EXHIBIT 16(a)
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Effective 07/19/00
JOINT CODE OF ETHICS
I. BACKGROUND
1. This Code of Ethics has been adopted by USAA Investment Management
Company ("IMCO"), USAA Shareholder Account Services ("SAS") and each
of the USAA Funds (as defined in Appendix A) in order to comply with
the Investment Company Act of 1940 which requires that every
investment company and its investment adviser adopt such a Code in
order to regulate the personal investing activities of its
personnel.
2. The purposes of this Code are to implement the provisions of Rule
17j-1, as amended, in particular to prohibit fraudulent, deceptive
or manipulative acts by fund personnel in connection with their
personal transactions in Covered Securities held or to be acquired
by the funds, and to avoid conflicts of interest so that the
confidence of investors in the USAA Funds and other clients of IMCO
("OTHER IMCO-MANAGED ACCOUNTS") as well as USAA members and
customers will be preserved.
3. In adopting this Code, the Boards of Directors/Trustees (hereinafter
"BOARD OF DIRECTORS") of IMCO, SAS and the USAA Funds emphasize that
all persons covered by this Code must agree:
(a) to place the interests of USAA Fund shareholders and other
IMCO-managed accounts above their own personal interests;
(b) to refrain, in the conduct of all of their personal affairs,
from taking any inappropriate advantage of their positions
with IMCO, SAS and the USAA Funds; and
(c) to conduct all "personal securities transactions" so as to
fully comply with the provisions of this Code in order to
avoid any actual or even apparent conflict or claim of a
conflict of interest or abuse of such person's position with
IMCO, SAS and the USAA Funds.
4. This Code is intended to be administered together with the "Policy
Statement Concerning Insider Trading" (the "IMCO INSIDER TRADING
POLICY") as adopted and revised, from time to time, by IMCO, as well
as the "USAA Policy Statement and Procedures on Conflict of Interest
and Business Ethics" (the "USAA CONFLICTS POLICY") as adopted and
revised, from time to time, by the United Services Automobile
Association ("USAA").
5. In adopting this Code, the Boards of Directors have considered:
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(a) how the Code's restrictions and procedures as to compliance
should be framed in light of IMCO's and SAS's legal and
ethical obligations to the USAA Funds and all other
IMCO-managed accounts;
(b) and determined that the Code contains provisions reasonably
necessary to prevent Access Persons from engaging in Unlawful
Actions;
(c) the overall nature of the USAA Funds' operations; and
(d) issues and concerns raised by transactions in different kinds
of securities, and by the personal securities transactions of
different categories of personnel (including portfolio
managers, analysts, traders, fund accountants, other
investment personnel, and all "access persons" in general).
6. The Boards of Directors of all entities which have adopted this code
have also provided for the fair, just and equitable treatment of all
of the officers, directors and employees who will be affected by
this Code.
II. DEFINITIONS
For the definitions of important terms used throughout this Code, see
"Appendix A."
III. JOINT CODE OF ETHICS COMMITTEE
1. PURPOSE, AUTHORITY AND RESPONSIBILITIES. A Joint Code of Ethics
Committee ("Committee") has been established which has authority and
responsibility to interpret, adopt and implement procedures designed
to ensure compliance with this Code. The corporate governance
committees of the USAA Funds receive recommendations from the Joint
Code of Ethics Committee concerning the interpretation, adoption of
amendments and implementation of procedures designed to ensure
compliance with the code by the USAA Funds.
The Committee shall perform an annual review of the Code and the
IMCO Insider Trading Policy to discuss (1) what, if any, changes to
the Code or the IMCO Insider Trading Policy may be appropriate; and
(2) compliance with the Code or the IMCO Insider Trading Policy over
the previous year. Upon completion of the annual review, the
Compliance Officer, on behalf of the Committee, shall prepare an
annual written report to the Boards of Directors that at a minimum
(1) summarizes existing procedures contained in the Code and the
IMCO Insider Trading Policy and any changes in the procedures made
during the past year; (2) describes any issues arising under the
code of ethics or procedures since the last report to the board of
directors, including, but not limited to, information about material
violations of the code or procedures and sanctions imposed in
response to the material violations; (3) identifies any recommended
changes in existing restrictions or procedures based upon IMCO's
experience under the Code or IMCO Insider Trading Policy, evolving
industry
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practices, or developments in applicable laws or regulations; and
(4) certifies that the Fund, investment adviser or principal
underwriter, as applicable, has adopted procedures reasonably
necessary to prevent Access Persons from violating the code. In
conjunction with its annual review of the Code, the Committee also
shall provide a report to the Corporate Governance Committees of the
USAA Funds summarizing the provisions of the Code as they apply to
the disinterested directors/trustees and proposing any changes to
the Code as it applies to disinterested directors/trustees.
The Committee Charter contains provisions which will be of interest
to all persons covered by this Code. Copies of the Charter will be
furnished by the Compliance Officer upon request and should be
treated as the confidential property of IMCO.
2. VIOLATIONS; INVESTIGATIONS; EMPLOYMENT-RELATED SANCTIONS;
DISGORGEMENT. The Committee Charter authorizes the Committee to
investigate as well as to conduct informal hearings (including the
power to call individuals as witnesses) to determine whether
violations of this Code have been committed by any persons subject
thereto. In the event that a substantive violation of this Code is
determined to have occurred, the Charter grants the Committee
authority to impose certain employment-related sanctions listed
therein. Authority is also granted to the Committee to issue
directions, by way of disgorgement of any security or money, and to
take whatever further enforcement action the Committee deems prudent
and necessary to see that violations are fully and adequately
rectified.
IV. AFFIRMATIVE OBLIGATIONS
1. IMCO. IMCO shall:
(a) compile a list of all "access persons," to be updated as
soon as practicable, but no less frequently than on a monthly
basis; and
(b) issue timely notice to all employees of their addition to, or
removal from, such list.
2. REPORTING PERSONS. Upon initial employment or association with IMCO,
SAS or other entity designated by the Compliance Officer (SEE
sub-paragraphs (a) and (b) below), and no less frequently than
annually thereafter (SEE sub-paragraphs (a) to (c) below), all
reporting persons shall be informed of all reporting obligations
required by this Code and shall:
(a) affirm in writing their receipt of, familiarity with,
understanding of, and agreement to comply with:
(i) those provisions of this Code that pertain to them; and
(ii) all provisions of the IMCO Insider Trading Policy.
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(b) agree in writing to cooperate with any investigations or
inquiries to determine whether substantive violations of this
Code, or of the above-referenced related policy statement, have
occurred.
(c) certify in writing compliance with those provisions of this
Code (including, in particular, the transaction reporting
requirements of the Code), and the above-referenced related
policy statement, at all times since the effective date of such
person's last such certification.
3. INTERESTED ACCESS PERSONS. All interested access persons shall make
prompt oral or written disclosure to the Compliance Officer as well
as the IMCO Senior Vice President in his or her area of the firm of
any actual or apparent material conflict(s) of interest which the
interested access person may have with regard to any Covered
Security in which he or she has a beneficial ownership interest and
which he or she knows, or has reason to know, is the subject of a
buy, sell or hold recommendation to or concerning any USAA Fund or
other IMCO-managed account.
V. RESTRICTIONS AS TO GIFTS, ETC. AND DIRECTORSHIPS
1. GIFTS, GRATUITIES, FAVORS, AWARDS OR OTHER BENEFITS. In addition to
those provisions of the USAA Conflicts Policy and NASD Rules of Fair
Practice relating to the receipt of gifts and other benefits, all
reporting persons other than disinterested directors/trustees are
prohibited from receiving any gift, gratuity, favor, award or other
item or benefit having a market value in excess of $100 per person,
per year, from or on behalf of any person or entity that does, or
seeks to do, business with or on behalf of IMCO, SAS or any USAA
Fund. Business-related entertainment such as meals, tickets to the
theater or a sporting event which are infrequent and of a non-lavish
nature are excepted from this prohibition.
2. DIRECTORSHIPS.
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(a) GENERAL RULE. Interested access persons are and shall hereby be
prohibited from serving on the board of directors of any
publicly traded company absent prior written approval by the
Joint Code of Ethics Committee.
(b) APPLICATIONS FOR APPROVAL. Applications for approval of service
as a director of a publicly traded company shall be directed,
in writing, to the office of the Compliance Officer for prompt
forwarding to the Joint Code of Ethics Committee. In dealing
with such applications, the Committee shall consider all
factors which it deems to be pertinent to the request.
Approvals, once granted, may be revoked, in the discretion of
the Committee, at any time and upon no prescribed advance
notice.
(c) SUBSEQUENT INVESTMENT MANAGEMENT ACTIVITIES. Whenever any
interested access person is granted approval to serve as a
director of a publicly traded company he or she shall
personally refrain from participating in any deliberations,
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recommendations, or considerations of whether or not to
recommend that any securities of that company be purchased,
sold or retained in the investment portfolio of any USAA Fund
or other IMCO-Managed Account. All appropriate portfolio
managers are to be advised in writing by the Compliance Officer
that specific interested access person is to be excluded from
such decisions.
VI. SUBSTANTIVE RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
1. INITIAL PUBLIC OFFERINGS. No interested access person or IMCO-NASD
registered employee shall effect or be permitted to effect the
purchase of a security from the issuer, or any member of the
underwriting syndicate or selling group, in and during the course of
any initial public offering by or on behalf of the issuer of such
security.
