exchange
Commission and other regulatory agencies.
(2) INTERPRETATION OF PROVISIONS. The Board of Trustees of the Trusts
may from time to time adopt such interpretations of this Code as
it deems appropriate.
(3) PERIODIC REVIEW AND REPORTING. The Compliance Officer or President
of the Trust (or his or her designee) will report to the Board of
Trustees at least annually as to the
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operation of this Code and will address in any such report the
need (if any) for further changes or modifications to this Code.
(4) ANNUAL ACKNOWLEDGMENT. Each interested Trustee, officer, employee
and affiliated agent of the Companies is required to certify
annually that he/she (i) has read and understands the Code, (ii)
is aware that he/she is subject to the provisions of this Code,
(iii) has complied with the Code at all times during the previous
calendar year, and (iv) has, during the previous calendar year,
reported all holdings and transactions that he/she is required to
report pursuant to the Code. This certification may be made
electronically via the http://rydex.starcompliance.com website.
Adopted December 11, 1998
Revised February 11, 2002
Revised January 30, 2003
Revised August 25, 2003
PART A
PROCEDURES FOR INDEPENDENT TRUSTEES
GENERAL OBLIGATIONS.
(1) REQUIRED TRANSACTION REPORTS.
(A) On a quarterly basis you must report any SECURITIES
transactions, as well as any SECURITIES accounts established.
You must submit your report to the Compliance Officer no
later than 10 calendar days after the end of the calendar
quarter in which the transaction to which the report relates
was effected. Quarterly Personal Securities Transactions
Reports will be made electronically, via the
rydex.starcompliance.com website. You will receive
notification via email when the Quarterly Transaction Report
is due, including instructions on how to access the
information and complete the report.
(B) If you had no reportable transactions or did not open any
SECURITIES accounts during the quarter, you are not required
to submit a report.
(C) Reports of individual SECURITIES transactions are required
only if you KNEW at the time of the transaction or, in the
ordinary course of fulfilling your official duties as a
Trustee, SHOULD HAVE KNOWN, that during the 15-calendar day
period immediately preceding or following the date of your
transaction, the same SECURITY was PURCHASED OR SOLD, or was
BEING CONSIDERED FOR PURCHASE OR SALE, by a Fund.
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NOTE: The "SHOULD HAVE KNOWN" standard does not:
- imply a duty of inquiry;
- presume you should have deduced or extrapolated from
discussions or memoranda dealing with the Fund's
investment strategies; or
- impute knowledge from your prior knowledge of the
Fund's portfolio holdings, market considerations, or
investment policies, objectives and restrictions.
(2) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING
OBLIGATION?
If the transaction is reportable because it came within paragraph
(1), above, you must report all transactions in securities that:
(i) you directly or indirectly BENEFICIALLY OWN or (ii) because of
the transaction, you acquire direct or indirect BENEFICIAL
OWNERSHIP. The report must also contain any account you
established in which any SECURITIES were held during the quarter.
(3) WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following SECURITIES or
transactions on your quarterly report:
(A) PURCHASES OR SALES effected for any account over which you
have no direct or indirect influence or CONTROL.
(B) Purchases you made solely with the dividend proceeds received
in a dividend reinvestment plan or that are part of an
automatic payroll deduction plan or other similar type of
plan, where you purchase SECURITIES issued by your employer.
(C) Purchases arising from the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its SECURITIES,
as long as you acquired these rights from the issuer, and
sales of such rights so acquired.
(D) Purchases of SECURITIES issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of deposit,
commercial paper, high quality short-term debt instruments,
including repurchase agreements, and registered open-end
mutual funds.
(E) PURCHASES OR SALES which are non-volitional on your part,
including PURCHASES OR SALES upon exercise of puts or calls
written by you and sales from a margin account to a BONA FIDE
margin call.
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You may include a statement in your report that the report shall
not be construed as your admission that you have any direct or
indirect BENEFICIAL OWNERSHIP in the SECURITY included in the
report.
PART B
INTERESTED TRUSTEES
GENERAL OBLIGATIONS.
(1) PROVIDING A LIST OF SECURITIES.
You must provide the Compliance Officer with a complete listing of
all securities you BENEFICIALLY OWN as of December 31 of the
previous year. Each following year, you must submit a revised list
to the Compliance Officer showing the SECURITIES you BENEFICIALLY
OWN as of December 31. You must submit the initial listing within
10 calendar days of the date you first become a Trustee, and each
update no later than 30 calendar days after the start of the year.
