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THE FRANKLIN TEMPLETON GROUP
CODE OF ETHICS
AND
POLICY STATEMENT ON INSIDER TRADING
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE FRANKLIN TEMPLETON GROUP CODE OF ETHICS.......................................................................1
PART 1 - STATEMENT OF PRINCIPLES..................................................................................1
PART 2 - PURPOSES, AND CONSEQUENCES OF NON-COMPLIANCE.............................................................2
PART 3 - COMPLIANCE REQUIREMENTS FOR ALL ACCESS PERSONS...........................................................3
PART 4 - ADDITIONAL COMPLIANCE REQUIREMENTS APPLICABLE TO PORTFOLIO PERSONS......................................10
PART 5 - REPORTING REQUIREMENTS FOR ALL ACCESS PERSONS...........................................................13
PART 6 - PRE-CLEARANCE REQUIREMENTS..............................................................................17
PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE....................................................................22
PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON GROUP INSIDER TRADING POLICY....................................23
APPENDIX A: COMPLIANCE PROCEDURES, DEFINITIONS, AND OTHER ITEMS............................................24
I. RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER..................................................25
II. COMPILATION OF DEFINITIONS OF IMPORTANT TERMS...........................................................31
III. SECURITIES EXEMPT FROM THE PROHIBITED, REPORTING, AND PRE-CLEARANCE PROVISIONS..........................32
IV. LEGAL REQUIREMENT.......................................................................................33
APPENDIX B: FORMS AND SCHEDULES............................................................................34
ACKNOWLEDGMENT FORM..............................................................................................35
SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS AND PRECLEARANCE DESK TELEPHONE & FAX NUMBERS.........................36
SCHEDULE B: SECURITIES TRANSACTION REPORT.......................................................................37
SCHEDULE C: INITIAL, ANNUAL & UPDATED DISCLOSURE OF ACCESS PERSONS SECURITIES HOLDINGS..........................38
SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT OPENING..........................................................39
SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST..............................................40
SCHEDULE F: INITIAL, ANNUAL & UPDATED DISCLOSURE OF SECURITIES ACCOUNTS.........................................41
SCHEDULE G: INITIAL AND ANNUAL CERTIFICATION OF DISCRETIONARY AUTHORITY.........................................42
SCHEDULE H: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED IN PRIVATE PLACEMENTS...............43
APPENDIX C: INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER SUBSIDIARIES OF
FRANKLIN RESOURCES, INC.- FEBRUARY 2000..........................................................................45
THE FRANKLIN TEMPLETON GROUP POLICY STATEMENT ON INSIDER TRADING..................................................1
A. LEGAL REQUIREMENT........................................................................................1
B. WHO IS AN INSIDER?.......................................................................................2
C. WHAT IS MATERIAL INFORMATION?............................................................................2
D. WHAT IS NON-PUBLIC INFORMATION?..........................................................................2
E. BASIS FOR LIABILITY......................................................................................3
F. PENALTIES FOR INSIDER TRADING............................................................................3
G. INSIDER TRADING PROCEDURES...............................................................................4
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THE FRANKLIN TEMPLETON GROUP CODE OF ETHICS
Franklin Resources, Inc. and all of its subsidiaries, and the funds in the
Franklin Templeton Group of Funds (the "Funds") (collectively, the "Franklin
Templeton Group") will follow this Code of Ethics (the "Code") and Policy
Statement on Insider Trading (the "Insider Trading Policy"). Additionally, the
subsidiaries listed in Appendix C of this Code, together with Franklin
Resources, Inc., the Funds, the Fund's investment advisers and principal
underwriter, have adopted the Code and Insider Trading Policy.
PART 1 - STATEMENT OF PRINCIPLES
The Franklin Templeton Group's policy is that the interests of shareholders
and clients are paramount and come before the interests of any director, officer
or employee of the Franklin Templeton Group.(1)
Personal investing activities of ALL directors, officers and employees of
the Franklin Templeton Group should be conducted in a manner to avoid actual or
potential conflicts of interest with the Franklin Templeton Group, Fund
shareholders, and other clients of any Franklin Templeton adviser.
Directors, officers and employees of the Franklin Templeton Group shall use
their positions with the Franklin Templeton Group, and any investment
opportunities they learn of because of their positions with the Franklin
Templeton Group, in a manner consistent with their fiduciary duties for the
benefit of Fund shareholders, and clients.
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1 "Director" includes trustee.
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PART 2 - PURPOSES, AND CONSEQUENCES OF NON-COMPLIANCE
It is important that you read and understand this document, because its
overall purpose is to help all of us comply with the law and to preserve and
protect the outstanding reputation of the Franklin Templeton Group. This
document was adopted to comply with Securities and Exchange Commission rules
under the Investment Company Act of 1940 ("1940 Act"), the Investment Advisers
Act of 1940 ("Advisers Act"), the Insider Trading and Securities Fraud
Enforcement Act of 1988 ("ITSFEA"), industry practice and the recommendations
contained in the ICI's Report of the Advisory Group on Personal Investing. Any
violation of the Code or Insider Trading Policy, including engaging in a
prohibited transaction or failing to file required reports, may result in
disciplinary action, and, when appropriate, termination of employment and/or
referral to appropriate governmental agencies.
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PART 3 - COMPLIANCE REQUIREMENTS FOR ALL ACCESS PERSONS
3.1 WHO IS COVERED BY THE CODE AND HOW DOES IT WORK?
The principles contained in the Code must be observed by ALL directors,
officers and employees(2) of the Franklin Templeton Group. However, there are
different categories of restrictions on personal investing activities. The
category in which you have been placed generally depends on your job function,
although unique circumstances may result in you being placed in a different
category.
