<PAGE> 1
AMR INVESTMENT SERVICES, INC.
CODE OF ETHICS
Dated February 16, 2000
A. Definitions When used in this Code, the following terms shall have the
meanings set forth below:
"Access Person" means any director, officer, or employee of AMR Investment
Services, Inc. ("Company").
"Advisory Account" means any account with respect to which the Company
provides investment advisory services pursuant to a contract.
"Beneficial Ownership" shall be interpreted in a manner consistent with
Rule 16a-1(a)(2) of the Securities Exchange Act of 1934. This includes accounts
of a spouse, minor children and relatives resident in the Access Person's home,
as well as accounts of another person if by reason of any contract,
understanding, relationship, agreement or other arrangement the Access Person
obtains beneficial ownership.
"Code" means this Code of Ethics.
"Company" means AMR Investment Services, Inc.
"Compliance Officer" means the Company officer(s) designated by the Company
President as being responsible for receiving reports or notices and performing
such other duties as required by the Code.
"Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the result of
an official position with the company. A natural person shall be presumed not to
be a "control" person for this purpose, unless a determination to the contrary
is made by the Securities and Exchange Commission.
"Exempt Security" means any security issued by the government of the United
States or its agencies and instrumentalities, bankers' acceptances, bank
certificates of deposit, commercial paper, other high quality short-term debt
instruments, or shares of open-end investment companies. In addition, as may be
determined by the Compliance Officer, certain futures transactions and options
on certain broad-based securities indices will be deemed an "Exempt Security."
"Investment Personnel" includes the President, the Vice President-Trust
Investments, portfolio managers employed by the Company and the analysts and
traders who assist in the investment process.
"Portfolio Managers" are defined as those employees of the Company with
direct responsibility and authority to make investment decisions affecting an
Advisory Account.
"Purchase or sale of a security" includes, among other transactions, the
writing of an option to purchase or sell a security.
1
<PAGE> 2
"Security" means 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,
fractional undivided interest in oil, gas or other mineral rights, any put,
call, straddle, option or privilege on any security, or group or index of
securities (including any interest therein or based on the value thereof), or
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.
Access Persons should contact the designated Compliance Officer regarding
any questions they have concerning or interpreting any of the above definitions.
B. Statement of General Principles
Directors, officers and employees of the Company owe a fiduciary duty to
place the interests of the Advisory Accounts above their own. This includes the
responsibility to conduct their personal securities transactions in a manner
that does not interfere with portfolio transactions on behalf of Advisory
Accounts or take unfair advantage of their relationship to the Company. At all
times employees should be guided by the principle that the interests of Advisory
Accounts come first. All personal securities transactions must be executed
consistent with the policies and restrictions set forth in the following pages.
Doubtful situations should be resolved in favor of Advisory Accounts.
Technical compliance with the Code's procedures will not automatically exempt
from scrutiny any trades that may indicate a perceived abuse of fiduciary
duties.
C. Restrictions
1. Purchases and Sales of a Security. No Access Person of the Company shall
purchase or sell, directly or indirectly:
a. any Security in which he or she has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership and
which, to his or her actual knowledge at the time of such purchase or
sale, is being purchased or sold by an Advisory Account,
b. any Security in which, to his or her actual knowledge at the time
of such purchase or sale, the Company or any other investment adviser
of the Company is actively considering recommending to an Advisory
Account for purchase or sale, or
c. any convertible security, option, warrant or any security of a
different class of any issuer whose underlying or other class of
securities are, to his or her actual knowledge at the time of such
purchase or sale, being actively considered for recommendation to, or
are currently being purchased or sold by an Advisory Account.
2
<PAGE> 3
These prohibitions shall apply whether the transaction is in the same (e.g.
two purchases) or the opposite (e.g. a purchase and a sale) direction of the
trade for an Advisory Account and will continue until the day after the day on
which the Company determines not to enter into or completes the purchase or
sale.
2. Exceptions. The prohibitions of Section C.1. above shall not apply to:
a. purchases or sales of Securities in any account over which the
Access Person has no direct or indirect influence, control or prior
knowledge;
b. purchases or sales of Securities which are not eligible for
purchase or sale by any Advisory Account and are not connected to
Securities any Advisory Account holds or intends or proposes to
acquire;
c. purchases or sales of Securities which are not a choice or decision
of the Access Person;
d. purchases of Securities issued pursuant to an automatic dividend
reinvestment plan; or
e. purchases of Securities effected upon the exercise of rights issued
by an issuer proportionately to all holders of a class of its
Securities (or certain other corporate actions as approved by the
Compliance Officer or his or her designee) to the extent such rights
were acquired from that issuer, and sales of such rights so acquired.
