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Exhibit No. 16
MITCHELL HUTCHINS ASSET MANAGEMENT INC. AND
THE PAINEWEBBER FUNDS
CODE OF ETHICS FOR PERSONAL INVESTING
BY ACCESS PERSONS FOR THE PAINEWEBBER FUNDS
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INTRODUCTION
Rule 17j-1 under the Investment Company Act of 1940 provides that it is
unlawful for any Access Person,(1) in connection with the purchase or sale of
any Covered Security(2) held or to be acquired by a Fund(3) (other than a money
market fund or a Fund that does not invest in Covered Securities) to:
- employ any device, scheme or artifice to defraud the Fund;
- 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;
- engage in any act, practice or course of business that operates or would
operate as a fraud or deceit on the Fund;
- or engage in any manipulative practice with respect to the Fund.
Rule 17j-1 also provides that funds and their advisers and principal
underwriters must adopt Codes of Ethics containing provisions reasonably
necessary to prevent Access Persons from violating Rule 17j-1. Accordingly,
Mitchell Hutchins and the PaineWebber Funds have adopted this Code of Ethics.
THIS CODE APPLIES TO YOU IF YOU ARE AN ACCESS PERSON FOR ANY PAINEWEBBER FUND
AND YOU ARE A DIRECTOR OF THE PAINEWEBBER FUNDS OR AN OFFICER, DIRECTOR OR
EMPLOYEE OF MITCHELL HUTCHINS.
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(1) "Access Person" is defined in Rule 17j-1, a copy of which is attached to
this Code as Exhibit A.
(2) "Covered Security" is defined in Rule 17j-1, a copy of which is attached
to this Code as Exhibit A.
(3) " Fund" is defined in Rule 17j-1, a copy of which is attached to this
Code as Exhibit A.
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PROVISIONS
PROVISION ONE: PERSONAL RESPONSIBILITY. You must take personal
responsibility for assuring that your personal securities transactions are not
connected with any of the fraudulent conduct described above. Mitchell Hutchins
has adopted policies and procedures to help you make this determination.
However, Mitchell Hutchins places primary responsibility for this determination
with you. Therefore, you must assure that your personal investing does not
violate this Code of Ethics before you submit a proposed personal investment
transaction for any reviews or approvals required by this Code or by any other
Mitchell Hutchins policies or procedures regarding personal investing.
PROVISION TWO: DISCLOSURE. You must report the following:
- HOLDINGS. You must disclose your personal securities holdings within ten
days of becoming an Access Person and again, annually, unless you are an
independent director of a PaineWebber Fund.
- TRANSACTIONS. You must notify Mitchell Hutchins of all personal
transactions in Covered Securities at least quarterly, unless you are
an independent director of a PaineWebber Fund.
If you are an independent director of a PaineWebber Fund, you must make
quarterly transaction reports only if, during the preceding quarter, you
traded a security when you knew, or reasonably should have known that a
Fund had traded the same security within the prior 15 days or would be
trading the same security within the next 15 days.
PROVISION THREE: PRECLEARANCE OF IPOS AND PRIVATE PLACEMENTS. If, in
connection with your regular duties, you make or participate in making
investment recommendations or decisions for the purchase or sale of any Covered
Security by a Fund, you must obtain written permission from Mitchell Hutchins
before you may purchase initial public offerings or private placements.
PROVISION FOUR: SUPERVISION. For any Access Person you supervise, you must:
- review that person's investment holdings and transactions reports for
any evidence of the fraudulent conduct prohibited by this Code;
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- evaluate any requests from that person to participate in IPOs or private
placements for potential conflicts between the interests of employees
and the interests of the Fund they serve; and
- identify and resolve any potential fraud or conflict of interest that
may arise in connection with that person's personal securities holdings
or transactions.
ADMINISTRATION AND ENFORCEMENT
ADMINISTRATION AND PAINEWEBBER FUND OVERSIGHT. Mitchell Hutchins is
responsible for administering and enforcing this Code and has full authority to
impose penalties, including without limitation, disgorgement, fines, and
termination of the employment of the parties subject to this Code. Mitchell
Hutchins will report at least annually on its administration of this Code to the
Boards of the PaineWebber Funds.