2. Limited offering TRANSACTIONS.
(a) GENERAL RULE. No interested access person may purchase a
security in a limited offering transaction without obtaining
the advance written approval of the Compliance Officer.
(b) EXCEPTION. In determining whether or not to grant approval of
participation in a limited offering, the Compliance Officer is
directed to consider, among any other pertinent factors:
(i) whether the investment opportunity is available to, and
should be reserved solely for, the USAA Funds; and
(ii) whether the opportunity is or seems to have been made
available to the access person due to or by virtue of the
position which he or she holds with IMCO and/or the USAA
Funds.
(c) SUBSEQUENT INVESTMENT MANAGEMENT ACTIVITIES.
(i) Interested access persons who are granted advance
written approval to purchase a security in a limited
offering transaction shall timely comply with the
continuing disclosure requirements of paragraph IV.3
above in connection with any actual or apparent
conflict(s) of interest that might otherwise arise
should IMCO, any USAA Fund or any other IMCO-managed
account consider for purchase, sale or retention of any
security whatsoever issued by the same issuer.
(ii) In adopting this Code, IMCO acknowledges its
responsibility to monitor activities of the firm and
those of its interested access persons to ensure that
investment decisions on behalf of the USAA Funds and/or
any other IMCO-managed account relating to any Covered
Security whatsoever of an issuer with respect to which an
interested access person has obtained pre-acquisition
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approval will be subject to independent review by senior
IMCO investment personnel having no personal interest in
the issuer or any of its securities.
3. PERSONAL SECURITIES TRANSACTION "BLACK-OUT" TRADING RESTRICTIONS
(a) PROHIBITED TRADING "BLACK-OUT" PERIODS. The following
categories of personnel are subject to the following
self-operative restrictions upon execution of personal
securities transactions by or on their behalf:
(i) "PENDING ORDER" RESTRICTION. Subject only to the
exceptions noted in sub-paragraph (b) below, no
interested access person may effect a personal securities
transaction in a Covered Security with respect to which
any USAA Fund or other IMCO-managed account has
outstanding a purchase or sale order (the "PENDING
ORDER") regarding the same Covered Security or any
equivalent security.
(ii) 14-DAY RESTRICTION. No portfolio manager may effect a
personal securities transaction within seven calendar
days before, or seven (7) calendar days after, the trade
date of a purchase or sale of the same Covered Security
or any equivalent Covered Security by or on behalf of any
USAA Fund or other IMCO-managed account for which he or
she serves as portfolio manager.
In the event that a personal securities transaction is effected
in contravention of either of the two foregoing restrictions,
the interested access person or portfolio manager involved
shall, as soon as practicable after becoming aware of the
violative nature of his or her personal transaction
(IRRESPECTIVE OF ANY PRE-EXECUTION CLEARANCE WHICH MAY HAVE
BEEN PREVIOUSLY GRANTED FOR THE TRANSACTION), promptly (I)
advise the office of the Compliance Officer of the violation,
and (II) comply with whatever directions, by way of
disgorgement, which the Compliance Officer may issue in order
for the violation to be fully and adequately rectified.
(b) EXCEPTIONS TO THE "PENDING ORDER" TRADING RESTRICTION. The
Compliance Officer may and is hereby authorized to grant,
absent circumstances inconsistent with the recitals to this
Code, exception and relief to interested access persons from
the trading restriction established by sub-paragraph (a)(i)
above where the pending order:
(i) has been placed by or on behalf of a USAA Fund or other
IMCO-managed account, the investment objective of which
is to substantially replicate the performance of a
broad-based, publicly-traded market basket of common
stocks (E.G., the Standard & Poor's 500 Composite Stock
Index); or
(ii) relates to the common stock of an issuer included within
the Standard & Poor's 500 Composite Stock Index, AND the
access person's requested trade does not, when aggregated
with any and all such other like trades in the same
Covered
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Security or any equivalent Covered Security during the
previous thirty (30) calendar days, exceed a total of
500 shares.
4. SHORT-TERM MATCHED PROFIT TRANSACTIONS.
(a) PROHIBITED TRANSACTIONS. Subject to the exceptions noted
immediately below, no investment personnel shall engage in any
"short-term matched profit transaction" within the meaning of
this Code.
N.B. Investment personnel should note that this prohibition
is intended to apply to all instances of short-term (i.e.,
60 calendar days or less) security "short-selling," as well
as short-term investment activities (of a hedging, as well
as a speculative nature) in or involving options.
(b) EXCEPTIONS. The Compliance Officer may, and is hereby granted
authority to determine, in his or her discretion, to except a
given personal securities transaction from the prohibition
established by the foregoing sub-paragraph in cases where:
(i) the transaction, and any earlier personal securities
transaction with which it may be matched over the most
recent 60 calendar days, do not appear to evidence actual
abuse of a conflict of interest with any USAA Fund or
other IMCO-managed account (as, for example, where the
Covered Security(ies) involved have not recently been
held, traded or actively considered for investment or
trading by such accounts); or
(ii) the investment personnel demonstrate that a BONA FIDE and
sufficient personal or family economic hardship exists
warranting the granting of such an exception.
Exceptions should be granted only upon meritorious
circumstances and, if granted, are to be promptly reported, in
writing, to the Joint Code of Ethics Committee.
5. EXCESSIVE SHORT-TERM TRADING
IMCO management encourages employees to invest. However, we believe
there is a distinction between investment and the attempt to
generate profits by trading securities. This latter activity is not
compatible with the performance of an individual's job. Frequent
trading which diverts the employee's attention from the job is
unacceptable.
Employees will refrain from engaging in a pattern of securities
transactions:
(a) that involves such frequent trading as to potentially impact
an employee's ability to carry out his or her duties; or
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(b) that implies that an employee might become preoccupied with
tracking personal investments or working on his or her trading
strategies during working hours; or
(c) that involves margin debit balances that exceed1/2 of the
employee's annual base salary.
After consideration of the above criteria, the Code of Ethics
Committee may place restrictions on the personal trading activity of
employees who engage in short-term trading activity that the
Committee, in its judgment, deems to be excessive.
VII. PRE-EXECUTION CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS
1. REQUIREMENT TO SEEK AND OBTAIN PRE-EXECUTION CLEARANCE.
(a) GENERAL RULE. Each access person shall, as a pre-condition to
the execution of any personal securities transaction, be
required to seek and obtain the express approval of such action
by the Compliance Officer (or such officer's delegate), which
approval may be in oral or written form, as the access person
elects. Should oral approval be sought, the interested access
person shall be bound by the written record made thereof by the
Compliance Officer (or such officer's delegate).
(b) RULE APPLICABLE TO DISINTERESTED DIRECTOR/TRUSTEES.
Disinterested director/trustees shall be entitled to exemption
on a transaction-by-transaction basis from the pre-execution
clearance requirement of the foregoing sub-paragraph, provided
that at the time of execution of the given personal securities
transaction, they have no actual knowledge regarding whether or
not the Covered Security at issue, or any equivalent Covered
Security has, at any time during the previous fifteen calendar
days, been either (I) purchased or sold, or (II) actively
considered for purchase or sale, by or on behalf of any USAA
Fund or other IMCO-managed account. Should a disinterested
director/trustee believe that he or she is, in fact, in
possession of such knowledge with respect to a contemplated
personal securities transaction, the transaction may not occur
without pre-execution clearance as prescribed by sub-paragraph
(a) above.
2. PROCEDURES FOR PROCESSING SUCH REQUESTS.
(a) ACCESS PERSON PROCEDURES. In making requests for
pre-execution clearance, access persons will be required to
furnish whatever information is called for by the office of
the Compliance Officer.
(b) COMPLIANCE OFFICER PROCEDURES.
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(i) IMCO TRADER AND PORTFOLIO MANAGER CONSIDERATION.
Before a decision is made concerning a pre-execution
clearance request, the Compliance Officer or his or her
delegate shall make such inquiries as are reasonably
necessary to determine whether the proposed transaction
would violate any express provision of this Code, or
would otherwise give rise to an actual or apparent
material conflict of interest, and shall take such action
as may be consistent with such determination.
3. EFFECT OF PRE-EXECUTION CLEARANCE. Approval of a request for
pre-execution clearance shall not operate as a waiver, satisfaction
or presumption of satisfaction of any other provision of this Code,
but only as evidence of an access person's good faith, which may be
considered by the Joint Code of Ethics Committee should a violation
of any other provision of this Code be determined to have occurred.
4. LIMITATIONS UPON EXECUTION OF APPROVED TRANSACTIONS. The Joint Code
of Ethics Committee shall be authorized to establish terms and
conditions upon which all approved personal securities transactions
may be executed. Such terms and conditions may be amended, from time
to time, and, where practicable, shall be stated on the
pre-execution clearance request form. At a minimum, such terms and
conditions shall include requirements that the access person
acknowledge, by signing the request form:
(a) his or her responsibility, pursuant to paragraph VIII.4(a) of
this Code, to ensure that the executing broker-dealer (or its
clearing broker) simultaneously provide a duplicate
confirmation of the trade, when executed, directly to the
office of the Compliance Officer;
(b) his or her understanding and agreement that if, for any reason
whatsoever, the approved request is not acted upon within the
time frame allowed by the Compliance Officer, the clearance
shall be deemed to have lapsed and terminated, necessitating a
further original request if the trade is still desired to be
pursued by the access person; and
(c) his or her agreement to notify the Compliance Officer if,
having received approval, the access person subsequently
determines not to pursue the approved trade.