The Code covers the following categories of employees who are described below:
(1) ACCESS PERSONS: Access Persons are those employees who have "access to
information" concerning recommendations made to a Fund or client with
regard to the purchase or sale of a security. Examples of "access to
information" would include having access to trading systems, portfolio
accounting systems, research data bases or settlement information.
Access Persons would typically include employees, including Management
Trainees, in the following departments:
o fund accounting;
o investment operations;
o information services & technology;
o product management;
o legal and legal compliance
o and anyone else designated by the Director of Compliance
In addition, you are an Access Person if you are any of the following:
o an officer or and directors of funds;
o an officer or director of an investment advisor or broker-dealer
subsidiary in the Franklin Templeton Group;
o a person that controls those entities; and
o any Franklin Resources' Proprietary Account ("Proprietary
Account")(3)
(2) PORTFOLIO PERSONS: Portfolio Persons are a subset of Access Persons
and are those employees of the Franklin Templeton Group, who, in
connection with his or her regular functions or duties, makes or
participates in the decision to purchase or sell a security by a Fund
in the Franklin Templeton Group, or any other client or if his or her
functions relate to the making of any recommendations about those
purchases or sales. Portfolio Persons include:
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2 The term "employee or employees" includes management trainees, as well as
regular employees of the Franklin Templeton Group.
3 See Appendix A. II., for definition of "Proprietary Accounts".
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o portfolio managers;
o research analysts;
o traders;
o employees serving in equivalent capacities (such as Management
Trainees);
o employees supervising the activities of Portfolio Persons; and
o anyone else designated by the Director of Compliance
(3) NON-ACCESS PERSONS: If you are an employee in the Franklin Templeton
Group AND you do not fit into any of the above categories, you are a
Non-Access Person. Because you do not normally receive confidential
information about Fund portfolios, you are subject only to the
prohibited transaction provisions described in 3.4 of this Code and
the Franklin Resources, Inc.'s Standards of Business Conduct contained
in the Employee Handbook.
Please contact the Legal Compliance Department if you are unsure as to what
category you fall in or whether you should be considered to be an Access Person
or Portfolio Person.
The Code works by prohibiting some transactions and requiring pre-clearance
and reporting of most others. NON-ACCESS PERSONS do not have to pre-clear their
security transactions, and, in most cases, do not have to report their
transactions. "INDEPENDENT DIRECTORS" need not report any securities transaction
unless you knew, or should have known that, during the 15-day period before or
after the transaction, the security was purchased or sold or considered for
purchase or sale by a Fund or Franklin Resources for a Fund. (See Section 5.2.B
below.) HOWEVER, PERSONAL INVESTING ACTIVITIES OF ALL EMPLOYEES AND INDEPENDENT
DIRECTORS ARE TO BE CONDUCTED IN COMPLIANCE WITH THE PROHIBITED TRANSACTIONS
PROVISIONS CONTAINED IN 3.4 BELOW. If you have any questions regarding your
personal securities activity, contact the Legal Compliance Department.
3.2 WHAT ACCOUNTS AND TRANSACTIONS ARE COVERED?
The Code covers all of your personal securities accounts and transactions,
as well as transactions by any of Franklin Resource's Proprietary Accounts. It
also covers all securities and accounts in which you have "beneficial
ownership."(4) A transaction by or for the account of your spouse, or any other
family
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4 Generally, a person has "beneficial ownership" in a security if he or she,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares a direct or indirect
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member living in your home is considered to be the same as a transaction by you.
Also, a transaction for any account in which you have any economic interest
(other than the account of an unrelated client for which advisory fees are
received) and have or share investment control is generally considered the same
as a transaction by you. For example, if you invest in a corporation that
invests in securities and you have or share control over its investments, that
corporation's securities transactions are considered yours.
However, you are not deemed to have a pecuniary interest in any securities
held by a partnership, corporation, trust or similar entity unless you control,
or share control of such entity, or have, or share control over its investments.
For example, securities transactions of a trust or foundation in which you do
not have an economic interest (i.e., you are not the trustor or beneficiary) but
of which you are a trustee are not considered yours unless you have voting or
investment control of its assets. Accordingly, each time the words "you" or
"your" are used in this document, they apply not only to your personal
transactions and accounts, but also to all transactions and accounts in which
you have any direct or indirect beneficial interest. If it is not clear whether
a particular account or transaction is covered, ask a Preclearance Officer for
guidance.
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pecuniary interest in the security. There is a presumption of a pecuniary
interest in a security held or acquired by a member of a person's immediate
family sharing the same household.
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3.3 WHAT SECURITIES ARE EXEMPT FROM THE CODE OF ETHICS?
You do not need to pre-clear or report transactions of the following
securities:
(1) securities that are direct obligations of the U. S. Government (i.e.,
issued or guaranteed by the U.S. Government, such as Treasury bills,
notes and bonds, including U.S. Savings Bonds and derivatives
thereof);
(2) high quality short-term instruments, including but not limited to
bankers' acceptances, bank certificates of deposit, commercial paper
and repurchase agreements;
(3) shares of registered open-end investment companies ("mutual funds");
and
(4) commodity futures, currencies, currency forwards and derivatives
thereof.
Such transactions are also exempt from: (i) the prohibited transaction
provisions contained in Part 3.4 such as front-running; (ii) the additional
compliance requirements applicable to portfolio persons contained in Part 4; and
(iii) the applicable reporting requirements contained in Part 5.
3.4 PROHIBITED TRANSACTIONS FOR ALL ACCESS PERSONS
A. "INTENT" IS IMPORTANT
Certain transactions described below have been determined by the courts and
the SEC to be prohibited by law. The Code reiterates that these types of
transactions are a violation of the Statement of Principals and are prohibited.