The Initial Holdings Report and Annual Holdings Report, as
applicable, will be delivered electronically, via the
rydex.starcompliance.com website. You will receive notification
via email when the applicable report is due, including
instructions on how to access the information and complete the
report.
You are NOT required to provide this list of securities if:
- you are not currently affiliated with or employed by a
Trust's investment adviser(s) or distributor.
(2) REQUIRED TRANSACTION REPORTS.
On a quarterly basis you must report any SECURITIES transactions,
as well as any SECURITIES accounts established. You must submit
your report to the Compliance Officer no later than 10 calendar
days after the end of the calendar quarter in which the
transaction to which the report relates was effected. Quarterly
Personal Securities Transactions Reports will be made
electronically, via the rydex.starcompliance.com website. You will
receive notification via email when the Quarterly Transaction
Report is due, including instructions on how to access the
information and complete the report.
If you had no reportable transactions or did not open any
SECURITIES accounts during the quarter, you are still required to
submit a report. Please sign in the space provided and submit the
report with no transactions listed.
(3) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING
OBLIGATION?
You must report all transactions in SECURITIES that: (i) you
directly or indirectly BENEFICIALLY OWN or (ii) because of the
transaction, you acquire direct or indirect
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BENEFICIAL OWNERSHIP. The report must also contain any account you
established in which any SECURITIES were held during the quarter.
(4) PRE-APPROVAL OF IPOs AND PRIVATE PLACEMENTS.
You must obtain approval from the Compliance Officer before
acquiring BENEFICIAL OWNERSHIP of any SECURITIES offered in
connection with an IPO or a PRIVATE PLACEMENT.
(5) WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following SECURITIES or
transactions on your report:
(A) PURCHASES OR SALES effected for any account over which you
have no direct or indirect influence or CONTROL.
(B) Purchases you made solely with the dividend proceeds received
in a dividend reinvestment plan or that are part of an
automatic payroll deduction plan or other similar type of
plan, where you purchase SECURITIES issued by your employer.
(C) Purchases arising from the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities,
as long as you acquired these rights from the issuer, and
sales of such rights so acquired.
(D) Purchases of SECURITIES issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of deposit,
commercial paper, high quality short-term debt instruments,
including repurchase agreements, and registered open-end
mutual funds.
(E) PURCHASES OR SALES which are non-volitional on your part,
including PURCHASES OR SALES upon exercise of puts or calls
written by you and sales from a margin account to a BONA FIDE
margin call.
You may include a statement in your report that the report shall
not be construed as your admission that you have any direct or
indirect BENEFICIAL OWNERSHIP in the SECURITY included in the
report.
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PART C
COMPANY OFFICERS, DIRECTORS AND ACCESS EMPLOYEES
I. GENERAL OBLIGATIONS.
(1) THIRTY-DAY PROHIBITION ON SELLING SECURITIES.
You cannot sell a SECURITY within 30 calendar days of acquiring
that SECURITY.
(2) PROVIDING A LIST OF SECURITIES.
You must provide the Compliance Officer with a complete listing of
all securities you BENEFICIALLY OWN as of December 31 of the
previous year. Each following year, you must submit a revised list
to the Compliance Officer showing the SECURITIES you BENEFICIALLY
OWN as of December 31. You must submit the initial listing within
10 calendar days of the date you first become an officer or ACCESS
EMPLOYEE, and each update no later than 30 calendar days after the
start of the year. The Initial Holdings Report and Annual Holdings
Report, as applicable, will be delivered electronically, via the
rydex.starcompliance.com website. You will receive notification
via email when the applicable report is due, including
instructions on how to access the information and complete the
report.
You are NOT required to provide this list of securities if:
- you are not currently affiliated with or employed by a
Trust's investment adviser(s) or distributor.
(3) REQUIRED TRANSACTION REPORTS.
On a quarterly basis you must report transactions in SECURITIES,
as well as any SECURITIES accounts established. You must submit
your report to the Compliance Officer no later than 10 calendar
days after the end of the calendar quarter in which the
transaction to which the report relates was effected. Quarterly
Personal Securities Transactions Reports will be made
electronically, via the rydex.starcompliance.com website. You will
receive notification via email when the Quarterly Transaction
Report is due, including instructions on how to access the
information and complete the report.
If you had no reportable transactions or did not open any
SECURITIES accounts during the quarter, you are still required to
submit a report. Please sign in the space provided and submit the
report with no transactions listed.
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(4) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY REPORTING
OBLIGATION?