5. DENIALS. Grounds for denials of requests for pre-execution clearance
will be provided by the Compliance Officer, in writing, upon the
access person's request form.
6. APPEALS.
(a) DISCRETIONARY. Access persons may appeal to the Joint Code of
Ethics Committee for a hearing as to reasons why a denial of
pre-execution clearance by the Compliance Officer should be
overturned and reversed by the Committee. Whether or not such a
hearing will be granted is totally within the discretion of the
Committee.
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(b) PROCEDURES REGARDING APPEALS. Requests for an appeal must be in
writing, stating all reasons therefor, and delivered to the
office of the Compliance Officer not later than seven (7)
calendar days following the date of final denial of the
pre-execution clearance request. Further procedures governing
appeals are to be adopted by the Joint Code of Ethics Committee
and shall be furnished, upon request, by the office of the
Compliance Officer.
VIII. ADMINISTRATION OF CODE OF ETHICS; REPORTING AND DISCLOSURE REQUIREMENTS
TO EFFECTUATE AND MONITOR COMPLIANCE WITH THIS CODE, THE IMCO INSIDER
TRADING POLICY AND RULE 204-2(A)(12) UNDER THE INVESTMENT ADVISERS ACT
OF 1940
1. ANNUAL REPORT TO BOARDS OF DIRECTORS; Annually, a written report
will be delivered to the Boards of Directors by the Compliance
officer that: (1) describes any issues arising under the code of
ethics or procedures since the last report to the board of
directors, including, but not limited to, information about material
violations of the code or procedures and sanctions imposed in
response to the material violations; and (2) certifies that the
Fund, investment adviser or principal underwriter, as applicable,
has adopted procedures reasonably necessary to prevent Access
Persons from violating the Code.
2. ANNUAL REVIEW AND APPROVAL OF THE CODE OF ETHICS BY THE BOARDS OF
DIRECTORS.
>> The Boards of Directors, including a majority of directors who
are not interested persons of the USAA Funds, must review and
approve the Code of Ethics and any material changes to the Code.
>> A material change to the code must be approved by the Boards of
Directors no later than six months after adoption of the material
change.
>> The Boards of Directors must base approval on a determination
that the code contains provisions reasonably necessary to
prevent interested access persons from engaging in Unlawful
Actions prohibited by Rule 17j-1 as amended.
3. INITIAL HOLDINGS REPORTS. No later than 10 days after a person
becomes an Access Person, the following information shall be
provided to compliance officer: (a) the title, number of shares and
principal amount of each Covered 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 that the report is submitted by the Access Person.
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4. BROKERAGE ACCOUNT CONFIRMATIONS AND STATEMENTS. All reporting
persons are required to ensure that the office of the Compliance
Officer is furnished duplicate copies of the following documents:
(a) confirmations issued by broker-dealers upon the execution of
all personal securities transactions in any Covered Security in
which the reporting person had, at the time of the transaction,
or by reason of the transaction acquired, any direct or
indirect beneficial ownership interest in the Covered Security
or Covered Securities which were the subject of the
transaction; and
(b) any regular periodic or other statements reflecting personal
securities transaction activity within any account with a
securities broker-dealer in which the reporting person has any
direct or indirect beneficial ownership interest.
Such copies shall be provided to the Compliance Officer
contemporaneously with the time that the reporting person receives
his or her copies from the broker-dealer.
5. QUARTERLY REPORTS BY INTERESTED ACCESS PERSONS. Every interested
access person shall submit to the Compliance Department, on a
calendar quarterly basis, a report (the "Quarterly Report") of all
personal securities transactions. To facilitate preparation of this
report, at the end of each calendar quarter the Compliance
Department will provide each interested access person a listing of
transactions for which the Compliance Department had received
duplicate confirmations during that quarter. An interested access
person shall review and revise such listing as appropriate to
satisfy this quarterly report requirement. Such quarterly report
shall be submitted within ten (10) calendar days after the end of
each calendar quarter. The Quarterly Report need not include any
transactions in "excepted securities" as defined in Appendix A of
this Code of Ethics and shall be filed with the Compliance
Department regardless of whether or not the interested access
person had a beneficial ownership interest in any securities
transactions during the quarter.
The Quarterly Report shall contain the following information:
(a) the date of the transaction, the title and the number of
shares, the interest rate and maturity date (if applicable) and
the principal amount of each Covered Security involved;
(b) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) the price of the Covered Security at which the transaction was
effected; and
(d) the name of the broker, dealer or bank with or through whom the
transaction was effected.
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(e) the date that the report was submitted by the interested access
person.
With respect to any account established by an interested access
person in which any Covered Securities were held during the quarter
for the direct or indirect benefit of the interested access person:
(1) the name of the broker, dealer or bank with whom the
interested access person established the account;
(2) the date the account was established; and
(3) the date that the report is submitted by the interested
access person.
6. REPORTS BY ACCESS PERSONS OF TRANSACTIONS IN SHARES ISSUED PURSUANT
TO DIVIDEND REINVESTMENT PLANS.
(a) Notwithstanding that transactions in shares issued pursuant to
automatic dividend reinvestment plans are excluded from the
term "purchase or sale of a security" within the meaning of
this Code, in order to facilitate IMCO's compliance with the
books and records provisions of Rule 204-2(a)(12) under the
Investment Advisers Act of 1940, all interested access persons
shall be required to inform the office of the Compliance
Officer, in writing, of any transaction in Covered Securities
issued pursuant to dividend reinvestment plans in which the
interested access person has any direct or indirect beneficial
ownership interest, not later than ten (10) calendar days after
the end of the calendar quarter in which such transaction has
occurred.
(b) Notwithstanding anything to the contrary in this Code, a
disinterested director/trustee shall not be required to report
transactions in Covered Securities issued pursuant to a
dividend reinvestment plan (regardless of whether the
transaction is automatic), provided that at the time of
execution of the transaction, the disinterested
director/trustee has no actual knowledge regarding whether or
not the Covered Security at issue, or any equivalent Covered
Security has, at any time during the previous fifteen calendar
days, been either (i) purchased or sold, or (ii) actively
considered for purchase or sale, by or on behalf of any USAA
Fund or other IMCO-managed account. Should a disinterested
director/trustee believe that he or she is in fact in
possession of such knowledge with respect to a contemplated
personal securities transaction, the transaction must be
reported in the manner set forth in paragraph (a) above with
respect to interested access persons.
7. ANNUAL HOLDINGS REPORTS. Annually, the following information (which
information must be current as of a date no more than 30 days before
the report is submitted) must be submitted to the compliance
officer: (a) the title, number of shares and principal amount of
each Covered Security in which the Access Person had any direct or
indirect beneficial ownership; (b) 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
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benefit of the Access Person; and (c) the date that the report is
submitted by the Access Person.
8. OTHER DISCLOSURE REQUIREMENTS. Each reporting person shall be
required to furnish upon his or her initial association with IMCO or
SAS a disclosure and identification of:
(a) all accounts with securities broker-dealers in which the
reporting person currently has any direct or indirect
beneficial ownership interest;
(b) any investment or other similar clubs or groups in which he or
she wishes to participate in (Participation in such clubs or
groups requires advance authorization and continuous compliance
with such terms and conditions as the Compliance Officer may
impose); and
(c) any regular outside business interest and/or activities of the
reporting person (whether compensated or uncompensated),
including any directorships within the purview of paragraph V.2
above in which he or she currently serves provided, however,
that sub-paragraphs (a) and (b) above shall not apply to
disinterested directors/trustees.
Subsequent developments necessitating additions, deletions or other
changes in the above information shall be brought by reporting
persons to the attention of the office of Compliance Officer prior
to the occurrence of developments within the scope of sub-paragraph
(a) and (b) above, and promptly following occurrences within the
scope of sub-paragraph (c) above. The information on file will be
provided to persons to whom this Code applies on an annual basis by
the office of the Compliance Officer.
Each reporting person shall also be required, upon his or her
initially becoming subject to this Code, and annually thereafter to
disclose and identify all individual Covered Securities in which the
reporting person had, as of the effective date of such disclosure,
any direct or indirect beneficial interest.
9. Exemption to Reporting Requirements:
>> A person need not make an initial, quarterly or annual report
under this section with respect to transactions effected for,
and Covered Securities held in, any account over which the
person had no direct influence or control.
10. Review of Reports: The compliance officer or his authorized designee
shall review the above-described reports pursuant to procedures
established by the compliance department. The compliance officer
shall report the results of his review to appropriate management
personnel.
11. Recordkeeping Requirements: The following records must be maintained
by the compliance officer and shall be made available to the
Commission or any representative
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of the Commission at any time and from time to time for reasonable
periodic, special or other examination:
>> A copy of the code of ethics for each organization that is in
effect or was in effect within the past five years in an easily
accessible place;
>> A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained in
an easily accessible place for at least five years after the end
of the fiscal year in which the violation occurs.
>> A copy of each report required to be made by an Access Person
including any information provided in lieu of the reports (such
as brokerage statements), must be maintained for at least five
years after the end of the fiscal year in which the report is
made or the information is provided, the first two years in an
easily accessible place;
>> A record of all persons, currently or within the past five
years, who are or were required to make reports under the code
of ethics, or who are or were responsible for reviewing these
reports, must be maintained in an easily accessible place, and
>> A copy of each report to the Boards of Directors must be
maintained for at least five years after the end of the fiscal
year in which it is made, the first two years in an easily
accessible place.