3. Undue Influence. No Access Person who owns a particular Security shall
attempt to cause an Advisory Account to purchase, sell or hold the same
Security in a manner calculated to create a personal benefit to the Access
Person. An Access Person who participates in an investment decision on
behalf of an Advisory Account concerning a particular security, that could
create a material benefit to the Access Person, should disclose to those
persons with authority to make investment decisions, or to the Compliance
Officer, the nature of his/her interest in that Security.
4. Initial Public Offerings. No Investment Personnel may acquire any
Securities in an Initial Public Offering.
5. Private Placements. Any acquisition by Investment Personnel of
Securities in a private placement must have prior clearance from the
Compliance Officer or another officer of the Company who has been
designated to clear such transactions. Prior approval should take into
account whether the investment opportunity should be reserved for the
Company and its Advisory Accounts, and whether the opportunity is being
offered to the individual by virtue of his or her position with the
Company. Investment Personnel who have been authorized to acquire
securities in a private placement are required to disclose these
investments when they play a part in the Company's subsequent consideration
of an investment in the issuer. In such circumstances, the decision to make
the investment should be subject to an independent review by Investment
Personnel with no personal interest in the issuer.
6. Short-Term Trading. No Investment Personnel of the Company may profit
from the purchase and sale, or sale and purchase of the same (or
equivalent) Securities
3
<PAGE> 4
within sixty calendar days. However, individual exceptions may be permitted
by the Compliance Officer or another officer designated by the Company when
it is clear that the trades would not create a conflict with the interests
of any Advisory Account of the Company. Examples of such exceptions include
the purchase of AMR stock and exercising compensation-related options. Any
trades made in violation of this prohibition should be reversed, or if that
is not feasible, all profits resulting from the trading should be disgorged
to a charitable organization designated by the Company; provided, however,
that the Compliance Officer or another officer designated by the Company
may waive disgorgement of profits if it is determined that trading in
violation of this prohibition was inadvertent and did not otherwise result
in a conflict with an Advisory Account.
7. Seven Day Blackout. No Portfolio Manager may purchase or sell a Security
within seven calendar days of a purchase or sale of the same (or
equivalent) Security on behalf of an Advisory Account managed by that
Portfolio Manager.
8. Portfolio Securities. No Portfolio Manager may purchase or sell a
Security if, as of the time of the proposed transaction, an Advisory
Account managed by the Portfolio Manager owns more than five percent (5%)
of a Security issued by the same issuer. Exceptions to the foregoing
limitation may be granted by the Compliance Officer or another officer
designated by the Company if it is determined that the trade would not
create an actual or apparent conflict of interest with the Company.
9. Inside Information, Market Manipulation and Other Prohibited
Transactions. Investment Personnel may not enter into any transaction:
a. while in possession of material nonpublic information regarding the
security or issuer of the security;
b. intended to raise, lower or maintain the price of any security to
create a false appearance of active trading; or
c. deemed by the Compliance Officer, or his or her designee, to
involve a conflict of interest, possible diversion of corporate
opportunity or appearance of impropriety.
10. Gifts. No Investment Personnel may accept any gift of more than minimal
value ($150) from any person or entity that does business with or on behalf
of the Company. Gifts generally do not include dinners, tickets to the
theater or sporting events or comparable entertainment. In addition, Access
Persons may not solicit gifts or give any gifts of more than a minimal
value ($150) to any person that does business with or on behalf of the
Company.
11. Service as a Director. Investment Personnel are prohibited from serving
on the Boards of Directors of publicly traded companies unless prior
authorization has been granted by the President of the Company, based upon
a determination that the Board service would not be inconsistent with the
interests of the Company and its Advisory Accounts. The President's serving
on any Board of a publicly traded company must be approved by the Secretary
of the Company.
D. Compliance Procedures
4
<PAGE> 5
1. Preclearance. The prohibitions of Section C.1. notwithstanding, an
Access Person may effect a purchase or sale of a Security in which they
have, or by reason of such transaction acquire, a direct or beneficial
interest, only if they obtain prior written clearance from an officer of
the Company who has been designated to grant trading approvals. Requests
for pre-clearance shall be made on the appropriate form provided by the
Compliance Officer for such purpose. In addition, upon receipt of such
preclearance, an Access Person may engage in a transaction otherwise
prohibited by Section C.1. Such written clearance shall be based upon a
determination by the approving officer (in consultation with such other
persons as may be necessary) that the purchase or sale will not materially
affect the liquidity of the market for the Security or its price and is
otherwise consistent with Section 17j-1 under the Investment Company Act of
1940 and the rules and regulations thereunder. Clearance shall be granted
for a period of seven calendar days only. Pre-clearance is not necessary
for transactions in Exempt Securities.