You must report all transactions in SECURITIES that: (i) you
directly or indirectly BENEFICIALLY OWN or (ii) because of the
transaction, you acquire direct or indirect BENEFICIAL OWNERSHIP.
The report must contain any account you established in which any
SECURITIES were held during the quarter.
(5) PRE-APPROVAL OF IPOS AND PRIVATE PLACEMENTS.
You must obtain approval from the Compliance Officer before
acquiring BENEFICIAL OWNERSHIP of any SECURITIES offered in
connection with an IPO or a PRIVATE PLACEMENT.
(6) WHAT SECURITIES AND TRANSACTIONS MAY BE EXCLUDED FROM YOUR REPORT?
You are not required to detail or list the following SECURITIES or
transactions on your report.
(A) PURCHASES OR SALES effected for any account over which you
have no direct or indirect influence or CONTROL.
(B) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are part
of an automatic payroll deduction plan or other similar
type of plan, where you purchase SECURITIES issued by your
employer.
(C) Purchases arising from the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its
SECURITIES, as long as you acquired these rights from the
issuer, and sales of such rights so acquired.
(D) Purchases of SECURITIES issued by the U.S. Government or
its agencies, bankers' acceptances, bank certificates of
deposit, commercial paper, high quality short-term debt
instruments, including repurchase agreements, and
registered open-end mutual funds.
(E) PURCHASES OR SALES which are non-volitional on your part,
including PURCHASES OR SALES upon exercise of puts or
calls written by you and sales from a margin account to a
BONA FIDE margin call.
You may include a statement in your report that the report shall
not be construed as your admission that you have any direct or
indirect BENEFICIAL OWNERSHIP in the SECURITY included in the
report.
(7) SEVEN-DAY BLACKOUT PERIOD ON PERSONAL SECURITIES TRANSACTIONS.
You cannot PURCHASE OR SELL, directly or indirectly, any SECURITY
in which you had (or by reason of such transaction acquire) any
BENEFICIAL OWNERSHIP at any time within seven calendar days before
or after the time that the same (or a related) SECURITY IS BEING
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PURCHASED OR SOLD by any Fund. This provision will only apply if
you obtain specific information regarding the PURCHASE OR SALE of
a SECURITY by a Fund.
(A) EXCEPTION TO BLACKOUT PERIOD. The seven-day blackout period
does not apply to the PURCHASE OR SALE of any SECURITY (i) of
a company with a market capitalization in excess of $500
million, (ii) included in either the S&P 500 Composite Index
or the NASDAQ 100 Index, and (iii) made in dollar amounts less
than $25,000.
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PART D
NATURAL CONTROL PERSONS
GENERAL OBLIGATIONS.
(1) PROVIDING A LIST OF SECURITIES.
You must provide the Compliance Officer with a complete listing of
all SECURITIES you BENEFICIALLY OWN as of December 31 of the
previous year. Each following year, you must submit a revised list
to the Compliance Officer showing the SECURITIES you BENEFICIALLY
OWN as of December 31. You must submit the initial listing within
10 calendar days of the date you first become a natural CONTROL
person, and each update no later than 30 calendar days after the
start of the year. The Initial Holdings Report and Annual Holdings
Report, as applicable, will be delivered electronically, via the
rydex.starcompliance.com website. You will receive notification
via email when the applicable report is due, including
instructions on how to access the information and complete the
report.
You are NOT required to provide this list of securities if:
- you are not currently affiliated with or employed by the
Trusts' investment adviser(s) or distributor.
(2) REQUIRED TRANSACTION REPORTS.
On a quarterly basis you must report any SECURITIES transactions,
as well as any SECURITIES accounts established. You must submit
your report to the Compliance Officer no later than 10 calendar
days after the end of the calendar quarter in which the
transaction to which the report relates was effected. Quarterly
Personal Securities Transactions Reports will be made
electronically, via the rydex.starcompliance.com website. You will
receive notification via email when the Quarterly Transaction
Report is due, including instructions on how to access the
information and complete the report.
If you had no reportable transactions or did not open any
SECURITIES accounts during the quarter, you are still required to
submit a report. Please sign in the space provided and submit the
report with no transactions listed.
(3) WHAT SECURITIES ARE COVERED UNDER YOUR QUARTERLY OBLIGATION?
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You must report all transactions in SECURITIES that: (i) you
directly or indirectly BENEFICIALLY OWN or (ii) because of the
transaction, you acquire direct or indirect BENEFICIAL OWNERSHIP.