>> A record of any decision, and the reasons supporting the
decision, to approve the acquisition by interested access person
of securities under limited offerings, for at least five years
after the end of the fiscal year in which the approval is
granted.
12. Disclosure Requirements: Appropriate disclosure information shall be
provided, pursuant to applicable statutes, rules and regulations,
with respect to the existence of this Code of Ethics and provisions
which permit personnel subject to this code to invest in securities,
including securities that may be purchased or held by the USAA
Funds.
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APPENDIX A -- DEFINITIONS
As used within this Code, the following terms have the following meanings:
DEFINED PERSONS
1. "ACCESS PERSON" means any director, trustee or officer of IMCO, SAS
and/or of any one or more of the USAA Funds, any advisory person and any
other person designated by the Compliance Officer.
2. "ADVISORY PERSON" means any employee of USAA or its subsidiaries 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 one or more of the USAA Funds or other IMCO-managed
accounts, or whose functions relate to the making of recommendations with
respect to such purchases or sales.
3. "DISINTERESTED DIRECTOR/TRUSTEE" means any director or trustee of a USAA
Fund who is not an "interested person" of the Fund as the quoted term is
defined by Section 2(a)(19)(A) of the Investment Company Act of 1940 and
rules of the SEC thereunder.
4. "IMCO-NASD REGISTERED EMPLOYEE" means any officer or employee of IMCO,
SAS or other USAA company affiliated with IMCO, who is licensed and
registered with the National Association of Securities Dealers, Inc.
("NASD") to engage in one or more categories of securities brokerage
activities subject to the supervision and control of IMCO.
5. "INTERESTED ACCESS PERSON" means any "access person" who is not a
"disinterested director/trustee."
6. "INVESTMENT PERSONNEL" means. any employee of the Fund or investment
adviser (or of any company in a control relationship to the Fund or
investment adviser) 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 the Fund and any natural person who
controls the Fund or investment adviser and who obtains information
concerning recommendations made to the Fund regarding the purchase or
sale of securities by the Fund.
7. "PORTFOLIO MANAGER" means any "access person" who, with respect to any
USAA Fund or other IMCO-managed account, has or shares with any other
person the primary responsibility for the day-to-day management of the
investment portfolio of such Fund or account.
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8. "REPORTING PERSON" means any officer or director of any USAA Fund, any
officer, director or employee of IMCO or SAS, any IMCO-NASD registered
employee, any interested access person, and any other person designated
by the Compliance Officer.
DEFINED SECURITIES
9. "COVERED SECURITY" encompasses each of the following (but not "excepted
security" which is separately defined below):
* any note, stock, treasury stock, bond, debenture, evidence of
indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or other
mineral rights;
* any put, call, straddle, option, or privilege on any security
(including a certificate of deposit) or on any group or index of
securities (including any interest therein or based on the value
thereof);
* any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to foreign currency; or
* in general, any interest or instrument commonly known as a "security,"
or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or
right to subscribe to or purchase, any of the foregoing.
10. "EQUIVALENT COVERED SECURITY" means, with respect to another security
(the "SUBJECT SECURITY"), any security of the same class as the reference
security, as well as any option (including puts as well as calls),
warrant, convertible security, subscription or stock appreciation right,
or other right or privilege on, for or with respect to the subject
security.
11. "EXCEPTED SECURITY" means any:
(a) security issued by the Government of the United States, bankers'
acceptance, bank certificate of deposit, commercial paper, or share
of any registered open-end investment company; and
(b) any other form of "security" which the Joint Code of Ethics
Committee may hereafter identify as not presenting the sort of
conflict of interest concerns which this Code is designed to obviate
or control.
In accordance with long-standing interpretations of the SEC, for
purposes of sub-paragraph (a) above:
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(i) "security issued by the Government of the United States"
shall NOT be deemed to include any indirect obligations
of the Government of the United States (so-called
"agency" obligations) with a remaining maturity in
excess of 397 calendar days, but shall be deemed to
include any obligations directly issued or guaranteed by
the Government of the United States, irrespective of the
obligation's initial or remaining maturity; and
(ii) certain so-called "money-market instruments," including
conventional repurchase agreements, U.S. Government
agency obligations and obligations issued or guaranteed
by foreign governments maturing within 397 calendar days
from date of purchase, may also be deemed to be
"excepted securities."
12. "SECURITY HELD OR TO BE ACQUIRED" means, (i) any Covered Security which,
within the most recent 15 days: Is or has been held by the Fund; or is
being or has been considered by the Fund or its investment adviser for
purchase by the Fund; and (ii) any option to purchase or sell, and any
security convertible into or exchangeable for, a Covered Security
described in paragraph (a)(10)(i) of this section.
DEFINED TRANSACTIONS
13. "INITIAL PUBLIC OFFERING" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before
the registration was not subject to Broker-Dealer reporting requirements
of the Securities Exchange Act of 1934.
14. "LIMITED OFFERING" means an offering that is exempt from registration
under state securities laws and under the Securities Act of 1933, such as
transactions by an issuer not involving a public offering or sales of
securities to accredited investors, or sales of securities to a limited
number of investors or in limited dollar amounts.
15. "PERSONAL SECURITIES TRANSACTION" means the execution, either directly
or indirectly, of any "purchase or sale of a security."
16. "PURCHASE OR SALE OF A COVERED SECURITY" shall include any bargain,
contract or other arrangement including the writing of an option to
purchase or sell a Covered Security, by which a person (other than a USAA
Fund or other IMCO-managed account) purchases, buys or otherwise
acquires, or sells or otherwise disposes of, a security in which he or
she currently has or thereby acquires any direct or indirect beneficial
ownership interest.
Excepted from the definition of this term and from the coverage by this
Code is any "purchase or sale of a security":
(a) involving a security or securities account over which a person has
no direct or indirect influence or control;
(b) which is non-volitional on the part of the person by or for whom the
transaction is effected;
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(c) which is effected pursuant to an automatic dividend reinvestment
plan; or
(d) involving either:
(i) the purchase of a security effected upon the exercise of
one or more rights issued by an issuer PRO RATA to all
holders of a class of its securities, if and only to the
extent to which such rights were acquired directly from
such issuer; or
(ii) the sale of any such rights so acquired.
17. "BENEFICIAL OWNERSHIP" and "BENEFICIAL OWNER" shall have the meanings
accorded to them in "Appendix B" to this Code.
18. "SHORT-TERM MATCHED PROFIT TRANSACTION" means the combination of any
"personal securities transaction" (the "SUBJECT TRANSACTION") which, when
matched (on either a purchase-and-sale, or sale-and-purchase, basis) with
any other such transaction by or on behalf of the same investment
personnel in the same (or any "equivalent") security occurring within
sixty (60) calendar days before or after the subject transaction, results
in actual trading profit for the investment personnel.
OTHER DEFINITIONS
19. "USAA FUNDS" means each and all of the following registered investment
companies currently advised by IMCO, together with any series or
portfolio thereof, as well as any such further registered investment
company the board of directors or trustees of which adopts this Joint
Code of Ethics:
o USAA Mutual Fund, Inc.
o USAA Investment Trust
o USAA Tax Exempt Fund, Inc.
o USAA State Tax-Free Trust
o USAA Life Investment Trust
20. "COMPLIANCE OFFICER" means the officer of IMCO holding that permanent
title, or any other individual designated by the Joint Code of Ethics
Committee to meet the responsibilities of such officer on an interim
basis.
21. "Unlawful actions" means it is lawful for any affiliated person of or
principal underwriter for a Fund, or any affiliated person of an
investment adviser of or principal underwriter for a Fund, in connection
with the purchase or sale, directly or indirectly, by the person of a
Security Held or to be Acquired by the Fund: (1) To employ any device,
scheme or artifice to defraud the Fund; (2) To make any untrue statement
of a material fact to the Fund or omit to state a material fact necessary
in order to make the statements made to the Fund, in light of the
circumstances under which they are made, not misleading; (3) To engage in
any act,
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practice or course of business that operates or would operate as a fraud
or deceit on the Fund; or (4) To engage in any manipulative practice with
respect to the Fund.
22. "Commission" shall mean the Securities and Exchange Commission.
.104621
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EXHIBIT 16(c)
<PAGE>
CODE OF ETHICS
MERRILL LYNCH INVESTMENT MANAGERS (MLIM)
REGISTERED INVESTMENT COMPANIES
AND THEIR INVESTMENT ADVISERS
AND PRINCIPAL UNDERWRITER
SECTION 1 - BACKGROUND
This Code of Ethics is adopted under Rule 17j-1 under the Investment
Company Act of 1940 ("1940 Act") and Rule 204-2(a) under the Investment
Advisers Act of 1940 and has been approved by the Boards of Directors of each
of the MLIM funds.1 Except where noted, the Code applies to all MLIM employees.
Section 17(j) under the Investment Company Act of 1940 makes it
unlawful for persons affiliated with investment companies, their principal
underwriters or their investment advisers to engage in fraudulent personal
securities transactions. Rule 17j-1 requires each Fund, investment adviser and
principal underwriter to adopt a Code of Ethics that contains provisions
reasonably necessary to prevent an employee from engaging in conduct prohibited
by the principles of the Rule. The Rule also requires that reasonable diligence
be used and procedures be instituted which are reasonably necessary to prevent
violations of the Code of Ethics.
