INDEPENDENCE INVESTMENT ASSOCIATES, INC.
and SUBSIDIARIES
CODE OF ETHICS
Independence Investment Associates, Inc. ("Independence Investment"), together
with its subsidiaries Independence International Associates, Inc. ("Independence
International") and Independence Fixed Income Associates, Inc. ("Independence
Fixed Income") (collectively, "Independence"), is committed to the highest
ethical and professional standards. This Code of Ethics provides guidance to
officers and employees of Independence (collectively referred to as "employees")
when they conduct any personal investment transactions. Employees are expected
to place the interests of clients ahead of their personal interests and to treat
all client accounts in a fair and equitable manner.
Employees are encouraged to raise any questions concerning the Code of Ethics
with Patricia Thompson, Vice President and Compliance Officer (the "Compliance
Officer").
CODE PROVISIONS
1. Ban on Transactions in Securities of Companies on the Working Lists and
Ban on Transactions in Corporate Fixed Income Securities
No employee of Independence or "family member"1 of such an employee may trade
in: (i) securities of companies on the Independence Investment domestic equity
and real estate working lists (collectively, "the Domestic Working Lists"), or
any securities or derivatives that derive their value principally from the value
of securities of companies on the Domestic Working Lists; (ii) securities of
companies on the Independence International international and Canadian working
lists (collectively, the "International Working Lists"), or any securities or
derivatives that derive their value principally from the value of securities of
companies on the International Working Lists; or (iii) any corporate fixed
income securities, domestic or international, or any securities or derivatives
that derive their value principally from any corporate fixed income securities.
Copies of the Domestic and International Working Lists are available from the
Compliance Office. Exemptions may be requested by contacting the Compliance
Office in writing. Exemptions may be granted for securities held at the time of
employment, held at the time of an employee becoming subject to one of the above
restrictions, held prior to a security being placed on a Working List or for
other compelling reasons. The securities referenced in footnote 2 below are
excluded from the bans contained in this section.
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1 For the purposes of this Code, the term "family member" means an employee's
"significant other", spouse or other relative, whether related by blood,
marriage or otherwise, who either (i) shares the same home, or (ii) is
financially dependent upon the employee, or (iii) whose investments are
controlled by the employee. The term also includes any unrelated individual for
whom an employee controls investments and materially contributes to the
individual's financial support.
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2. Pre-Clearance
Independence requires that all permitted personal trades for employees and their
"family members", as defined in this Code, be pre-cleared. This requirement for
pre-clearance approval applies to all transactions in debt and equity
securities2 and derivatives which are not otherwise banned pursuant to this Code
and includes private placements (including 144A's) whether described in footnote
2 below or not, in order to avoid any perception of favored treatment from other
industry personnel or companies. Transactions in publicly-registered,
tax-exempt, domestic debt securities (municipal bonds) are excluded from this
pre-clearance requirement. A request for pre-clearance should be submitted in
writing to the Compliance Office using the electronic pre-clearance system or a
written equivalent and should contain:
a) The employee's name and name of individual trading, if different,
b) Name of security and ticker symbol, if publicly traded,
c) CUSIP number, if publicly traded,
d) Whether sale or purchase,
e) If sale, date of purchase,
f) If a private placement, the seller and/or the broker and whether or
not the seller and/or the broker is one with whom the associate does
business on a regular basis,
g) The date of the request,
h) The type of security and the appropriate trading room(s) for
pre-clear,
i) A statement that the employee has checked with the appropriate
trading room(s) and that no trades of the security have been
placed for client accounts and remain open, and
j) The initialed approval of the appropriate trading room(s).
At present, there are five trading rooms: the Independence Investment domestic
equity trading room, the Independence International international trading room,
the Independence Investment corporate fixed income trading room, the
Independence Investment global fixed income trading room and the Independence
Fixed Income trading room in McLean, Virginia. Clearance of private placements
or other transactions may be denied if the transaction would raise issues
regarding the appearance of impropriety. A sample form for pre-clearance is
attached. Please note that approval is effective only for the date granted.
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2 Excludes (i) direct obligations of the Government of the United States; (ii)
bankers' acceptances, bank certificates of deposit, commercial paper and high
quality (one of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization) short-term debt instruments (maturity at
issuance of less than 366 days), including repurchase agreements; and (iii)
shares issued by registered open-end investment companies (mutual funds).
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3. No Purchases of Initial Public Offerings (IPOs)
In addition to the bans contained in Section 1, no employee or "family member"
may purchase any newly issued publicly-offered securities until the next
business (trading) day after the offering date and after receipt of
pre-clearance approval. No purchase should be at other than the market price
prevailing on, or subsequent to, such business day.
See also the prohibition on such purchases contained in a separate Independence
policy, the Company Conflict and Business Practice Policy.