Preclearance, which is a cornerstone of our compliance efforts, cannot detect
transactions which are dependent upon intent, or which by their nature, occur
before any order has been placed for a fund or client. A Preclearance Officer,
who is there to assist you with compliance with the Code, cannot guarantee any
transaction or transactions comply with the Code or the law. The fact that your
transaction receives preclearance, shows evidence of good faith, but depending
upon all the facts, may not provide a full and complete defense to any
accusation of violation of the Code or of the law. For example, if you executed
a transaction for which you received approval, or if the transaction
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was exempt from preclearance (e.g., a transaction for 100 shares or less), would
not preclude a subsequent finding that front-running or scalping occurred
because such activity are dependent upon your intent. Intent cannot be detected
during preclearance, but only after a review of all the facts.
In the final analysis, compliance remains the responsibility of each
individual effecting personal securities transactions.
B. FRONT-RUNNING: TRADING AHEAD OF A FUND OR CLIENT
You cannot front-run any trade of a Fund or client. The term "front-run"
means knowingly trading before a contemplated transaction by a Fund or client of
any Franklin Templeton adviser, whether or not your trade and the Fund's or
client's trade take place in the same market. Thus, you may not:
(1) purchase a security if you intend, or know of Franklin Templeton
Group's intention, to purchase that security or a related security on
behalf of a Fund or client, or
(2) sell a security if you intend, or know of Franklin Templeton Group's
intention, to sell that security or a related security on behalf of a
Fund or client.
C. SCALPING.
You cannot purchase a security (or its economic equivalent) with the
intention of recommending that the security be purchased for a Fund, or client,
or sell short a security (or its economic equivalent) with the intention of
recommending that the security be sold for a Fund or client. Scalping is
prohibited whether or not you realize a profit from such transaction.
D. TRADING PARALLEL TO A FUND OR CLIENT
You cannot buy a security if you know that the same or a related security
is being bought contemporaneously by a Fund or client, or sell a security if you
know that the same or a related security is being sold contemporaneously by a
Fund or client.
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E. TRADING AGAINST A FUND OR CLIENT
You cannot:
(1) buy a security if you know that a Fund or client is selling the same
or a related security, or has sold the security, until seven (7)
calendar days after the Fund's or client's order has either been
executed or withdrawn, or
(2) sell a security if you know that a Fund or client is buying the same
or a related security, or has bought the security until seven (7)
calendar days after the Fund's or client's order has either been
executed or withdrawn.
Refer to Section I.A., "Pre-Clearance Standards," of Appendix A of the Code
for more details regarding the preclearance of personal securities transactions.
F.. USING PROPRIETARY INFORMATION FOR PERSONAL TRANSACTIONS
You cannot buy or sell a security based on Proprietary Information(5)
without disclosing the information and receiving written authorization. If you
wish to purchase or sell a security about which you obtained such information,
you must report all of the information you obtained regarding the security to
the Appropriate Analyst(s)6, or to the Director of Compliance for dissemination
to the Appropriate Analyst(s).
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5 Proprietary Information: Information that is obtained or developed during
the ordinary course of employment with the Franklin Templeton Group,
whether by you or someone else, and is not available to persons outside the
Franklin Templeton Group. Examples of such Proprietary Information include,
among other things, internal research reports, research materials supplied
to the Franklin Templeton Group by vendors and broker-dealers not generally
available to the public, minutes of departmental/research meetings and
conference calls, and communications with company officers (including
confidentiality agreements). Examples of non-Proprietary Information
include mass media publications (e.g., The Wall Street Journal, Forbes, and
Fortune), certain specialized publications available to the public (e.g.,
Morningstar, Value Line, Standard and Poors), and research reports
available to the general public.
6 The Director of Compliance is designated on Schedule A. The "Appropriate
Analyst" means any securities analyst or portfolio manager, other than you,
making recommendations or investing funds on behalf of any associated
client, who may be reasonably expected to recommend or consider the
purchase or sale of the security in question.
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You will be permitted to purchase or sell such security if the Appropriate
Analyst(s) confirms to the Preclearance Desk that there is no intention to
engage in a transaction regarding the security within seven (7) calendar days on
behalf of an Associated Client(7) and you subsequently preclear such security in
accordance with Part 6 below.
G. CERTAIN TRANSACTIONS IN SECURITIES OF FRANKLIN RESOURCES, INC., AND
AFFILIATED CLOSED-END FUNDS, AND REAL ESTATE INVESTMENT TRUSTS
If you are an employee of Franklin Resources, Inc. or any of its
affiliates, including the Franklin Templeton Group, you cannot effect a short
sale of the securities, including "short sales against the box" of Franklin
Resources, Inc., or any of the Franklin or Templeton closed-end funds, Franklin
real estate investment trusts or any other security issued by Franklin
Resources, Inc. or its affiliates. This prohibition would also apply to
effecting economically equivalent transactions, including, but not limited to
sales of any option to buy (i.e., a call option) or purchases of any option to
sell (i.e., a put option) and "swap" transactions or other derivatives. Officers
and directors of the Franklin Templeton Group who may be covered by Section 16
of the Securities Exchange Act of 1934, are reminded that their obligations
under that section are in addition to their obligations under this Code.
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7 Associated Client: A Fund or client whose trading information would be
available to the access person during the course of his or her regular
functions or duties.