On August 23, 1999, the SEC adopted amendments to Rule 17j-1 which
require greater board oversight of personal trading practices, more complete
reporting of employee securities trading and preclearance of employee purchases
of initial public offerings and private placements. The amendments require,
among other things, that MLIM provide its fund boards annually a written report
that (i) describes issues that arose during the previous year under the Code,
including information about material code violations and sanctions imposed and
(ii) certifies to the board that MLIM has adopted procedures reasonably
necessary to prevent access persons from violating the Code.
SECTION 2 - STATEMENT OF GENERAL FIDUCIARY PRINCIPLES
The Code of Ethics is based on the fundamental principle that MLIM and its
employees must put client interests first. As an investment adviser, MLIM has
fiduciary responsibilities to its clients, including the registered investment
companies
--------
1 As applicable herein, MLIM includes all AMG investment advisory affiliates
and the affiliated principal underwriter of investment companies registered
under the 1940 Act.
<PAGE>
(the "Funds") for which it serves as investment adviser. Among MLIM's fiduciary
responsibilities is the responsibility to ensure that its employees conduct
their personal securities transactions in a manner which does not interfere or
appear to interfere with any Fund transactions or otherwise take unfair
advantage of their relationship to the Funds. All MLIM employees must adhere to
this fundamental principle as well as comply with the specific provisions set
forth herein. It bears emphasis that technical compliance with these provisions
will not insulate from scrutiny transactions which show a pattern of compromise
or abuse of an employee's fiduciary responsibilities to the Funds. Accordingly,
all MLIM employees must seek to avoid any actual or potential conflicts between
their personal interest and the interest of the Funds. In sum, all MLIM
employees shall place the interest of the Funds before personal interests.
SECTION 3 - INSIDER TRADING POLICY
All MLIM employees are subject to MLIM's Insider Trading Policy, which
is considered an integral part of this Code of Ethics. MLIM's Insider Trading
Policy, which is set forth in the MLIM Code of Conduct, prohibits MLIM
employees from buying or selling any security while in the possession of
material nonpublic information about the issuer of the security. The policy
also prohibits MLIM employees from communicating to third parties any material
nonpublic information about any security or issuer of securities. Additionally,
no MLIM employee may use inside information about MLIM activities or the
activities of any Merrill Lynch & Co., Inc. entity to benefit the Funds or to
gain personal benefit. Any violation of MLIM's Insider Trading Policy may
result in sanctions, which could include termination of employment with MLIM.
(See Section 10--Sanctions).
SECTION 4 - RESTRICTIONS RELATING TO SECURITIES TRANSACTIONS
A. GENERAL TRADING RESTRICTIONS FOR ALL EMPLOYEES
The following restrictions apply to all MLIM employees:
1. ACCOUNTS. No employee, other than those employed by Merrill Lynch
Investment Managers International Limited ("MLIMI"), may engage in
personal securities transactions other than through an account
maintained with Merrill Lynch, Pierce, Fenner & Smith Incorporated or
another Merrill Lynch broker/dealer entity ("Merrill Lynch") unless
written permission is obtained from the Compliance Director.
Similarly, no MLIMI employee may engage in personal securities
transactions other than through an account maintained with Merrill
Lynch or The Bank of New York Europe Limited ("BNYE") unless written
permission is obtained from the Compliance Director.
2. ACCOUNTS INCLUDE FAMILY MEMBERS AND OTHER ACCOUNTS. Accounts of
employees include the accounts of their spouses, dependent relatives,
trustee
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and custodial accounts or any other account in which the employee has
a financial interest or over which the employee has investment
discretion (other than MLIM-managed Funds).
3. PRECLEARANCE. All employees must obtain approval from the Compliance
Director or preclearance delegatee prior to entering any securities
transaction (with the exception of exempted securities as listed in
Section 5) in all accounts. Approval of a transaction, once given, is
effective only for the business day on which approval was requested or
until the employee discovers that the information provided at the time
the transaction was approved is no longer accurate. If an employee
decides not to execute the transaction on the day preclearance
approval is given, or the entire trade is not executed, the employee
must request preclearance again at such time as the employee decides
to execute the trade.
Employees may preclear trades only in cases where they have a present
intention to transact in the security for which preclearance is
sought. It is MLIM's view that it is not appropriate for an employee
to obtain a general or open-ended preclearance to cover the
eventuality that he or she may buy or sell a security at some point on
a particular day depending upon market developments. This requirement
would not prohibit a price limit order, provided that the employee
shall have a present intention to effect a transaction at such price.
Consistent with the foregoing, an employee may not simultaneously
request preclearance to buy and sell the same security.
4. RESTRICTIONS ON PURCHASES. No employee may purchase any security which
at the time is being purchased, or to the employee's knowledge is
being considered for purchase, by any Fund managed by MLIM. This
restriction, however, does not apply to personal trades of employees
which coincide with trades by any MLIM index fund.
5. RESTRICTIONS ON SALES. No employee may sell any security which at the
time is actually being sold, or to the employee's knowledge is being
considered for sale, by any Fund managed by MLIM. This restriction,
however, does not apply to personal trades of employees which coincide
with trades by any MLIM index fund.
6. RESTRICTIONS ON RELATED SECURITIES. The restrictions and procedures
applicable to the transactions in securities by employees set forth in
this Code of Ethics shall similarly apply to securities that are
issued by the same issuer and whose value or return is related, in
whole or in part, to the value or return of the security purchased or
sold or being contemplated for purchase or sale during the relevant
period by the Fund. For example, options or warrants to purchase
common stock, and convertible debt and convertible preferred stock of
a particular issuer would be considered related to the underlying
common stock of
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that issuer for purposes of this policy. In sum, the related security
would be treated as if it were the underlying security for the purpose
of the pre-clearance procedures described herein.
7. PRIVATE PLACEMENTS. Employee purchases and sales of "private
placement" securities (including all private equity partnerships,
hedge funds, limited partnership or venture capital funds) must be
precleared directly with the Compliance Director or designee. No
employee may engage in any such transaction unless the Compliance
Director or his designee and the employee's senior manager have each
previously determined in writing that the contemplated investment does
not involve any potential for conflict with the investment activities
of the Funds.
If, after receiving the required approval, an employee has any
material role in the subsequent consideration by any Fund of an
investment in the same or affiliated issuer, the employee must
disclose his or her interest in the private placement investment to
the Compliance Director and the employee's department head. The
decision to purchase securities of the issuer by a Fund must be
independently reviewed and authorized by the employee's department
head.
8. INITIAL PUBLIC OFFERINGS. As set forth in Paragraph A.3. of this
Section 4, the purchase by an employee of securities offered in an
initial public offering must be precleared. As a matter of policy,
employees will not be allowed to participate in so-called "hot"
offerings as such term may be defined by Merrill Lynch or appropriate
regulators (e.g., offerings that are oversubscribed or for which the
demand is such that there is the possibility of oversubscription).
B. ADDITIONAL TRADING RESTRICTIONS FOR INVESTMENT PERSONEL
The following additional restrictions apply to investment personnel.
Investment personnel are persons who, in connection with their regular
functions or duties, make or participate in making recommendations regarding
the purchase or sale of securities by a Fund). The Compliance Department will
retain a current a list of investment personnel.
1. NOTIFICATION. An investment person must notify the Compliance
Department or preclearance designee of any intended transactions in a
security for his or her own personal account or related accounts which
is owned or contemplated for purchase or sale by a Fund for which the
employee has investment authority.
2. BLACKOUT PERIODS. An investment person may not buy or sell a security
within 7 CALENDAR DAYS either before or after a purchase or sale of
the same or related security by a Fund or portfolio management group
for which the investment person has investment authority. For example,
if a Fund trades a security on
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day 0, day 8 is the first day the manager, analyst or portfolio
management group member of that Fund may trade the security for his or
her own account. An investment person's personal trade, however, shall
have no affect on the Fund's ability to trade. For example, if within
the seven-day period following his or her personal trade, an
investment person believes that it is in the best interests of the
Fund for which he or she has investment authority to purchase or sell
the same security on behalf of the Fund, the trade should be done for
the Fund, and an explanation of the circumstances must be provided to
the Compliance Department.
3. ESTABLISHING POSITIONS COUNTER TO FUND POSITIONS. No investment person
may establish a long position in his or her personal account in a
security if the Fund for which he or she has investment authority
maintains a position that would benefit from a decrease in the value
of such security. For example, the investment person would be
prohibited from establishing a long position if (1) the Fund holds a
put option on such security (aside from a put purchased for hedging
purposes where the fund holdings the underlying security); (2) the
Fund has written a call option on such security; or (3) the Fund has
sold such security short, other than "against-the-box."
No investment person may purchase a put option or write a call option
where a Fund for which such person has investment authority holds a
long position in the underlying security.
No investment person may short sell any security where a Fund for
which such person has investment authority holds a long position in
the same security or where such Fund otherwise maintains a position in
respect of which the Fund would benefit from an increase in the value
of the security.
4. PURCHASING AN INVESTMENT FOR A FUND THAT IS A PERSONAL HOLDING. An
investment person may not purchase an investment for a Fund that is
also a personal holding of the investment person or any other account
covered by this Code of Ethics, or the value of which is materially
linked to a personal holding, unless the investment person has
obtained prior approval from his or her senior manager.