4. Dealing with Brokers and Vendors
Independence employees should consult the Company Conflict and Business Practice
Policy regarding business dealings with brokers and vendors. Certain activities
may require the approval of the President of Independence and the General
Counsel of John Hancock Life Insurance Company. Employees are reminded that any
dealings with and/or potential expenditures involving public officials are
further limited by Section X of the Company Conflict and Business Practice
Policy.
5. Service as Director
Employees should refer to the Company Conflict and Business Practice Policy
regarding service on boards of publicly traded companies as well as service on
certain privately held company, non-profit or association boards.
6. Access Persons: Initial and Annual Disclosures of Personal Holdings
For purposes of Rule 17j-1 under the Investment Company Act of 1940,
Independence has decided to treat all directors, officers and employees of
Independence as though they were "access persons." Therefore, all directors,
officers and employees of Independence, within 10 days after becoming an "access
person" and annually thereafter, must disclose all securities in which they have
any direct or indirect beneficial ownership, and the name of any broker, dealer
or bank with whom the individual maintained an account in which any securities
were held for the direct or indirect benefit of the individual. Any securities
referenced in footnote 2, above, are exempted from this disclosure, as are any
accounts over which the "access person" has no direct or indirect influence or
control. Both "initial" and "annual" reports furnished under this section must
contain the information required by Rule 17j-1(d)(1).
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7. Quarterly Reports
Independence requires all directors, officers and employees to file Individual
Securities Transactions Reports ("Quarterlies") by the 10th day of the month
following the close of a quarter. These are required of directors, officers and
certain employees by Rule 204-2(a)(12) under the Investment Advisers Act of 1940
and by Rule 17j-1(d)(1) under the Investment Company Act of 1940 and must
contain all of the information required by those rules. All securities
transactions in which the individual has any direct or indirect beneficial
ownership must be disclosed except for (i) transactions effected in any account
over which the individual has no direct or indirect influence or control; and
(ii) transactions in the securities referenced in footnote 2 above. The format
for these reports has changed and each individual should carefully review the
information requested and be sure that all required information has been
disclosed.
8. Inside Information Policy and Procedures
Please refer to a separate Independence policy, the Company Inside Information
Policy and Procedures. In addition to the reporting requirements under this Code
of Ethics, employees are subject to certain reporting obligations under the
Company Inside Information Policy and Procedures. These include reporting
accounts over which the employee has investment discretion and a requirement
that notice of each transaction in such an account be sent to the Compliance
Officer within 10 days of a transaction.
The Standards of Practice Handbook (AIMR 1999), noted below, contains a useful
discussion on the prohibition against the use of material, non-public
information.
9. Conflict of Interest and Business Practice Policy
As required by its parent company, Independence has adopted the Company Conflict
and Business Practice Policy which is distributed annually to each employee for
review and certification of compliance. The provisions of the Company Conflict
and Business Practice Policy, therefore, are not incorporated within this Code
of Ethics.
10. Annual Report to the Board
Independence will be required to report annually to its Board of Directors that
all employees have received a copy of this Code of Ethics and have certified
their compliance.
Independence will summarize for the Board existing procedures and any changes
made during the past year or recommended to be made, and will identify to the
Board, and may identify to the Board of Directors of any registered investment
company advised by Independence, any violations requiring significant remedial
action during the past year.
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11. Association for Investment Management and Research ("AIMR")
Standards of Practice Handbook (9th Ed. 1999)
At Independence, some employees have earned the Chartered Financial Analyst
designation ("CFA(R)") and are subject to the Code of Ethics and Standards of
Professional Conduct contained in the AIMR Standards of Practice Handbook.
Employees are reminded that the Handbook is an excellent resource for
information on professional conduct. Copies are available from the Compliance
Officer.
12. Code of Ethics Enforcement
Employees are required annually to certify their compliance with this Code of
Ethics. The Compliance Officer may grant exemptions/exceptions to the
requirements of the Code on a case by case basis if the proposed conduct appears
to involve no opportunity for abuse. All exceptions/exemptions shall be in
writing and copies shall be maintained with a copy of the Code. A record shall
be maintained of any decision to grant pre-clearance to a private placement
transaction, or to grant an exemption to the ban on purchases of IPO's, together
with the reasons supporting the decision. The Compliance Office will conduct
post-trade monitoring and other audit procedures reasonably designed to assure
compliance with the Code of Ethics. Employees are advised that the Code's
procedures will be monitored and enforced, with potential sanctions for
violations including a written warning, disgorgement of profits, fines,
suspension, termination and, where required, reports to the AIMR or the
appropriate regulatory authority. Copies of all reports filed, records of
violations and copies of letters or other records of sanctions imposed will be
maintained in a compliance file. Significant violations of the Code may be
referred by the Compliance Officer to the Independence Board of Directors for
review and/or appropriate action.
Adopted by the Independence Board of Directors on November 21, 1994. Amended and
restated on February 27, 1996. Amended and restated as of January 15, 1997.
Amended and restated as of May 12, 1998. Amended and restated as of February 28,
2000.
CODE OF ETHICS.DOC