The report must also include any account you established in which
SECURITIES were held during the quarter.
(4) PRE-APPROVAL OF IPOs AND PRIVATE PLACEMENTS.
You must obtain approval from the Compliance Officer before
acquiring BENEFICIAL OWNERSHIP of any SECURITIES offered in
connection with an IPO or a PRIVATE PLACEMENT.
(5) WHAT SECURITIES AND TRANSACTIONS ARE EXCLUDED FROM YOUR REPORTING
OBLIGATION?
You are not required to detail or list the following SECURITIES or
transactions on your report:
(A) PURCHASES OR SALES effected for any account over which you
have no direct or indirect influence or CONTROL.
(B) Purchases you made solely with the dividend proceeds
received in a dividend reinvestment plan or that are part
of an automatic payroll deduction plan, where you purchase
SECURITIES issued by your employer.
(C) Purchases arising from the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its
SECURITIES, as long as you acquired these rights from the
issuer, and sales of such rights so acquired.
(D) Purchases of SECURITIES issued by the U.S. Government or
its agencies, bankers' acceptances, bank certificates of
deposit, commercial paper, high quality short-term debt
instruments, including repurchase agreements, and
registered open-end mutual funds.
(E) PURCHASES OR SALES which are non-volitional on your part,
including PURCHASES OR SALES upon exercise of puts or
calls written by you and sales from a margin account to a
BONA FIDE margin call.
You may include a statement in your report that the report shall
not be construed as your admission that you have any direct or
indirect BENEFICIAL OWNERSHIP in the SECURITY included in the
report.
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APPENDIX A
DEFINITIONS
ACCESS EMPLOYEE includes any director or officer of a Trust or of a Trust's
investment adviser, or an employee of a Trust's investment adviser who, in
connection with his or her regular functions or duties, participates in the
selection of a Trust's portfolio SECURITIES or who has access to information
regarding a Trust's future purchases or sales of portfolio SECURITIES.
BENEFICIAL OWNERSHIP means the same as under Section 16 of the Securities
Exchange Act of 1934 and Rule 16a-1(a)(2) thereunder. You should generally
consider yourself the beneficial owner of any SECURITIES in which you have a
direct or indirect pecuniary interest. In addition, you should consider yourself
the beneficial owner of SECURITIES held by your spouse, your minor children, a
relative who shares your home, or other persons by reason of any contract,
arrangement, understanding or relationship that provides you with sole or shared
voting or investment power.
CONTROL means the same as that under 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 presumption may be countered
by the facts and circumstances of a given situation.
INDEPENDENT TRUSTEE means a trustee of a Trust who is not an "interested person"
of the Trust within the meaning of Section 2(a)(19) of the 1940 Act. As of
February 25, 2000, the Trusts' INDEPENDENT TRUSTEES are:
Corey A. Colehour
J. Kenneth Dalton
Roger Somers
John O. Demaret
Patrick T. McCarville
INITIAL PUBLIC OFFERING ("IPO") means an offering of SECURITIES registered under
the Securities Act of 1933, the issuer of which, immediately before
registration, was not subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934.
INTERESTED TRUSTEE means a trustee of a Trust who is an "interested person" of
the Trust within the meaning of Section 2(a)(19) of the 1940 Act. As of February
25, 2000, the Trusts' only INTERESTED trustee is:
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Albert P. Viragh, Jr.
PRIVATE PLACEMENT means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) in the
Securities Act of 1933.
PURCHASE OR SALE OF A SECURITY includes, among other things, the writing of an
option to purchase or sell a SECURITY.
SECURITY means the same as that set forth in Section 2(a)(36) of the 1940 Act,
except that it does not include securities issued by the U.S. Government or its
agencies, bankers' acceptances, bank certificates of deposit, commercial paper,
shares of registered open-end mutual funds and high quality short-term debt
instruments, including repurchase agreements. A SECURITY does not include index
futures or other commodities.
A SECURITY HELD OR TO BE ACQUIRED by the Trust (or any Fund) means any SECURITY
which, within the most recent 15 days, (i) is or has been held by the Trust (or
any Fund) or (ii) is being or has been considered by the Trust's adviser or
sub-adviser for purchase by the Trust (or any Fund), and any option to purchase
or sell, and any SECURITY convertible into or exchangeable for any SECURITY.
A SECURITY is BEING PURCHASED OR SOLD by the Trust from the time a PURCHASE OR
SALE program has been communicated to the person who places buy and sell orders
for the Trust until the program has been fully completed or terminated.
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