5. INDEX FUNDS. The restrictions of this Section 4.B. do not apply to
purchases and sales of securities by investment personnel which
coincide with trades by any MLIM index fund.
6. PROHIBITION ON SHORT-TERM PROFITS. Investment personnel are prohibited
from profiting on any sale and subsequent purchase, or any purchase
and subsequent sale of the same (or equivalent) securities occurring
within 60 calendars days ("short-term profit"). This holding period
also applies to all permitted options transactions; therefore, for
example, an investment person may not purchase or
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<PAGE>
write an option if the option will expire in less than 60 days (unless
such a person is buying or writing an option on a security that he or
she has held more than 60 days). In determining short-term profits,
all transactions within a 60-day period in all accounts related to the
investment person will be taken into consideration in determining
short-term profits, regardless of his or her intentions to do
otherwise (e.g., tax or other trading strategies). Should an
investment person fail to preclear a trade that results in a
short-term profit, the trade would be subject to reversal with all
costs and expenses related to the trade borne by the investment
person, and he or she would be required to disgorge the profit.
Transactions not required to be precleared under Section 5 will not be
subject to this prohibition.
C. TRADING RESTRICTIONS FOR DISINTERESTED DIRECTORS OF THE MLIM FUNDS
The following restrictions apply only to disinterested directors of
the MLIM Funds (i.e., any director who is not an "interested person" of a MLIM
fund within the meaning of Section 2(a)(10) of the 1940 Act):
1. RESTRICTIONS ON PURCHASES. No disinterested director may purchase any
security which, to the director's knowledge at the time, is being
purchased or is being considered for purchase by any Fund for which he
or she is a director.
2. RESTRICTIONS ON SALES. No disinterested director may sell any security
which, to the director's knowledge at the time, is being sold or is
being considered for sale by any Fund for which he or she is a
director.
3. RESTRICTIONS ON TRADES IN SECURITIES RELATED IN VALUE. The
restrictions applicable to the transactions in securities by
disinterested directors shall similarly apply to securities that are
issued by the same issuer and whose value or return is related, in
whole or in part, to the value or return of the security purchased or
sold by any Fund for which he or she is a director(see Section
4.A.6.).
SECTION 5 - EXEMPTED TRANSACTIONS/SECURITIES
MLIM has determined that the following securities transactions do not
present the opportunity for improper trading activities that Rule 17j-1 is
designed to prevent; therefore, the restrictions set forth in Section 4 of this
Code (including preclearance, prohibition on short-term profits and blackout
periods) shall not apply.
A. Purchases or sales in an account over which the employee has no direct or
indirect influence or control (e.g., an account managed on a fully
discretionary basis by an investment adviser or trustee).
B. Purchases or sales of direct obligations of the U.S. Government.
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<PAGE>
C. Purchases or sales of open-end investment companies (including money
market funds), variable annuities and unit investment trusts. (However,
unit investment trusts traded on a stock exchange (e.g., MITS, DIAMONDS,
NASDAQ 100, etc.) must be precleared.)
D. Purchases or sales of bank certificates, bankers acceptances, commercial
paper and other high quality short-term debt instruments, including
repurchase agreements.
E. Purchases or sales of Merrill common stock (and securities related in
value to Merrill Lynch common stock). Also exempt is employer stock
purchased and sold through employer-sponsored benefit plans in which the
spouse of a MLIM employee may participate (e.g., employee stock purchase
plans or 401(k) plans) and sales of employer stock (or the exercise of
stock options) that is received as compensation by a MLIM employee's
spouse.
F. Purchases or sales which are non-volitional on the part of the employee
(e.g., an in-the-money option that is automatically exercised by a
broker; a security that is called away as a result of an exercise of an
option; or a security that is sold by a broker, without employee
consultation, to meet a margin call not met by the employee).
G. Purchases which are made by reinvesting cash dividends pursuant to an
automatic dividend reinvestment plan.
H. 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.
I. Purchases or sales of commodities, futures (including currency futures
and futures on broad-based indices), options on futures and options on
broad-based indices. Currently, "broad-based indices" include only the
S&P 100, S&P 500, FTSE 100 and Nikkei 225. Also exempted are
exchange-traded securities which are representative of, or related
closely in value to, these broad-based indices.
J. The receipt of a bona fide gift of securities. (Donations of securities,
however, require preclearance.)
Exempted transactions/securities may NOT be executed/held in brokerage
accounts maintained outside of Merrill Lynch.
THE REPORTING REQUIREMENTS LISTED IN SECTION 6 OF THIS CODE, HOWEVER,
SHALL APPLY TO THE SECURITIES AND TRANSACTION TYPES SET FORTH IN PARAGRAPHS F-J
OF THIS SECTION.
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SECTION 6 - REPORTING BY EMPLOYEES
The requirements of this Section 6 apply to all MLIM employees. The
requirements will also apply to all transactions in the accounts of spouses,
dependent relatives and members of the same household, trustee and custodial
accounts or any other account in which the employee has a financial interest or
over which the employee has investment discretion. The requirements do not
apply to securities acquired for accounts over which the employee has no direct
or indirect control or influence. All employees whose accounts are maintained
at Merrill Lynch or BNYE are deemed to have automatically complied with the
requirements of this Section 6.B. and C. as to reporting executed transactions
and personal holdings. Transactions and holdings in such accounts are
automatically reported to the Compliance Department through automated systems.
Employees who have approved accounts outside of Merrill Lynch or BNYE
are deemed to have complied with the requirements of this Section 6.B. and C.
provided that the Compliance Department receives duplicate statements and
confirmations directly from their brokers.
Employees who effect reportable transactions outside of a brokerage
account (e.g., optional purchases or sales through an automatic investment
program directly with an issuer) will be deemed to have complied with this
requirement by preclearing transactions with the Compliance Department and by
reporting their holdings annually on the "Personal Securities Holdings" form,
as required by the Compliance Department.
A. INITIAL HOLDINGS REPORT. Each new MLIM employee will be given a copy of
this Code of Ethics upon commencement of employment. All new employees
must disclose their personal securities holdings to the Compliance
Department within 10 days of commencement of employment with MLIM.
(Similarly, securities holdings of all new related accounts must be
reported to the Compliance Department within 10 days of the date that such
account becomes related to the employee.) With respect to exempt
securities referred to in Section 5 which do not require
preclearance/reporting, employees must nonetheless initially report those
exempt securities defined in Section 5.F.-J. (This reporting requirement
does not apply to holdings that are the result of transactions in exempt
securities as defined in Section 5.A.-E.) Initial holdings reports must
identify the title, number of shares, and principal amount with respect to
each security holding. Within 10 days of commencement of employment, each
employee shall file an Acknowledgement stating that he or she has read and
understands the provisions of the Code.
B. RECORDS OF SECURITIES TRANSACTIONS. All employees must preclear each
securities transaction (with the exception of exempt transactions in
Section 5) with the Compliance Department or preclearance
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designee. At the time of preclearance, the employee must provide a
complete description of the security and the nature of the transaction. As
indicated above, employees whose accounts are maintained at Merrill Lynch
or BNYE or who provide monthly statements directly from their
brokers/dealers are deemed to have automatically complied with the
requirement to report executed transactions.
C. ANNUAL HOLDINGS REPORT. All employees must submit an annual holdings
report reflecting holdings as of a date no more than 30 days before the
report is submitted. As indicated above, employees whose accounts are
maintained at Merrill Lynch or BNYE or who provide monthly statements
directly from their brokers/dealers are deemed to have automatically
complied with this requirement.
With respect to exempt securities referred to in Section 5 which do not
require preclearance/reporting, employees must nonetheless annually report
the HOLDINGS of those exempt securities that are defined in Section
5.F.-J. (This reporting requirement, however, does not apply to exempt
securities as defined in Section 5.A.-E.)
D. ANNUAL CERTIFICATION OF COMPLIANCE. All MLIM employees must certify
annually to the Compliance Department that (1) they have read and
understand and agree to abide by this Code of Ethics; (2) they have
complied with all requirements of the Code of Ethics, except as otherwise
notified by the Compliance Department that they have not complied with
certain of such requirements; and (3) they have reported all transactions
required to be reported under the Code of Ethics.
E. REVIEW OF TRANSACTIONS AND HOLDINGS REPORTS. All transactions reports and
holdings reports will be reviewed by department heads (or their
designeeds) or compliance personnel according to procedures established by
the Compliance Department.
SECTION 7 - REPORTING BY DISINTERESTED DIRECTORS OF MLIM FUNDS
A disinterested director of a Fund need only report a transaction in a
security if the director, at the time of that transaction, knew or, in the
ordinary course of fulfilling the official duties of a director of such Fund,
should have known that, during the 15-day period immediately preceding the date
of the transaction by the director, the security was purchased or sold by any
Fund or was being considered for purchase or sale by any Fund for which he or
she is a director. In reporting such transactions, disinterested directors must
provide: the date of the transaction, a complete description of the security,
number of shares, principal amount, nature of the transaction, price,
commission, and name of broker/dealer through which the transaction was
effected.
As indicated in Section 6.D. for MLIM employees, disinterested
directors are similarly required to certify annually to the Compliance
Department that (1) they have read and understand and agree to abide by this
Code of Ethics; (2) they have complied
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with all requirements of the Code of Ethics, except as otherwise reported to
the Compliance Department that they have not complied with certain of such
requirements; and (3) they have reported all transactions required to be
reported under the Code of Ethics.