MITCHELL HUTCHINS POLICIES AND PROCEDURES FOR PERSONAL INVESTING. Mitchell
Hutchins has instituted policies and procedures ("Procedures") reasonably
necessary to assure that you do not violate this Code of Ethics. YOU ARE
RESPONSIBLE FOR COMPLYING WITH ALL PROCEDURES THAT APPLY TO YOU. Among other
things, the Procedures:
- limit your ability to trade Covered Securities at the same time as a
Fund, if you participate in its management;
- limit your ability to engage in short-term trading;
- require you to preclear certain transactions in Covered Securities and
specify the process for obtaining that preclearance;
- provide forms and instructions for quarterly and annual reporting and
for preclearance of IPOs and private placements; and
- require you to certify at least annually that you have conducted all
personal transactions in Covered Securities in accordance with this Code
of Ethics and related Mitchell Hutchins procedures.
In addition, the Procedures provide for a Code of Ethics Committee to
review violations of the Code and the Procedures and to order appropriate
remedial action. The Procedures also require the Mitchell Hutchins Legal and
Compliance Department to review transaction and holdings reports from Fund
Directors and to refer potential conflicts to the Code of Ethics Committee.
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SUB-ADVISERS OF THE PAINEWEBBER FUNDS
Mitchell Hutchins requires every sub-adviser of a PaineWebber Fund to adopt
a code of ethics that meets the requirement of Rule 17j-1. Access Persons of the
PaineWebber Funds who are employees of a sub-adviser are governed by the
sub-adviser's code of ethics. Mitchell Hutchins has delegated responsibility to
each sub-adviser for supervising the personal securities transactions of these
Access Persons, including review of transaction and holding reports and any
requests to purchase IPOs or private placements.
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SECTION 270.17J-1 PERSONAL INVESTMENT ACTIVITIES OF INVESTMENT COMPANY
PERSONNEL.
(a) DEFINITIONS. For purposes of this section:
(1) ACCESS PERSON means:
(i) Any director, officer, general partner or Advisory Person of a Fund or
of a Fund's investment adviser.
(A) If an investment adviser is primarily engaged in a business or
businesses other than advising Funds or other advisory clients, the term
ACCESS PERSON means any director, officer, general partner or Advisory
Person of the investment adviser who, with respect to any Fund, makes
any recommendation, participates in the determination of which
recommendation will be made, or whose principal function or duties
relate to the determination of which recommendation will be made, or
who, in connection with his or her duties, obtains any information
concerning recommendations on Covered Securities being made by the
investment adviser to any Fund.
(B) An investment adviser is "primarily engaged in a business or
businesses other than advising Funds or other advisory clients" if, for
each of its most recent three fiscal years or for the period of time
since its organization, whichever is less, the investment adviser
derived, on an unconsolidated basis, more than 50 percent of its total
sales and revenues and more than 50 percent of its income (or loss),
before income taxes and extraordinary items, from the other business or
businesses.
(ii) Any director, officer or general partner of a principal underwriter who,
in the ordinary course of business, makes, participates in or obtains
information regarding, the purchase or sale of Covered Securities by the
Fund for which the principal underwriter acts, or whose functions or
duties in the ordinary course of business relate to the making of any
recommendation to the Fund regarding the purchase or sale of Covered
Securities.
(2) ADVISORY PERSON of a Fund or of a Fund's investment adviser means:
(i) 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,
participates in, or obtains information regarding the purchase or sale
of Covered Securities by a Fund, or whose functions relate to the making
of any recommendations with respect to the purchases or sales; and
(ii) Any natural person in a control relationship to the Fund or investment
adviser who obtains information concerning recommendations made to the
Fund with regard to the purchase or sale of Covered Securities by the
Fund.
(3) CONTROL has the same meaning as in section 2(a)(9) of the Act [15 U.S.C.
80a-2(a)(9)].
(4) COVERED SECURITY means a security as defined in section 2(a)(36) of the Act
[15 U.S.C. 80a-2(a)(36)], except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial paper and
high quality short-term debt instruments, including repurchase
agreements; and
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EXHIBIT A
(iii) Shares issued by open-end Funds.
(5) FUND means an investment company registered under the Investment Company
Act.
(6) An INITIAL PUBLIC OFFERING means an offering of securities registered under
the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which, immediately
before the registration, was not subject to the reporting requirements of
sections 13 or 15(d) of the Securities Exchange Act of 1934 [15 U.S.C. 78m
or 78o(d)].
(7) INVESTMENT PERSONNEL of a Fund or of a Fund's investment adviser means:
(i) 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.
(ii) 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.
(8) A LIMITED OFFERING means an offering that is exempt from registration under
the Securities Act of 1933 pursuant to section 4(2) or section 4(6)
[15 U.S.C. 77d(2) or 77d(6)] or pursuant to rule 504, rule 505, or rule 506
[17 CFR 230.504, 230.505, or 230.506] under the Securities Act of 1933.