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PART 4 - ADDITIONAL COMPLIANCE REQUIREMENTS APPLICABLE TO PORTFOLIO PERSONS(8)
4.1 REQUIREMENT TO DISCLOSE INTEREST AND METHOD OF DISCLOSURE
As a Portfolio Person, you must promptly disclose your direct or indirect
beneficial interest in a security whenever you learn that the security is under
consideration for purchase or sale by an Associated Client in the Franklin
Templeton Group and you;
(1) Have or share investment control of the Associated Client;
(2) Make any recommendation or participate in the determination of which
recommendation shall be made on behalf of the Associated Client; or
(3) Have functions or duties that relate to the determination of which
recommendation shall be made to the Associated Client.
In such instances, you must initially disclose that beneficial interest
orally to the primary portfolio manager (or other Appropriate Analyst) of the
Associated Client(s) considering the security, the Director of Research and
Trading or the Director of Compliance. Following that oral disclosure, you must
send a written acknowledgment of that interest on Schedule E (or on a form
containing substantially similar information) to the primary portfolio manager
(or other Appropriate Analyst), with a copy to the Legal Compliance Department.
4.2 SHORT SALES OF SECURITIES
You cannot sell short any security held by your Associated Clients,
including "short sales against the box". Additionally, Portfolio Persons
associated with the Templeton Group of Funds and clients cannot sell short any
security on the Templeton "Bargain List". This prohibition would also apply to
effecting economically equivalent transactions, including, but not limited to,
sales of uncovered call options,
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8 You are a "Portfolio Person" if you are an employee of the Franklin
Templeton Group, and, in connection with your regular functions or duties,
make or participate in the decision to purchase or sell a security by a
Fund in the Franklin Templeton Group, or any other client or if your
functions relate to the making of any recommendations about those purchases
or sales. Portfolio Persons include portfolio managers, research analysts,
traders, persons serving in equivalent capacities (such as Management
Trainees), persons supervising the activities of Portfolio Persons, and
anyone else so designated by the Compliance Officer.
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purchases of put options while not owning the underlying security and short
sales of bonds that are convertible into equity positions.
4.3 SHORT SWING TRADING
Portfolio Persons cannot profit from the purchase and sale or sale and
purchase within sixty calendar days of any security, including derivatives.
Portfolio Persons are responsible for transactions that may occur in margin and
option accounts and all such transactions must comply with this restriction.(9)
This restriction does NOT apply to:
(1) trading within a shorter period if you do not realize a profit and if
you do not violate any other provisions of this Code; and
(2) profiting on the purchase and sale or sale and purchase within sixty
calendar days of the following securities:
o securities that are direct obligations of the U.S. Government,
such as Treasury bills, notes and bonds, and U.S. Savings Bonds
and derivatives thereof;
o high quality short-term instruments ("money market instruments")
including but not limited to (i) bankers' acceptances, (ii) U.S.
bank certificates of deposit; (iii) commercial paper; and (iv)
repurchase agreements;
o shares of registered open-end investment companies; and
o commodity futures, currencies, currency forwards and derivatives
thereof.
Calculation of profits during the 60 calendar day holding period generally
will be based on "last-in, first-out" ("LIFO"). Portfolio Persons may elect to
calculate their 60 calendar day profits on either a LIFO or FIFO ("first-in,
first-out") basis when there has not been any activity in such security by their
Associated Clients during the previous 60 calendar days.
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(9) This restriction applies equally to transactions occurring in margin and
option accounts which may not be due to direct actions by the Portfolio
Person. For example, a stock held less than 60 days that is sold to meet a
margin call or the underlying stock of a covered call option held less than
60 days that is called away, would be a violation of this restriction if
these transactions resulted in a profit for the Portfolio Person.
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4.4 SERVICE AS A DIRECTOR
As a Portfolio Person, you cannot serve as a director, trustee, or in a
similar capacity for any company (excluding not-for-profit companies, charitable
groups, and eleemosynary organizations) unless you receive approval from the
Chief Executive Officer of the principal investment adviser to the Fund(s) of
which you are a Portfolio Person and he/she determines that your service is
consistent with the interests of the Fund(s) and its shareholders.
4.5 SECURITIES SOLD IN A PUBLIC OFFERING
Portfolio Persons cannot buy securities in any initial public offering, or
a secondary offering by an issuer, including initial public offerings of
securities made by closed-end funds and real estate investment trusts advised by
the Franklin Templeton Group. Purchases of open-end mutual funds are excluded
from this prohibition.
4.6 INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN PRIVATE PLACEMENTS
Portfolio Persons cannot acquire limited partnership interests or other
securities in private placements unless they:
(1) complete the Private Placement Checklist (Schedule H);
(2) provide supporting documentation (e.g., a copy of the offering
memorandum); and
(3) obtain approval of the appropriate Chief Investment Officer; and
(4) submit all documents to the Legal Compliance Department
Approval will only be granted after the Director of Compliance consults with an
executive officer of Franklin Resources, Inc.
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PART 5 - REPORTING REQUIREMENTS FOR ALL ACCESS PERSONS
5.1 REPORTING OF BENEFICIAL OWNERSHIP AND SECURITIES TRANSACTIONS
Compliance with the following personal securities transaction reporting
procedures is essential to enable us to meet our responsibilities to Funds and
other clients and to comply with regulatory requirements. You are expected to
comply with both the letter and spirit of these requirements, including
completing and filing all reports required under the Code in a timely manner.
5.2 INITIAL HOLDINGS AND BROKERAGE ACCOUNT REPORTS
A. ALL ACCESS PERSONS (EXCEPT INDEPENDENT DIRECTORS)
Every employee (new or transfer) of the Franklin Templeton Group who
becomes an Access Person, must file:
(1) An Acknowledgement Form;
(2) Schedule C: Initial, Annual & Updated Disclosure of Securities
Holdings; and
(3) Schedule F: Initial, Annual & Updated Disclosure of Securities
Accounts
The Acknowledgement Form, Schedule C and Schedule F must be completed and
returned to the Legal Compliance Department within 10 calendar days of the date
the employee becomes an access person.