SECTION 8 - APPROVAL AND REVIEW BY BOARDS OF DIRECTORS
The Board of Directors of each MLIM Fund, including a majority of
directors who are disinterested directors, must approve this Code of Ethics.
Additionally, any material changes to this Code must be approved by the Board
of Directors within six months after adoption of any material change. The Board
of Directors must base its approval of the Code and any material changes to the
Code on a determination that the Code contains provisions reasonably necessary
to prevent employees from engaging in any conduct prohibited by Rule 17j-1.
Prior to approving the Code or any material change to the Code, the Board of
Directors must receive a certification from the Fund, the Investment Adviser or
Principal Underwriter that it has adopted procedures reasonably necessary to
prevent employees from violating the Code of Ethics.
SECTION 9 - REVIEW OF MLIM ANNUAL REPORT
At least annually, the Fund, the Investment Adviser and the Principal
Underwriter must furnish to the Fund's Board of Directors, and the Board of
Directors must consider, a written report that (1) describes any issues arising
under this Code of Ethics or procedures since the last report to the Board of
Directors, including, but not limited to, information about material violations
of the Code of Ethics or procedures and sanctions imposed in response to the
material violations and (2) certifies that the Fund, Investment Adviser and
Principal Underwriter have adopted procedures reasonably necessary to prevent
employees from violating this Code of Ethics.
SECTION 10 - SANCTIONS
Potential violations of the Code of Ethics must be brought to the
attention of the Compliance Director or his designee, are investigated and, if
appropriate, sanctions are imposed. Upon completion of the investigation, if
necessary, the matter may also be reviewed by the Code of Ethics Review
Committee which will determine whether any further sanctions should be imposed.
Sanctions may include, but are not limited to, a letter of caution or warning,
reversal of a trade, disgorgement of a profit or absorption of costs associated
with a trade, supervisor approval to trade for a prescribed period, fine or
other monetary penalty, suspension of personal trading privileges, suspension
of employment (with or without compensation), and termination of employment.
SECTION 11 - EXCEPTIONS
An exception to any of the policies, restrictions or requirements set
forth herein may be granted only upon a showing by the employee to the Code of
Ethics Review
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Committee that such employee would suffer extreme financial hardship should an
exception not be granted. Should the subject of the exception request involve a
transaction in a security, a change in the employee's investment objectives,
tax strategies, or special new investment opportunities would not constitute
acceptable reasons for a waiver.
jw/compli/procedure/code_eth
Summer 2000
<PAGE>
EXHIBIT 16(d)
<PAGE>
BARCLAYS GLOBAL INVESTORS, N.A.
And its Subsidiaries:
BARCLAYS GLOBAL FUNDS ADVISORS
BARCLAYS GLOBAL INVESTORS SERVICES
CODE OF ETHICS
INTRODUCTION
Barclays Global Investors, N.A. and its subsidiaries Barclays Global Funds
Advisors (BGFA) and Barclays Global Investors Services (BGIS), collectively
referred to as "BGI", have adopted the following Code of Ethics regarding
personal securities transaction policies and procedures intended to prevent
their US officers, directors and employees from engaging in any fraudulent or
manipulative acts with respect to accounts managed or advised by BGI as set
forth in SEC 17 CFR 270 Rule 17j-1, SEC 17 CFR 275 Rule 204-2 and OCC
Regulation 12 CFR 12.7. Policies and Procedures on Insider Trading and Chinese
Walls are included in Appendix A.
DEFINITIONS
"Securities" are defined as any SEC registered or privately placed equity and
fixed income security, future or option contract, or other related commodity
derivative investment. This includes closed-end mutual funds, unit investment
trusts, physical-form securities, and exchange traded funds. "Securities" do
not include US Treasuries and other direct obligations of the US Government,
banker's acceptance, commercial paper, and shares of registered open- end
investment companies.
"Employee" include any US directors, officers and employees of BGI and his/her
spouse, domestic partner, minor children, a relative who shares the employee's
home or other persons by reason of any contract, arrangement, understanding or
relationship that provides to the employee with sole or shared voting or
investment powers.
"Personal Account" includes any securities account or portfolio in which
securities are held for the employee in which the employee has a direct or
indirect pecuniary (monetary) interest. The term includes IRA and 401(k)
accounts in which securities can be purchased or sold.
PROHIBITED TRADING ACTIVITIES
INSIDER TRADING
---------------
o All employees are prohibited from engaging in insider trading or tipping.
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Insider trading occurs when a personal securities transaction occurs on the
basis of or while in possession of material, nonpublic information. Information
is considered material if it could reasonably affect the employee's decision to
invest (or not to invest) in a security. Nonpublic information is that which is
generally not available to the ordinary investors in the marketplace. Refer to
Appendix A for further details on insider trading.
PARALLEL TRADING, FRONT RUNNING AND SHADOWING RESTRICTIONS
----------------------------------------------------------
o All employees are prohibited from conducting personal securities
transactions that are considered parallel trading, front running and
shadowing.
Shadowing and parallel trading occur when an employee observes a BGI trade or
trading pattern and places the same (or similar) trade in his/her account or
passes the information to others inside or outside of the company. Front
running occurs when an employee uses (or passes to others who use the
information) advance knowledge of a BGI trade to enter into a personal
transaction in the same security ahead of BGI's order and to capitalize on the
impact of the BGI order.
RESTRICTED TRADING ACTIVITIES
TRADING IN BARCLAYS PLC SECURITIES AND SECURITIES UNDERWRITTEN BY BARCLAYS'
---------------------------------------------------------------------------
AFFILIATES
----------
o All Members of the Board of Directors of BGI, members of the Management
Committee, employees reporting directly to BGI's Chief Financial Officer
and all employees within the U.S. and Global Finance and Treasury Groups
are prohibited from trading in the securities of Barclays PLC during the
period from the end of the accounting year or half year until the relevant
results are announced, i.e., from January 1 to the preliminary results
announcement in February and from July 1 to the interim results
announcement in August. During other times, these individuals must
pre-clear trades in Barclays PLC securities in accordance with the
Barclays PLC policy.
o Access Persons are not permitted to purchase securities underwritten by
Barclays' affiliates as manager or co-manager for a period of sixty days
after an offering is commenced.
REQUIREMENTS FOR ALL EMPLOYEES
REPORTING OF PERSONAL ACCOUNTS AND SECURITIES TRANSACTIONS
-----------------------------------------------------------
o All employees must disclose all personal accounts to US Compliance and
must authorize US Compliance to receive duplicate trade confirmations and
account statements.
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o Upon employment, new employees must sign a document stating that they
understand and agree to abide by BGI's personal trading requirements,
restrictions and prohibitions.
ANNUAL CERTIFICATION
---------------------
o All employees must provide an annual certification of their personal
accounts and securities holdings.
o All employees must certify at least annually their understanding and
compliance with the Code of Ethics.
60 DAY HOLDING PERIOD
----------------------
o Employees are required to hold securities including options and futures
for a minimum of 60 days, and to avoid short-term trading practices. US
Compliance may pre-approve exceptions to the 60 day holding period.
PRE-CLEARANCE PRIOR TO TRANSACTIONS IN IPOS, PRIVATE PLACEMENTS, OPTIONS, AND
------------------------------------------------------------------------------
FUTURES
-------
o All employees must obtain pre-clearance for transactions in IPOs, private
placements, options and futures. For options and futures, the employee
must execute the transaction by the end the next business day or request
another pre-clearance.
BLACKOUT PERIODS
----------------
o Employees are restricted from trading securities in selected indexes
during a designated "blackout" period when the specific index is
undergoing a major scheduled reconstitution. US Compliance will notify
employees of the "blackout" periods which will include the period 15 days
before and after a major scheduled index reconstitution.
ADDITIONAL REQUIREMENTS FOR ACCESS PERSONS
Access persons include all employees whose Group 1) participates in making
securities purchase and sell recommendations or 2) may have access to timely
and material information concerning BGI's securities transactions. Access
Persons also include the Boards of Directors and officers of BGFA and BGIS.
US Compliance will identify BGI's Access Persons who are required to submit
reports under this Code of Ethics and inform them of their reporting and
securities preclearance obligations.
REPORTING OF SECURITIES TRANSACTIONS AND HOLDINGS
-------------------------------------------------
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o All Access Persons must provide a listing of securities holdings to US
Compliance within 10 calendar days from when a personal account is opened
and provide US Compliance with transaction information until such time as
US Compliance receives duplicate confirmations and statements.
o All newly hired Access Persons must provide a complete listing of
securities holdings on their initial day of employment.
ACCESS PERSONS REQUIRING PRE-CLEARANCE BY MANAGEMENT AND US COMPLIANCE
----------------------------------------------------------------------
o All Access Persons, whose Group directly participates in making securities
purchase or sell recommendations or has timely and material knowledge of
BGI's securities transactions, must pre-clear their personal securities
transactions with their Group manager in addition to pre-clearance by US
Compliance. The manager will verify that there is no timely or material
knowledge of trades pending for specific securities within the Access
Person's Group. These Groups include Portfolio Management, Trading,
Trading Operations, Client Order Management, Transition Services, Index
Research Group, Alpha Strategy Group and other Groups identified by US
Compliance from time to time.