(9) PURCHASE OR SALE OF A COVERED SECURITY includes, among other things, the
writing of an option to purchase or sell a Covered Security.
(10) SECURITY HELD OR TO BE ACQUIRED by a Fund means:
(i) Any Covered Security which, within the most recent 15 days:
(A) Is or has been held by the Fund; or
(B) 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.
(b) UNLAWFUL ACTIONS. It is unlawful 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, 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.
(c) CODE OF ETHICS.
(1) ADOPTION AND APPROVAL OF CODE OF ETHICS.
(i) Every Fund (other than a money market fund or a Fund that does not
invest in Covered Securities) and each investment adviser of and
principal underwriter for
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EXHIBIT A
the Fund, must adopt a written code of ethics containing provisions
reasonably necessary to prevent its Access Persons from engaging in
any conduct prohibited by paragraph (b) of this section.
(ii) The board of directors of a Fund, including a majority of directors
who are not interested persons, must approve the code of ethics of
the Fund, the code of ethics of each investment adviser and
principal underwriter of the Fund, and any material changes to
these codes. The board must base its approval of a code and any
material changes to the code on a determination that the code
contains provisions reasonably necessary to prevent Access Persons
from engaging in any conduct prohibited by paragraph (b) of this
section. Before approving a code of a Fund, investment adviser or
principal underwriter or any amendment to the code, the board of
directors must receive a certification from the Fund, investment
adviser or principal underwriter that it has adopted procedures
reasonably necessary to prevent Access Persons from violating the
investment adviser's or principal underwriter's code of ethics. The
Fund's board must approve the code of an investment adviser or
principal underwriter before initially retaining the services of
the investment adviser or principal underwriter. The Fund's board
must approve a material change to a code no later than six months
after adoption of the material change.
(iii) If a Fund is a unit investment trust, the Fund's principal
underwriter or depositor must approve the Fund's code of ethics, as
required by paragraph (c)(1)(ii) of this section. If the Fund has
more than one principal underwriter or depositor, the principal
underwriters and depositors may designate, in writing, which
principal underwriter or depositor must conduct the approval
required by paragraph (c)(1)(ii) of this section, if they obtain
written consent from the designated principal underwriter or
depositor.
(2) ADMINISTRATION OF CODE OF ETHICS.
(i) The Fund, investment adviser and principal underwriter must use
reasonable diligence and institute procedures reasonably necessary
to prevent violations of its code of ethics.
(ii) No less frequently than annually, every Fund (other than a unit
investment trust) and its investment advisers and principal
underwriters must furnish to the Fund's board of directors, and the
board of directors must consider, a written report that:
(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
violations of the code or procedures and sanctions imposed in
response to the material violations; and
(B) Certifies that the Fund, investment adviser or principal
underwriter, as applicable, has adopted procedures reasonably
necessary to prevent Access Persons from violating the code.
(3) EXCEPTION FOR PRINCIPAL UNDERWRITERS. The requirements of paragraphs (c)(1)
and (c)(2) of this section do not apply to any principal underwriter unless:
(i) The principal underwriter is an affiliated person of the Fund or of the
Fund's investment adviser; or
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EXHIBIT A
(ii) An officer, director or general partner of the principal underwriter
serves as an officer, director or general partner of the Fund or of the
Fund's investment adviser.
(D) REPORTING REQUIREMENTS OF ACCESS PERSONS.
(1) REPORTS REQUIRED. Unless excepted by paragraph (d)(2) of this section, every
Access Person of a Fund (other than a money market fund or a Fund that does
not invest in Covered Securities) and every Access Person of an investment
adviser of or principal underwriter for the Fund, must report to that Fund,
investment adviser or principal underwriter:
(i) INITIAL HOLDINGS REPORTS. No later than 10 days after the person becomes
an Access Person, the following information:
(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.
(ii) QUARTERLY TRANSACTION REPORTS. No later than 10 days after the end of a
calendar quarter, the following information:
(A) With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect
beneficial ownership:
(1) 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 Covered Security involved;
(2) The nature of the transaction (I.E., purchase, sale or any other
type of acquisition or disposition);
(3) The price of the Covered Security at which the transaction was
effected;
(4) The name of the broker, dealer or bank with or through which the
transaction was effected; and
(5) The date that the report is submitted by the Access Person.
(B) 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:
(1) The name of the broker, dealer or bank with whom the Access
Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access Person.
(iii) 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):
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EXHIBIT A
(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 benefit of the Access Person; and
(C) The date that the report is submitted by the Access Person.
(2) EXCEPTIONS FROM REPORTING REQUIREMENTS.