2. Reporting. Every Access Person shall report to the Compliance Officer
the information described below with respect to an existing holding and
transactions in any Security in which such Access Person has, or by reason
of such transaction acquires, any direct or indirect beneficial ownership
in the Security, including, but not limited to, transactions which have
been cleared according to Section D.1. above. Reporting is not necessary
for transactions in Exempt Securities.
a. Initial Holdings Report. Every report shall be made no later than
ten days after a person becomes an Access Person and shall contain the
following information:
1.) 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;
2.) the name of the 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
3.) the date that the report is submitted by the Access Person.
b. Quarterly Transaction Report. Every report shall be made no later
than ten days after the end of the calendar quarter and shall contain
the following information:
1.) the date of the transaction, the title, interest rate and
maturity date (if applicable) and the number of shares, and the
principal amount of each Security involved;
2.) the nature of the transaction, i.e., purchase, sale or any
other type of acquisition or disposition;
3.) the price at which the transaction was effected;
5
<PAGE> 6
4.) the name of the broker, dealer or bank with or through which
the transaction was effected;
5.) the date that the report is submitted by the Access Person;
and
6.) for any account opened during the quarter in which any
Security was held for the direct or indirect benefit of the
Access Person, include the name of the broker, dealer or bank
with whom the account was established and the date of
establishment.
c. Annual Holdings Report. Every report shall be made annually and
contain the following information (which must be current as of a date
not more than 30 calendar days before the report is submitted):
1.) the title, number of shares and principal amount of each
Security in which the Access Person had any direct or indirect
beneficial ownership;
2.) the name of the 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
3.) the date that the report is submitted by the Access Person.
All reports shall be made on the form designated for such purpose.
Copies of confirmation statements or monthly statements of account may be
attached to the signed report form instead of completing the information
otherwise required on the form.
4. Disclaimer of Beneficial Ownership. Any report pursuant to this Section
D. shall not be construed as an admission by the person making the report
that he or she has any direct or indirect beneficial ownership in the
Security to which the report relates.
5. Notification of Reporting Obligation. The initial holdings, quarterly
and annual reports are designed to comply with the requirements of the
Investment Company Act of 1940 and rules thereunder. All Access Persons
under a duty to file initial holdings, quarterly and annual reports with
the Compliance Officer shall be informed of that duty by that officer or
his or her designee. Once informed of their duty to file quarterly and
annual reports, an Access Person has a continuing obligation to file such
reports in a timely manner until such time as notified otherwise.
Information supplied on the reports is available for inspection by the
Securities and Exchange Commission at any time during the five-year period
following the end of the fiscal year in which each report is made.
6. Review of Reports. Periodically, the Compliance Officer, or his or her
designee, shall compare the reported personal securities transactions of
Access Persons with completed portfolio transactions of the Company and
with any portfolio transactions effected for the Company by its investment
adviser(s) to determine whether a violation of this Code may have occurred.
Before making any determination that a violation has
6
<PAGE> 7
or may have been committed by any person, the Compliance Officer shall give
such person an opportunity to supply additional explanatory material. If
the Compliance Officer determines that a violation of this Code has or may
have occurred, such Officer shall submit a written determination, together
with any appropriate supporting documentation and any additional
explanatory material provided by the individual, to the President of the
Company, who shall make an independent determination of whether a violation
has occurred.
No person shall participate in a determination of whether he or she
has committed a violation of the Code or the imposition of any sanction as
a result of such violation. If a Securities transaction of the President is
under review, the Secretary of the Company shall act in all respects in the
manner prescribed herein for the President.
The Compliance Officer shall report to the Company's President
informing him promptly following the receipt of any report which indicates
that an Access Person entered into a personal Securities transaction which
violated the prohibitions contained in this Code or any report which
indicates that any person violated the prohibitions contained in the
Statement of Policy on Material Non-Public Information.
No less than annually, the Company must furnish to the Board of
Trustees ("Board") of any mutual fund for which it is the adviser or
sub-adviser, and the Board must consider, a written report that
a. describes any issues arising under the Code or procedures since the
last report to the Board, 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 Company has adopted procedures reasonably
necessary to prevent Access Persons from violating the Code.
