APPROVED 5/1/00
COUNTRY TRUST BANK
CODE OF ETHICS RELATING TO BUSINESS
AS INVESTMENT ADVISER
1. This Code of Ethics (Code) has been adopted as a guide to all those,
including Directors, officers and other employees of Company, who might, by
reason of their Company duties, find themselves in a position where their
personal interests could conflict with those of Country Trust Bank (the
"Company"), the IAA Trust Mutual Funds or with a duty to the interests of their
shareholders, or other advisory clients. It is vitally important that both the
fact and the appearance of conflicting interests be avoided.
2. The purpose of this Code is to assist persons connected with the
Company to avoid any actual or potential conflicts of interest. The Code also is
intended to indicate procedures whereby any possible conflicting interests which
may arise from time to time will be disclosed so that, if necessary, corrective
action may be taken.
3. The following definitions shall apply throughout this Code:
(a) "Access Person" means any Director, officer or employee of
the Company (i) who, in connection with his/her regular functions or duties,
makes, participates in, or obtains information regarding the Purchase or Sale of
a Security by the Company, the IAA Trust Mutual Funds or other advisory clients
or whose functions relate to the making of any recommendations with respect to
such purchases or sales; and (ii) any natural person in a Control relationship
to the Company who obtains information concerning recommendations made to the
Company, the IAA Trust Mutual Funds or other advisory clients with regard to the
Purchase or Sale of a Security.
(b) A security is "being considered for purchase or sale" when
a recommendation to purchase or sell a security has been made and communicated
and, with respect to the person making the recommendation, when such person
seriously considers making such a recommendation.
(c) "Beneficial Ownership" shall be interpreted in the same
manner as it would be in determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 and the rules
and regulations thereunder, except that the determination of direct or indirect
beneficial ownership shall apply to all securities which an Access Person has or
acquires.
(d) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Investment Company Act.
(e) "Independent Director" means a Director of the Company (or
IAA Trust Mutual Funds) who is not an "interested person" of the Company (or IAA
Trust Mutual Funds) within the meaning of Section 2(a)(19) of the Investment
Company Act.
(f) "Investment Personnel" means:
(i) Any employee of the Company (or of any
company in a Control relationship to the
Company) 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 Company; and
(ii) Any natural person who Controls the Company
and who obtains information concerning
recommendations made to the Company
regarding the Purchase or Sale of Securities
by the Company.
(iii) "Investment Personnel" includes investment
portfolio managers, investment analysts and
security traders and members of the
Company's investment committee.
(g) "Purchase or Sale of a Security" includes, among other
things, the writing of an option to purchase or sell a security.
(h) "Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act, except that it shall not include direct
obligations of the Government of the United States or of federal agencies and
bankers' acceptances, bank certificates of deposit, commercial paper high
quality short-term debt instruments, including repurchase agreements (and such
other money market instruments as may be designated from time to time by the
Company's Board of Directors), and shares of registered open-end investment
companies.
4. The prohibitions of Section 5 of this Code shall not apply to:
(a) Purchases or sales effected in any account over which
the Access Person has no direct or indirect influence or Control.
(b) Purchases or Sales of Securities which are not eligible
for purchase or sale by the Company, the IAA Trust Mutual Funds or other
advisory clients.
(c) Purchases or sales which are non-volitional on the part of
either the Access Person or the Company, the IAA Trust Mutual Funds or other
advisory clients.
(d) Purchases which are part of an automatic dividend
reinvestment plan.
(e) Purchases effected upon the exercise of rights issued by
an issuer PRO RATA to all holders of a class of its Securities, to the extent
such rights were acquired from such issuer, and sales of such rights so
acquired.
(f) Purchases or sales which receive the prior approval of the
Treasurer because they are only remotely potentially harmful to the Company, the
IAA Trust Mutual Funds or other advisory clients because they would be very
unlikely to affect a highly institutional market, or because they clearly are
not related economically to the Securities to be purchased, sold or held by the
Company, the IAA Trust Mutual Funds or other advisory clients.
5. No Access Person shall purchase or sell, directly or indirectly,
any security in which he/she has, or by reason of such transactions acquires,
any direct or indirect Beneficial Ownership and which to his/her actual
knowledge at the time of such purchase or sale:
(a) is being considered for purchase or sale by the Company,
the IAA Trust Mutual Funds or other advisory clients; or
(b) is being purchased or sold by the Company or the IAA
Trust Mutual Funds or other advisory clients.