ACCESS PERSONS REQUIRING PRE-CLEARANCE FROM US COMPLIANCE ONLY
--------------------------------------------------------------
o The following Groups have access to information relating to BGI's
securities transactions. Employees within these Groups must pre-clear
their securities transactions with US Compliance. These Groups include
Internal Audit, US Compliance, US Risk Management, the US Executive
Committee, US members of the Management Committee, BGFA and BGIS Board of
Directors and officers. In addition, all BGI staff who have access to the
following systems must also pre-clear trades with US Compliance: Landmark,
Bulk Console, Beacon, Bidbook, Fifus, TOC, ITOC, TSC, IntelProd, Quantex
and any other systems identified by US Compliance from time to time.
Pre-clearance authorization is valid until the next day's closing of the
relevant market.
Access Persons are not required to pre-clear transactions in accounts managed
by a registered investment advisor for which full discretion has been granted.
Documentation of such an arrangement must be provided and an exemption must be
obtained from US Compliance who will confirm the discretionary arrangement.
Pre-clearance is not required for transactions in automatic dividend
reinvestment plans, periodic stock purchase plans or in selling or exercising
rights obtained as a shareholder in an issue.
MONITORING OF PERSONAL SECURITIES TRANSACTIONS
POST TRADE REVIEW
-----------------
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o US Compliance will review personal securities transactions to identify
violations of the Code of Ethics. Violations to this policy will be
reviewed by management and disciplinary action may be taken up to and
including dismissal.
ADOPTION AND APPROVAL OF BGI CODE OF ETHICS
o US Compliance will present the BGI Code of Ethics for approval by the
Board of Directors or Trustees of all funds for which BGFA or BGIS is the
investment advisor. This will be done at the initiation of investment
advisory services provided by BGFA or BGIS to the fund and no later than
six months after a material change has been adopted. In connection with
each approval, BGFA and BGIS will certify to the board that they have
adopted procedures reasonably necessary to prevent the Access Persons from
materially violating the BGI Code of Ethics.
o BGFA and BGIS will provide to the fund's board a written report describing
issues, material violations and sanctions, and will certify to the board
that procedures have been adopted which are intended to prevent Access
Persons from violating the BGI Code of Ethics. This report and
certification will be submitted Code of Ethics at least annually.
RECORDKEEPING REQUIREMENTS
BGI will follow the recordkeeping practices outlined below:
o A copy of the Code of Ethics that is in effect, or at any time within the
past five years was in effect, will be maintained in an easily accessible
place.
o A record of any violation of the Code of Ethics, and of any action taken
as a result of the violation, will be maintained in an easily accessible
place for at least five years after the end of the fiscal year in which
the violation occurs.
o A copy of each personal account statement, trade confirmation and any
information provided in lieu of a report will be retained for five years,
two years in an easily accessible location.
o A record of all persons, currently or within the past five years, who are
or were required to make reports, and who are or were responsible for
reviewing these reports will be retained in an easily accessible location.
o A copy of each report submitted to a fund board pursuant to the Code of
Ethics will be maintained for at least five years after the end of the
fiscal year in which it is made, two years in an easily accessible
location.
o A record of any decision to approve and the reasons supporting the
decision to approve the acquisition by employees of IPOs and private
placements will be
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maintained for at least five years after the end of the fiscal year in
which the approval is granted.
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APPENDIX A
INSIDER TRADING AND CHINESE WALL POLICY
A. INTRODUCTION
The continued success of Barclays depends on its relationships with
its customers and on its well-deserved reputation as an institution
grounded in a tradition of integrity and ethical conduct in all of its
dealings. To maintain this high standard and, thus, Barclays'
reputation in today's regulatory and business climate, requires strict
observance of ethical behavior as well as of legal obligations created
by the Federal securities laws and specific contractual undertakings
of Barclays such as confidentiality agreements. This Policy emphasizes
generally the importance of adhering to professional and ethical
conduct and provides specific policies and, in certain instances,
procedures, with respect to Personal Securities Transactions and
Chinese Walls. These guidelines will help employees meet Barclays'
contractual, ethical and statutory obligations.
BGI EMPLOYEES WHO VIOLATE THESE POLICIES AND PROCEDURES WILL BE
SUBJECT TO SUCH DISCIPLINARY ACTION AS MANAGEMENT DEEMS APPROPRIATE,
INCLUDING A LETTER OF CENSURE OR SUSPENSION, OR REMOVAL FROM OFFICE,
OR SUMMARY TERMINATION OF EMPLOYMENT.
B. INSIDER TRADING
All employees must strictly comply with Federal, provincial or state
securities laws in transactions on behalf of Barclays and in their own
personal transactions. Such securities laws prohibit trading on
material non-public information ("Insider Trading") or communicating
such information to others who may trade on it ("Tipping").
What constitutes material non-public information ("Inside
Information") must be determined on the basis of all pertinent
circumstances. First, the information must be material. Material
information is generally defined as (i) information for which there is
a substantial likelihood that a reasonable investor would consider it
important in making his or her investment decisions, or (ii)
information that is reasonably certain to have a substantial effect on
the price of a company's securities. Second, the information must be
non-public. Information that has been communicated to the market place
is generally public and, therefore, not Inside Information. For
example, information found in a filing or a report made with the
Securities and Exchange Commission or appearing in newspapers,
industry journals, financial newsletters or other publications would
be considered public, although information obtained by word-of-mouth
or through rumors would not necessarily be public. Information that is
known only inside a company
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or to a limited number of outsiders such as accountants, bankers,
financial advisors or attorneys, is not public.
The following information will generally be Inside Information if not
publicly known: (a) information concerning a company, including
information concerning its business, financial matters and management,
such as changes in earnings or dividends, significant technical
achievements, important discoveries of natural resources, the
obtaining or losing of major contracts, or changes in management; and
(b) information concerning a company's securities, including the
market for a security or its terms, such as a prospective tender
offer, merger or acquisition, prospective block trade, prospective
private placement or public offering, impending stock dividend or
stock split or proposed recapitalization. A BGI employee who had any
of the types of Inside Information described above would be guilty of
Tipping if he or she (a) either communicated the Information to
another person or (b) simply told another person, without explanation,
to buy or sell the securities of that company, and the other person
did indeed purchase such securities as a result of such Tipping.
Similarly, a staff member, possessing Inside Information, would be
guilty of Insider Trading if he or she bought or sold securities for
his or her personal account, or for BGI's account, based on that
Inside Information.
C. CONFIDENTIALITY AND CHINESE WALL POLICY
---------------------------------------
Beyond simply complying with the letter of the law, employees are
expected to understand and observe the highest professional and
ethical standards in conducting BGI's business. All BGI employees have
a duty to respect the confidential nature of information received from
customers and to use that information only for the purpose for which
it is provided, whether or not that information is Inside Information
and regardless of the basis on which confidentiality is required -
whether it be statutory requirements, ethical considerations or
contractual obligations. Maintaining strict standards with respect to
the confidentiality of information will accomplish several goals. It
will enable BGI to (a) preserve its reputation for corporate
integrity, (b) maintain compliance with the Federal securities laws,
and (c) reduce the occurrence of conflicts of interest both within
divisions (and even within teams) as well as between separate
operating entities of Barclays. Indeed, maintaining strict standards
of confidentiality will enable BGI to serve the needs of its customers
more effectively.
In certain areas Chinese Walls will be, or have been, established to
ensure that employees have adopted procedures to safeguard the
confidentiality of information. The term "Chinese Wall" is a familiar
one to most people. However, what it means or how it actually operates
in the workplace is often misunderstood.
8
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A Chinese Wall is a barrier that controls or restricts the flow of
confidential information. It is essentially a system or set of
procedures designed to segregate information and prevent the
communication of that information between certain people or operating
areas. The procedures that comprise each Chinese Wall may vary
depending on the location of the particular wall or the times when it
is operative. A Chinese Wall may need to be in place only at certain
times or on a constant basis. A Chinese Wall may need to be located
between various operating areas, between divisions, between teams
within a division and even, temporarily, between staff who are on the
same team but assigned to different accounts. The existence and proper
maintenance of Chinese Walls will allow Barclays to serve
simultaneously the needs of customers who have competing interests.
For the most part, the maintenance of Chinese Walls will reduce the
occurrence of conflicts of interest within Barclays as well as reduce
the possibility of abuse of Inside Information.
Regardless of the existence of specific Chinese Walls, the following
procedures should be observed by all employees at all times:
1. Never communicate confidential information to anyone outside
Barclays except for communications with auditors, approved
counsel or other experts who have been specifically engaged for
certain matters. Communicate confidential information inside
Barclays only on a need-to-know basis.
2. Do not communicate confidential information through a Chinese
Wall unless permission is obtained from the appropriate
designated manager or the Manager of Compliance.
3. Never discuss confidential information in a public place such as
an elevator, a restaurant or a hallway.
4. Always log off your computer before leaving the area for any
length of time and at the end of the day.
5. Use systems and information solely for authorized activities.
6. Notify a supervisor of any unauthorized use or misuse of the
system or information or any activity that appears questionable.
7. Maintain the secrecy of passwords and other system access
identification.
8. Prevent others from using a terminal to which another employee
has logged on until that employee has logged off.
9. Keep documents and papers containing confidential information in
locked file cabinets or other secured facilities. Do not leave
papers and documents containing confidential information exposed
on desks or credenzas.
9