5.3 QUARTERLY TRANSACTION REPORTS
A. ALL ACCESS PERSONS (EXCEPT INDEPENDENT DIRECTORS)
You must report all securities transactions by; (i) providing the Legal
Compliance Department with copies of all broker's confirmations and statements
within 10 calendar days after the end of the calendar quarter (which may be sent
under separate cover by the broker) showing all transactions and holdings in
securities and (ii) certifying by January 30th of each year that you have
disclosed all such brokerage accounts on Schedule F to the Legal Compliance
Department. The brokerage statements and confirmations must include all
transactions in securities in which you have, or by reason of the transaction
acquire any
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direct or indirect beneficial ownership, including transactions in a
discretionary account and transactions for any account in which you have any
economic interest and have or share investment control. Also, if you acquire
securities by any other method which is not being reported to the Legal
Compliance Department by a duplicate confirmation statement at or near the time
of the acquisition, you must report that acquisition to the Legal Compliance
Department on Schedule B within 10 calendar days after you are notified of the
acquisition. Such acquisitions include, among other things, securities acquired
by gift, inheritance, vesting,(10) stock splits, merger or reorganization of the
issuer of the security.
You must file these documents with the Legal Compliance Department not
later than 10 calendar days after the end of each quarter, but you need not show
or report transactions for any account over which you had no direct or indirect
influence or control.(11) Failure to timely report transactions is a violation
of Rule 17j-1 as well as the Code, and may be reported to the Fund's Board of
Directors and may also result, among other things, in denial of future personal
security transaction requests.
B. INDEPENDENT DIRECTORS
If you are a director of the Franklin Templeton Group but you are not an
"interested person" of the Fund, you are not required to file transaction
reports unless you knew or should have known that, during the 15-day period
before or after a transaction, the security was purchased or sold, or considered
for purchase or sale, by a Fund or by Franklin Resources on behalf of a Fund.
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(10) You are not required to separately report the vesting of shares or options
of Franklin Resources, Inc., received pursuant to a deferred compensation
plan as such information is already maintained.
(11) See Sections 3.2 and 4.6 of the Code. Also, confirmations and statements of
transactions in open-end mutual funds, including mutual funds sponsored by
the Franklin Templeton Group are not required. See Section 3.3 above for a
list of other securities that need not be reported. If you have any
beneficial ownership in a discretionary account, transactions in that
account are treated as yours and must be reported by the manager of that
account (see Section 6.1.C below).
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5.4 ANNUAL REPORTS - ALL ACCESS PERSONS
A. SECURITIES ACCOUNTS REPORTS (EXCEPT INDEPENDENT DIRECTORS)
As an access person, you must file a report of all personal securities
accounts on Schedule F, with the Legal Compliance Department, annually by
January 30th. You must report the name and description of each securities
account in which you have a direct or indirect beneficial interest, including
securities accounts of a spouse and minor children. You must also report any
account in which you have any economic interest and have or share investment
control (e.g., trusts, foundations, etc.) other than an account for a Fund in,
or a client of, the Franklin Templeton Group.
B. SECURITIES HOLDINGS REPORTS (EXCEPT INDEPENDENT DIRECTORS)
You must file a report of personal securities holdings on Schedule C, with
the Legal Compliance Department, by January 30th of each year. This report
should include all of your securities holdings, including any security acquired
by a transaction, gift, inheritance, vesting, merger or reorganization of the
issuer of the security, in which you have any direct or indirect beneficial
ownership, including securities holdings in a discretionary account and for any
account in which you have any economic interest and have or share investment
control. Your securities holding information must be current as of a date no
more than 30 days before the report is submitted. You may attach copies of
year-end brokerage statements to the Schedule C in lieu of listing each security
position on the schedule.
C. CERTIFICATION OF COMPLIANCE WITH THE CODE OF ETHICS (INCLUDING
INDEPENDENT DIRECTORS)
All access persons, including independent directors, will be asked to
certify that they will comply with the Franklin Templeton Group's Code of Ethics
and Policy Statement on Insider Trading by filing the Acknowledgment Form with
the Legal Compliance Department within 10 business days of receipt of the Code.
Thereafter, you will be asked to certify that you have complied with the Code
during the preceding year by filing a similar Acknowledgment Form by January 30
of each year.
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5.5 BROKERAGE ACCOUNTS AND CONFIRMATIONS OF SECURITIES TRANSACTIONS
(EXCEPT INDEPENDENT DIRECTORS)
If you are an access person, in the Franklin Templeton Group, before or at
a time contemporaneous with opening a brokerage account with a registered
broker-dealer, or a bank, or placing an initial order for the purchase or sale
of securities with that broker-dealer or bank, you must:
(1) notify the Legal Compliance Department, in writing, by completing
Schedule D or by providing substantially similar information; and
(2) notify the institution with which the account is opened, in writing,
of your association with the Franklin Templeton Group.
The Compliance Department will request the institution in writing to send
to it duplicate copies of confirmations and statements for all transactions
effected in the account simultaneously with their mailing to you.
If you have an existing account on the effective date of this Code or upon
becoming an access person, you must comply within 10 days with conditions (1)
and (2) above.
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PART 6 - PRE-CLEARANCE REQUIREMENTS
6.1 PRIOR APPROVAL OF SECURITIES TRANSACTIONS
A. LENGTH OF APPROVAL
Unless you are covered by Paragraph D below, you cannot buy or sell any
security, without first contacting a Preclearance Officer by fax, phone, or
e-mail and obtaining his or her approval. A clearance is good until the close of
the business day following the day clearance is granted but may be extended in
special circumstances, shortened or rescinded, as explained in Appendix A.
