EXHIBIT 16
CODE OF ETHICS
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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.
(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:
* USAA Mutual Fund, Inc.
* USAA Investment Trust
* USAA Tax Exempt Fund, Inc.
* USAA State Tax-Free Trust
* 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.
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