(i) A person need not make a report under paragraph (d)(1) of this section
with respect to transactions effected for, and Covered Securities held
in, any account over which the person has no direct or indirect
influence or control.
(ii) A director of a Fund who is not an "interested person" of the Fund
within the meaning of section 2(a)(19) of the Act [15 U.S.C.
80a-2(a)(19)], and who would be required to make a report solely by
reason of being a Fund director, need not make:
(A) An initial holdings report under paragraph (d)(1)(i) of this section
and an annual holdings report under paragraph (d)(1)(iii) of this
section; and
(B) A quarterly transaction report under paragraph (d)(1)(ii) of this
section, unless the director knew or, in the ordinary course of
fulfilling his or her official duties as a Fund director, should have
known that during the 15-day period immediately before or after the
director's transaction in a Covered Security, the Fund purchased or sold
the Covered Security, or the Fund or its investment adviser considered
purchasing or selling the Covered Security.
(iii) An Access Person to a Fund's principal underwriter need not make a
report to the principal underwriter under paragraph (d)(1) of this
section if:
(A) The principal underwriter is not an affiliated person of the Fund
(unless the Fund is a unit investment trust) or any investment adviser
of the Fund; and
(B) The principal underwriter has no officer, director or general
partner who serves as an officer, director or general partner of the
Fund or of any investment adviser of the Fund.
(iv) An Access Person to an investment adviser need not make a quarterly
transaction report to the investment adviser under paragraph (d)(1)(ii)
of this section if all the information in the report would duplicate
information required to be recorded under Sections 275.204-2(a)(12) or
275.204-2(a)(13) of this chapter.
(v) An Access Person need not make a quarterly transaction report under
paragraph (d)(1)(ii) of this section if the report would duplicate
information contained in broker trade confirmations or account
statements received by the Fund, investment adviser or principal
underwriter with respect to the Access Person in the time period
required by paragraph (d)(1)(ii), if all of the information required by
that paragraph is contained in the broker trade confirmations or account
statements, or in the records of the Fund, investment adviser or
principal underwriter.
(3) REVIEW OF REPORTS. Each Fund, investment adviser and principal underwriter
to which reports are required to be made by paragraph (d)(1) of this section
must institute
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EXHIBIT A
procedures by which appropriate management or compliance personnel review
these reports.
(4) NOTIFICATION OF REPORTING OBLIGATION. Each Fund, investment adviser and
principal underwriter to which reports are required to be made by
paragraph (d)(1) of this section must identify all Access Persons who are
required to make these reports and must inform those Access Persons of their
reporting obligation.
(5) BENEFICIAL OWNERSHIP. For purposes of this section, beneficial ownership is
interpreted in the same manner as it would be under Section 240.16a-1(a)(2)
of this chapter in determining whether a person is the beneficial owner of a
security for purposes of section 16 of the Securities Exchange Act of 1934
[15 U.S.C. 78p] and the rules and regulations thereunder. Any report
required by paragraph (d) of this section may contain a statement that the
report will not be construed as an admission that the person making the
report has any direct or indirect beneficial ownership in the Covered
Security to which the report relates.
(e) PRE-APPROVAL OF INVESTMENTS IN IPOS AND LIMITED OFFERINGS. Investment
Personnel of a Fund or its investment adviser must obtain approval from the Fund
or the Fund's investment adviser before directly or indirectly acquiring
beneficial ownership in any securities in an Initial Public Offering or in a
Limited Offering.
(f) RECORDKEEPING REQUIREMENTS.
(1) Each Fund, investment adviser and principal underwriter that is required to
adopt a code of ethics or to which reports are required to be made by Access
Persons must, at its principal place of business, maintain records in the
manner and to the extent set out in this paragraph (f), and must make these
records available to the Commission or any representative of the Commission
at any time and from time to time for reasonable periodic, special or other
examination:
(A) A copy of each code of ethics for the organization that is in effect, or
at any time within the past five years was in effect, must be maintained in
an easily accessible place;
(B) 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;
(C) A copy of each report made by an Access Person as required by this
section, including any information provided in lieu of the reports under
paragraph (d)(2)(v) of this section, 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;
(D) A record of all persons, currently or within the past five years, who
are or were required to make reports under paragraph (d) of this section, or
who are or were responsible for reviewing these reports, must be maintained
in an easily accessible place; and
(E) A copy of each report required by paragraph (c)(2)(ii) of this section
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.
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EXHIBIT A
(2) A Fund or investment adviser must maintain a record of any decision, and the
reasons supporting the decision, to approve the acquisition by investment
personnel of securities under paragraph (e), for at least five years after
the end of the fiscal year in which the approval is granted.
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