B. SECURITIES NOT REQUIRING PRECLEARANCE
The securities enumerated below do not require preclearance under the Code.
However, all other provisions of the Code apply, including, but not limited to:
(i) the prohibited transaction provisions contained in Part 3.4 such as
front-running; (ii) the additional compliance requirements applicable to
portfolio persons contained in Part 4, (iii) the applicable reporting
requirements contained in Part 5; and (iv) insider trading prohibitions.
You need NOT pre-clear transactions in the following securities:
(1) MUTUAL FUNDS. Transactions in shares of any registered open-end mutual
fund;
(2) FRANKLIN RESOURCES, INC., AND ITS AFFILIATES. Purchases and sales of
securities of Franklin Resources, Inc., closed-end funds of the
Franklin Templeton Group, or real estate investment trusts advised by
Franklin Properties Inc., as these securities cannot be purchased on
behalf of our advisory clients.(12)
----------
(12) Officers, directors and certain other key management personnel who perform
significant policy-making functions of Franklin Resources, Inc., the
closed-end funds, and/or real estate investment trusts may have ownership
reporting requirements in addition to these reporting requirements. Contact
the Legal Compliance Department for additional information. See also the
"Insider Trading Policy" attached.
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(3) SMALL QUANTITIES. Transactions that do not result in purchases or
sales of more than 100 shares of any one security, regardless of where
it is traded, in any 30 day period. HOWEVER, YOU MAY NOT EXECUTE ANY
TRANSACTION, REGARDLESS OF QUANTITY, IF YOU LEARN THAT THE FUNDS ARE
ACTIVE IN THE SECURITY. IT WILL BE PRESUMED THAT YOU HAVE KNOWLEDGE OF
FUND ACTIVITY IN THE SECURITY IF, AMONG OTHER THINGS, YOU ARE DENIED
APPROVAL TO GO FORWARD WITH A TRANSACTION REQUEST. Transactions made
pursuant to dividend reinvestment plans ("DRIPs") do not require
preclearance regardless of quantity or Fund activity.
(4) GOVERNMENT OBLIGATIONS. Transactions in securities issued or
guaranteed by the governments of the United States, Canada, the United
Kingdom, France, Germany, Switzerland, Italy and Japan, or their
agencies or instrumentalities, or derivatives thereof;
(5) PAYROLL DEDUCTION PLANS. Securities purchased by an employee's spouse
pursuant to a payroll deduction program, provided the Compliance
Department has been previously notified in writing by the access
person that the spouse will be participating in the payroll deduction
program.
(6) EMPLOYER STOCK OPTION PROGRAMS. Transactions involving the exercise
and/or purchase by an access person or an access person's spouse of
securities pursuant to a program sponsored by a corporation employing
the access person or spouse.
(7) PRO RATA DISTRIBUTIONS. Purchases effected by the exercise of rights
issued pro rata to all holders of a class of securities or the sale of
rights so received.
(8) TENDER OFFERS. Transactions in securities pursuant to a bona fide
tender offer made for any and all such securities to all similarly
situated shareholders in conjunction with mergers, acquisitions,
reorganizations and/or similar corporate actions. However, tenders
pursuant to offers for less than all outstanding securities of a class
of securities of an issuer must be precleared.
(9) NOT ELIGIBLE FOR FUNDS AND CLIENTS. Transactions in any securities
that are prohibited investments for all Funds and clients advised by
the entity employing the access person.
(10) NO INVESTMENT CONTROL. Transactions effected for an account or entity
over which you do not have or share investment control (i.e., an
account where someone else exercises complete investment control).
(11) NO BENEFICIAL OWNERSHIP. Transactions in which you do not acquire or
dispose of direct or indirect beneficial ownership (i.e., an account
where in you have no financial interest).
Although an access person's securities transaction may be exempt from
pre-clearing, such transactions must comply with the prohibited transaction
provisions of Section 3.4 above. Additionally, you may not trade any securities
as to which you have "inside information" (see attached The Franklin Templeton
Group Policy Statement on Insider Trading). If you have any questions, contact a
Preclearance
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Officer before engaging in the transaction. If you have any doubt whether you
have or might acquire direct or indirect beneficial ownership or have or share
investment control over an account or entity in a particular transaction, or
whether a transaction involves a security covered by the Code, you should
consult with a Preclearance Officer before engaging in the transaction.
C. DISCRETIONARY ACCOUNTS
You need not pre-clear transactions in any discretionary account for which
a registered broker-dealer, a registered investment adviser, or other investment
manager acting in a similar fiduciary capacity, which is not affiliated with the
Franklin Templeton Group, exercises sole investment discretion, if the following
conditions are met:(13)
(1) The terms of each account relationship ("Agreement") must be in
writing and filed with a Preclearance Officer prior to any
transactions.
(2) Any amendment to each Agreement must be filed with aPreclearance
Officer prior to its effective date.
(3) The Portfolio Person certifies to the Compliance Department at the
time such account relationship commences, and annually thereafter, as
contained in Schedule G of the Code that such Portfolio Person does
not have direct or indirect influence or control over the account,
other than the right to terminate the account.