Any Access Person of the IAA Trust Mutual Funds shall refrain
from transmitting any information regarding the IAA Trust Mutual Funds' purchase
or sale or potential purchase or sale of any security to any person other than
in connection with the discharge of his/her responsibilities to the IAA Trust
Mutual Funds.
Country Trust Bank further forbids any officer, Director or
employee from trading, either personally or on behalf of others (such as, mutual
funds and private accounts managed by Country Trust Bank), on material nonpublic
information or communicating material nonpublic information to others in
violation of the law and pursuant to Country Trust Bank's Policy and Procedures
to Detect and Prevent Insider Trading.
Access Persons shall at all times during or after their
employment, hold in trust, keep confidential, and not disclose to any third
party or make any use of the confidential information of the Company or clients
except for the benefit of the Company or clients and in the course of their
employment with the Company. Access Persons shall not cause the transmission,
removal, or transport of confidential information of the Company or clients from
the Company's principal place of business, or such other place of business
specified by the Company, without prior written approval of the Company.
6. No Investment Personnel of this Company subject to this Code of
Ethics shall:
(a) Purchase, directly or indirectly, any security in which
he/she has, or by reason of such transaction acquires, any direct or indirect
Beneficial Ownership and which to his/her actual knowledge is:
(1) A security which is being offered as part of
an initial public offering of Securities,
unless such purchase receives the prior
written approval of the Treasurer.
(2) A security being sold as part of a limited
offering (such as a private placement)
unless such purchase receives the prior
written approval of the Treasurer. A person
who receives approval to purchase a security
as part of a limited offering shall not
participate in any subsequent consideration
of the purchase of the security by this
Company.
(b) Serve on the Board of Directors of a publicly traded
company without the prior written approval of the Treasurer that such service
would be consistent with the interests of this Company and it shareholders.
7. The portfolio manager or managers assigned to the IAA Trust Mutual
Funds shall not:
(a) Buy or sell a security within at least seven (7) calendar
days before and after the Fund to which he/she is assigned trades in the
security. Any profits realized by the portfolio manager within the proscribed
period shall be required to be disgorged, less any applicable taxes.
(b) Profit from the purchase and sale or sale and purchase of
the same or equivalent Securities within sixty (60) calendar days of the
Purchase or Sale of such Securities by the Fund to which he/she is assigned.
8. Company will not purchase or retain Securities or recommend the
purchase or retention of services to the IAA Trust Mutual Funds or other
advisory clients of any company if persons affiliated with the Company as a
group, beneficially own more than one percent (1%) of the Securities of such
company. Each Access Person or other employee shall promptly report to the
Treasurer with respect to any corporation or unincorporated enterprise in which
he/she has a beneficial interest and which to his/her knowledge has in the past
engaged, or may reasonably be expected in the future to engage, in transactions
with, or compete with, this Company, the IAA Trust Mutual Funds or other
advisory clients, and all such interests shall be listed on all reports or
disclosures required to be made pursuant to Section 12(e) of this Code.
9. Any Access Person whose duties may involve dealings with a
corporation, in any of whose Securities he/she may have an interest shall
disclose such interest to the Treasurer, even though such Access Person and all
other persons affiliated with Company, the IAA Trust Mutual Funds or other
advisory clients do not, as a group, beneficially own more than one percent (1%)
of the Securities of such corporation. Disclosure procedures under this section
may be required by the Treasurer for persons other than Access Persons as deemed
appropriate.
10. Access Persons and other employees and members of their families
should avoid the receipt of payments, benefits, gifts, entertainment or other
favors which go beyond common courtesies of a de minimus value usually
associated with accepted business practices, and which thereby might be regarded
as placing such persons under some obligation to a third party dealing or
desiring to deal with the Company, the IAA Trust Mutual Funds or other advisory
clients.
11. Access Persons and other employees are encouraged to take part in
educational, cultural, charitable and civic activities of the community in which
they reside. Such persons should, however, avoid outside employment or
activities which take time and attention from duties required by Company.
Outside employment or activities which may involve obligations which in any way
compete or conflict with the interests of the Company, the IAA Trust Mutual
Funds or other advisory clients should not be undertaken without prior approval
by the President or his/her designee.
If at any time an Access Person or other employee (including
any member of his/her immediate family) finds that he/she has, or is considering
the assumption of a financial interest or outside relationship which might
involve a conflict of interest, or if he/she is in doubt as to the proper
application of this Code, he/she should immediately make all facts known to the
President or Treasurer and be guided by the instructions he/she receives. Except
as otherwise directed by those instructions, he/she should refrain from
exercising responsibility in any matter which might reasonably be thought to be
affected by his/her adverse interest.