7. Records of Securities Transactions. All Investment Personnel must direct
their brokers to supply the designated Compliance Officer, on a timely
basis, duplicate copies of confirmations of all personal Securities
transactions and copies of periodic statements for all Securities accounts.
Such records are not required to be submitted for accounts which solely
contain transactions in Exempt Securities (e.g. open-end investment company
accounts).
8. Certification of Compliance with Code of Ethics. All Access Persons are
required on an annual basis to certify that they have read and understood
the Code and recognize that they are subject to it. Furthermore, Access
Persons shall certify annually that they have complied with the Code and
that they have disclosed or reported all personal securities transactions
required to be disclosed or reported pursuant to the Code.
9. Sanctions. Upon determining that there has been a violation of this
Code, the Company's President may impose such sanctions as deemed
appropriate including, among others, a letter of censure, or suspension or
termination of the employment of the violator. In every case, any profits
realized from prohibited transactions must be disgorged to a charitable
organization designated by the Company.
7
<PAGE> 8
AMR INVESTMENT SERVICES TRUST
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
AMERICAN SELECT FUNDS
AMR INVESTMENT SERVICES, INC.
STATEMENT OF POLICY
ON
MATERIAL NON-PUBLIC INFORMATION
Dated November 19, 1999
A. INTRODUCTION
This Statement of Policy on Material Non-Public Information ("Statement")
has been adopted in response to the Insider Trading and Securities Fraud
Enforcement Act of 1988. That law materially increases potential sanctions for
the illegal use of material, non-public information. These sanctions include
substantial monetary fines and jail sentences. The new law extends these
sanctions to employers of individuals who violate the law if the employer fails
to take reasonable steps to prevent such violations. In addition, this law
requires every registered investment adviser, such as AMR Investment Services,
Inc. ("AMR"), to adopt and enforce written procedures "reasonably designed" to
prevent insider trading abuses. Accordingly, this Statement applies to every
trustee, director, officer and employee of the AMR Investment Services Trust
("AMR Trust"), the American AAdvantage Funds ("AAdvantage Funds"), the American
AAdvantage Mileage Funds ("Mileage Funds"), the American Select Funds ("Select
Funds"), and AMR (collectively referred to herein as "Employees").
This Statement explains: (i) the general legal prohibitions and sanctions
regarding insider trading; (ii) the obligations of each Employee in the event he
or she learns material, non-public information; and (iii) the obligations of
each Employee to limit the communication of material, non-public information.
The meaning of the key concepts underlying the prohibitions and the definitions
of certain key words and phrases used in this Statement are set forth in
Appendix A.
Please note that the Funds and AMR also have adopted a Code of Ethics
which govern all personal securities transactions by Employees and members of
their immediate families.
<PAGE> 9
B. POLICY AGAINST INSIDER TRADING; PROCEDURES TO PREVENT SUCH TRADING
1. The Funds and AMR forbid any Employee who possesses material,
non-public information from (i) trading securities to which such
information relates, (ii) recommending transactions to others based
on such information, or (iii) communicating such information to
others in violation of the securities laws of the U.S. and any other
country which has jurisdiction over the trading or communication.
2. Whenever an Employee becomes aware that material, non-public
information has been utilized by another Employee in the purchase or
sale of a security, he or she should immediately contact an
appropriate compliance officer.
C. NEED TO KNOW POLICY; PROCEDURES TO ENFORCE SUCH POLICY
1. All information regarding planned, prospective or ongoing securities
transactions should be treated as confidential. Such information
should be confined to those Employees who require the information to
perform their duties.
2. To ensure the integrity of this policy, Employees should take
reasonable steps to safeguard the confidentiality of material,
non-public information, including the following:
a. Do not discuss confidential information in public places such as
elevators, hallways or social gatherings;
b. To the extent practical, limit access to the areas of the firm
where confidential information could be observed or overheard to
Employees with a business need for being in the area;
c. Avoid using speaker phones in areas where unauthorized persons may
overhear conversations;
d. Where appropriate, maintain the confidentiality of client
identities by using code names or numbers for confidential
projects;
e. Exercise care to avoid placing documents containing confidential
information in areas where they may be read by unauthorized
persons and store such documents in secure locations when they are
not in use; and
f. Destroy copies of confidential documents no longer needed for a
project.
<PAGE> 10
QUESTIONS. If you have any questions with respect to the interpretation or
application of this statement, you are encouraged to discuss them with your
immediate supervisor or any compliance officer.