(4) Additionally, any discretionary account that you open or maintain with
a registered broker-dealer, a registered investment adviser, or other
investment manager acting in a similar fiduciary capacity must provide
duplicate copies of confirmations and statements for all transactions
effected in the account simultaneously with their delivery to you., If
your discretionary account acquires securities which are not reported
to a Preclearance Officer by a duplicate confirmation, such
transaction must be reported to a Preclearance Officer on Schedule B
within 10 days after you are notified of the acquisition.(14)
----------
(13) Please note that these conditions apply to any discretionary account in
existence prior to the effective date of this Code or prior to your
becoming an access person. Also, the conditions apply to transactions in
any discretionary account, including pre-existing accounts, in which you
have any direct or indirect beneficial ownership, even if it is not in your
name.
(14) Any pre-existing agreement must be promptly amended to comply with this
condition. The required reports may be made in the form of an account
statement if they are filed by the applicable deadline.
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<PAGE> 21
However, if you make any request that the discretionary account manager
enter into or refrain from a specific transaction or class of transactions, you
must first consult with aPreclearance Officer and obtain approval prior to
making such request.
D. DIRECTORS WHO ARE NOT ADVISORY PERSONS OR ADVISORY REPRESENTATIVES
You need not pre-clear any securities if:
(1) You are a director of a Fund in the Franklin Templeton Group and a
director of the fund's advisor;
(2) You are not an "advisory person"(15) of a Fund in the Franklin
Templeton Group; and
(3) You are not an employee of any Fund,
or
(1) You are a director of a Fund in the Franklin Templeton Group;
(2) You are not an "advisory representative"(16) of Franklin Resources or
any subsidiary; and
(3) You are not an employee of any Fund,
unless you know or should know that, during the 15-day period before the
transaction, the security was purchased or sold, or considered for purchase or
sale, by a Fund or by Franklin Resources on behalf of a Fund or other client.
----------
(15) An "advisory person" of a registered investment company or an investment
adviser is any employee, who in connection with his or her regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by an advisory client , or
whose functions relate to the making of any recommendations with respect to
such purchases or sales. Advisory person also includes any natural person
in a control relationship to such company or investment adviser who obtains
information concerning recommendations made to such company with regard to
the purchase or sale of a security.
(16) Generally, an "advisory representative" is any person who makes any
recommendation, who participates in the determination of which
recommendation shall be made, or whose functions or duties relate to the
determination of which recommendation shall be made, or who, in connection
with his duties, obtains any information concerning which securities are
being recommended prior to the effective dissemination of such
recommendations or of the information concerning such recommendations. See
Section II of Appendix A for the legal definition of "Advisory
Representative."
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Directors qualifying under this paragraph are required to comply with all
applicable provisions of the Code including reporting their initial holdings and
brokerage accounts in accordance with 5.2, personal securities transactions and
accounts in accordance with 5.3 and 5.5, and annual reports in accordance with
5.4 of the Code.
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PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE
The Code is designed to assure compliance with applicable law and to
maintain shareholder confidence in the Franklin Templeton Group.
In adopting this Code, it is the intention of the Boards of
Directors/Trustees, to attempt to achieve 100% compliance with all requirements
of the Code - but it is recognized that this may not be possible. Incidental
failures to comply with the Code are not necessarily a violation of the law or
the Franklin Templeton Group's Statement of Principles. Such isolated or
inadvertent violations of the Code not resulting in a violation of law or the
Statement of Principles will be referred to the Director of Compliance and/or
management personnel, and disciplinary action commensurate with the violation,
if warranted, will be imposed.
However, if you violate any of the enumerated prohibited transactions
contained in Parts 3 and 4 of the Code, you will be expected to give up any
profits realized from these transactions to Franklin Resources for the benefit
of the affected Funds or other clients. If Franklin Resources cannot determine
which Fund(s) or client(s) were affected, the proceeds will be donated to a
charity chosen by Franklin Resources. Failure to disgorge profits when requested
may result in additional disciplinary action, including termination of
employment.
Further, a pattern of violations that individually do not violate the law
or Statement of Principles, but which taken together demonstrate a lack of
respect for the Code of Ethics, may result in disciplinary action including
termination of employment. A violation of the Code resulting in a violation of
the law will be severely sanctioned, with disciplinary action including, but not
limited to, referral of the matter to the board of directors of the affected
Fund, termination of employment or referral of the matter to the appropriate
regulatory agency for civil and/or criminal investigation.
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<PAGE> 24
PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON GROUP INSIDER TRADING POLICY
The Code of Ethics is primarily concerned with transactions in securities
held or to be acquired by any of the Funds or Franklin Resources' clients,
regardless of whether those transactions are based on inside information or
actually harm a Fund or a client.
The Insider Trading Policy (attached to this document) deals with the
problem of insider trading in securities that could result in harm to a Fund, a
client, or members of the public, and applies to all directors, officers and
employees of any entity in the Franklin Templeton Group. Although the
requirements of the Code and the Insider Trading Policy are similar, you must
comply with both.
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APPENDIX A: COMPLIANCE PROCEDURES, DEFINITIONS, AND OTHER ITEMS
This appendix sets forth the additional responsibilities and obligations of
Compliance Officers, and the Legal/Administration and Legal/Compliance
Departments, under the Franklin Templeton Group Code of Ethics and Policy
Statement on Insider Trading.
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I. RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER
A. PRE-CLEARANCE STANDARDS
1. GENERAL PRINCIPLES
The Director of Compliance, or a Preclearance Officer, shall only permit an
access person to go forward with a proposed security(17) transaction if he or
she determines that, considering all of the facts and circumstances, the
transaction does not violate the provisions of Rule 17j-1, or of this Code and
there is no likelihood of harm to a client.