12. Reports shall be made under this Code as follows:
(a) INITIAL HOLDINGS REPORTS. Every Access Persons
hall provide an initial holdings report to the Company no later than ten (10)
days after he or she becomes an Access Person, containing:
(i) The title, number of shares and principal
amount of each Security in which the Access
Person had any direct or indirect Beneficial
Ownership when the person became an Access
Person;
(ii) 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
(iii) The date that the report is submitted by the
Access Person.
(b) QUARTERLY TRANSACTION REPORTS. Every Access Person shal
report to the Company, not later than ten (10) days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, the following information:
(i) With respect to any transaction during the
quarter in a Security in which the Access
Person had any direct or indirect Beneficial
Ownership:
(a) The date of the transaction, the
title, the interest rate and
maturity date (if applicable), the
number of shares, and the principal
amount of each Security involved;
(b) The nature of the transaction (i.e.,
purchase, sale or any other type
of acquisition of disposition);
(c) The price at which the transaction
was effected;
(d) The name of the broker, dealer or
bank with or through whom the
transaction was effected; and
(e) The date that the report is
submitted.
(ii) With respect to any account established by
the Access Person in which any Securities
were held during the quarter for the direct
or indirect benefit of the Access Person:
(a) The name of the broker, dealer or
bank with whom the Access Person
established the account;
(b) The date the account was
established; and
(c) The date that the report is
submitted by the Access Person.
(c) Annual Holdings Reports. All Access Persons shall be
required to certify annually to the Treasurer:
(i) That they have read and understand the Code
of Ethics and recognize that they are
subject thereto, that they have complied
with the requirements of this Code of Ethics
and that they have disclosed or reported all
personal Securities transactions required to
be disclosed or reported pursuant to the
requirements of this Code;
(ii) The title, number of shares and principal
amount of each Security in which the
Access Person had any direct or indirect
Beneficial Ownership;
(iii) 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 benefit of the Access
Person; and
(iv) The date that the report is submitted by the
Access Person.
(d) EXCEPTIONS:
(i) An Access Person need not make a report
under this paragraph 12 with respect to
transactions effected for, and Securities
held in, any account over which the person
has no direct or indirect influence or
Control.
(ii) An Independent Director of the Company need
not file an initial holdings report or
annual holdings reports and need only report
a transaction in a security if such
Director, at the time of that transaction,
knew or, in the ordinary course of
fulfilling his/her official duties as a
Director of the Company, should have known
that, during the fifteen (15) day period
immediately preceding or after the date of
the transaction by the Director, such
security was purchased or sale by its
Investment Adviser.
(e) The Treasurer shall identify all Access Persons who are
required to make reports under this paragraph 12 and shall inform such Access
Persons of their reporting obligation. The Treasurer shall review all reports
required to be filed under this paragraph 12, except his or her own reports. The
Treasurer's reports shall be reviewed by the Chief Executive Officer.
(f) A supplemental report letter shall also be submitted by
any Access Person promptly after he/she becomes involved in any conflict of
interest situation which he/she has not previously reported and which is
required to be reported under this Code.
(g) Reports required by Sections 8 and 9 of this Code shall be
made in accordance with procedures established by the Treasurer.
13. As to any transaction set forth in this Code requiring an Access or
Investment Person to receive the prior written approval of the Treasurer, the
Treasurer shall be required to receive the prior written approval of the Chief
Executive Officer of this Company before engaging in any similar transaction.
14. Any report required to be made by this Code may contain a statement
that the report shall not be construed as an admission by the person making such
report that he/she has any direct or indirect Beneficial Ownership in the
security to which the report relates. All information disclosed under this Code
shall be treated on a confidential basis except as to any disclosure required by
law and except to the extent necessary for the protection of the Company.
15. Upon discovering a violation of this Code, the Board of Directors
of the Company may impose such sanctions as it deems appropriate, including,
among other things, a letter of censure or suspension or termination of the
employment of the violator.
16. The Treasurer shall prepare an annual report to the Board of
Directors which:
(a) 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 violation of the Code or procedures and
sanctions imposed in response to the material violations during the past year;
and
(b) Certifies that the Company has adopted precedures
reasonably necessary to prevent Access Persons from violating the Code.
17. The Treasurer shall maintain a record of the approval of, and
rationale supporting, any direct or indirect acquisition by Investment Personnel
of a beneficial interest in Securities in an initial public offering or private
placement, pursuant to paragraph 6 (a).
18. Any material change to this Code must be approved by the Board of
Directors (and be subsequently approved by the Boards of Directors of the IAA
Trust Mutual Funds, including a majority of their Independent Directors).