<PAGE> 11
APPENDIX A
1. THE INSIDER TRADING PROHIBITION. The "insider trading" doctrine prohibits any
person (including investment advisers)from:
o trading in a security while in possession of material, non-public information
regarding the security and in violation of a duty of trust and confidence;
o tipping such information to others;
o recommending the purchase or sale of securities while in possession of such
information; or
o assisting someone who is engaged in any of the above activities.
Thus, "insider trading" is not limited to insiders. It also applies to
non-insiders, such as investment analysts and stock brokers. In addition, it is
not limited to persons who trade. It also applies to persons who tip material,
non-public information or recommend securities while in possession of such
information.
2. MATERIALITY. Insider trading restrictions arise only when the information
that is used for trading, tipping or recommendations is "material." The
information need not be so important that it would have changed an investor's
decision to buy or sell; rather, it is sufficient that a reasonable investor
would want to know the information in making purchase or sale decisions. The
Supreme Court has held that, in close cases, doubts as to whether information is
material should be resolved in favor of finding materiality.
EFFECT ON MARKET PRICE. Any information that, upon disclosure, is likely
to have a significant impact on the market price of securities should be
considered material.
FUTURE EVENTS. The materiality of facts relating to the possible
occurrence of future events depends on the likelihood that the event will
occur and the significance of the event if it does occur.
TENDER OFFERS. Tender offers are subject to particularly strict regulation
under the securities laws. Under no circumstances should you trade in
securities while in possession of material, non-public information
regarding a potential tender offer.
<PAGE> 12
ILLUSTRATIONS. The following list, though not exhaustive, illustrates the
types of matters that might be considered material: a joint venture,
merger or acquisition; the declaration of or omission to declare
dividends; the acquisition or loss of a significant contract; a change in
control or a significant change in management; a call of securities for
redemption; the borrowing of a significant amount of funds; the purchase
or sale of a significant asset; a significant change in capital investment
plans; a significant labor dispute or disputes with subcontracts or
supplies; an event requiring a company to file a current report on Form
8-K with the SEC; establishment of a program to make purchases of the
company's own shares; a tender offer for another company's securities; an
event of technical default or default on interest and/or principal
payments; advance knowledge of an upcoming publication that is expected to
affect the market price of the stock.
3. NON-PUBLIC INFORMATION. Any information which is not "public" is deemed to be
"non-public." Just as an investor is permitted to trade on the basis of
information that is not material, he may also trade on the basis of information
that is public. Information is considered public if it has been disseminated in
a manner making it available to investors generally. An example of non-public
information would include material information provided to a select group of
analysts but not made available to the investment community at large. Set forth
below are a number of ways in which non-public information may be made public.
DISCLOSURE TO NEWS SERVICES AND NATIONAL PAPERS. Publication of a material
fact by a national business and financial newswire service, such as Dow
Jones or Reuters, a national news service, such as Associated Press, or a
national newspaper, such as The New York Times or The Wall Street Journal
would render the information "public".
LOCAL DISCLOSURE. An article in a local newspaper might be sufficient for
a company that is only locally traded, but might not be sufficient for a
company that has a national market.
INFORMATION IN SEC REPORTS. Information contained in reports filed with
the SEC will be deemed to be public.
INFORMATION IN BROKERAGE REPORTS. Information published in bulletins and
research reports disseminated by brokerage firms will, as a general
matter, be deemed public.
<PAGE> 13
If you possess material, non-public information with respect to a security
before such information is publicly disseminated, you may not initiate
transactions in the security until the information has been publicly released
for a period sufficient to allow it to be fully disseminated.
4. CONCEPT OF POSSESSION. The SEC takes the position that insider trading laws
prohibit any person from trading in a security in violation of a duty of trust
and confidence while in possession of material, non-public information regarding
the security. The "in possession" standard is in contrast to trading on the
basis of the material, non-public information.
For example, assume a portfolio manager for a Fund was intending to
purchase shares of a company because the company recently announced that it had
been granted a patent for a product he believed would generate significant
revenues. Just prior to making the purchase, the portfolio manager comes into
possession of non-public information that the company shortly will announce a
program to repurchase its shares. The Fund would be prohibited from purchasing
in the company's securities even though the reason for the intended purchase was
the issuance of the patent and not the repurchase program. The prohibition would
last until the information is no longer material or non-public.
5. ADVISORY ACCOUNT. With respect to all Employees, the term "Advisory Account"
means any account with respect to which AMR provides investment advisory
services pursuant to a contract.