2. ASSOCIATED CLIENTS
Unless there are special circumstances that make it appropriate to
disapprove a personal securities transaction request, a Preclearance Officer
shall consider only those securities transactions of the "Associated Clients" of
the access person, including open and executed orders and recommendations, in
determining whether to approve such a request. "Associated Clients" are those
Funds or clients whose trading information would be available to the access
person during the course of his or her regular functions or duties. Currently,
there are three groups of Associated Clients: (i) the Franklin Mutual Series
Funds and clients advised by Franklin Mutual Advisers, LLC ("Mutual Clients");
(ii) the Franklin Group of Funds and the clients advised by the various Franklin
investment advisers ("Franklin Clients"); and (iii) the Templeton Group of Funds
and the clients advised by the various Templeton investment advisers ("Templeton
Clients"). Thus, persons who have access to the trading information of Mutual
Clients generally will be precleared solely against the securities transactions
of the Mutual Clients, including open and executed orders and recommendations.
Similarly, persons who have access to the trading information of Franklin
Clients or Templeton Clients generally will be precleared solely against the
securities transactions of Franklin Clients or Templeton Clients, as
appropriate.
----------
17 Security includes any option to purchase or sell, and any security that is
exchangeable for or convertible into, any security that is held or to be
acquired by a fund.
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Certain officers of Franklin Resources, as well as legal, compliance, fund
accounting, investment operations and other personnel who generally have access
to trading information of the funds and clients of the Franklin Templeton Group
during the course of their regular functions and duties, will have their
personal securities transactions precleared against executed transactions, open
orders and recommendations of the entire Franklin Templeton Group.
3. SPECIFIC STANDARDS
(a) Securities Transactions by Funds or clients
No clearance shall be given for any transaction in any security on any day
during which an Associated Client of the access person has executed a buy or
sell order in that security, until seven (7) calendar days after the order has
been executed. Notwithstanding a transaction in the previous seven days,
clearance may be granted to sell if the security has been disposed of by all
Associated Clients.
(b) Securities under Consideration
Open Orders
No clearance shall be given for any transaction in any security on any day
which an Associated Client of the access person has a pending buy or sell order
for such security, until seven (7) calendar days after the order has been
executed.
Recommendations
No clearance shall be given for any transaction in any security on any day
on which a recommendation for such security was made by a Portfolio Person,
until seven (7) calendar days after the recommendation was made and no orders
have subsequently been executed or are pending.
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(c) Private Placements
In considering requests by Portfolio Personnel for approval of limited
partnerships and other private placement securities transactions, the Director
of Compliance shall consult with an executive officer of Franklin Resources,
Inc. In deciding whether to approve the transaction, the Director of Compliance
and the executive officer shall take into account, among other factors, whether
the investment opportunity should be reserved for a Fund or other client, and
whether the investment opportunity is being offered to the Portfolio Person by
virtue of his or her position with the Franklin Templeton Group. If the
Portfolio Person receives clearance for the transaction, an investment in the
same issuer may only be made for a Fund or client if an executive officer of
Franklin Resources, Inc., who has been informed of the Portfolio Person's
pre-existing investment and who has no interest in the issuer, approves the
transaction.
(d) Duration of Clearance
If a Preclearance Officer approves a proposed securities transaction, the
order for the transaction must be placed and effected by the close of the next
business day following the day approval was granted. The Director of Compliance
may, in his or her discretion, extend the clearance period up to seven calendar
days, beginning on the date of the approval, for a securities transaction of any
access person who demonstrates that special circumstances make the extended
clearance period necessary and appropriate.18 The Director of Compliance may, in
his or her discretion, after consultation with a member of senior management for
Franklin Resources, Inc., renew the approval for a particular transaction for up
to an additional seven calendar days upon a similar showing of special
circumstances by the access person. The Director of Compliance may shorten or
rescind any approval or renewal of approval under this paragraph if he or she
determines it is appropriate to do so.
----------
18 Special circumstances include but are not limited to, for example,
differences in time zones, delays due to travel, and the unusual size of
proposed trades or limit orders. Limit orders must expire within the
applicable clearance period.
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B. WAIVERS BY THE DIRECTOR OF COMPLIANCE
The Director of Compliance may, in his or her discretion, after
consultation with an executive officer of Franklin Resources, Inc., waive
compliance by any access person with the provisions of the Code, if he or she
finds that such a waiver:
(1) is necessary to alleviate undue hardship or in view of unforeseen
circumstances or is otherwise appropriate under all the relevant facts
and circumstances;
(2) will not be inconsistent with the purposes and objectives of the Code;
(3) will not adversely affect the interests of advisory clients of the
Franklin Templeton Group, the interests of the Franklin Templeton
Group or its affiliates; and
(4) will not result in a transaction or conduct that would violate
provisions of applicable laws or regulations.
Any waiver shall be in writing, shall contain a statement of the basis for
it, and a copy shall be promptly sent by the Director of Compliance to the
General Counsel of Franklin Resources, Inc.
C. CONTINUING RESPONSIBILITIES OF THE LEGAL COMPLIANCE DEPARTMENT
A Preclearance Officer shall make a record of all requests for
pre-clearance regarding the purchase or sale of a security, including the date
of the request, the name of the access person, the details of the proposed
transaction, and whether the request was approved or denied. APreclearance
Officer shall keep a record of any waivers given, including the reasons for each
exception and a description of any potentially conflicting Fund or client
transactions.
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A Preclearance Officer shall also collect the signed initial
acknowledgments of receipt and the annual acknowledgments from each access
person of receipt of a copy of the Code and Insider Trading Policy, as well as
reports, as applicable, on Schedules B, C, D, E and F of the Code. In addition,
a Preclearance Officer shall request copies of all confirmations, and other
information with respect to an account opened and maintained with the
broker-dealer by any access person of the Franklin Templeton Group. A
Preclearance Officer shall preserve those acknowledgments and reports, the
records of consultations and waivers, and the confirmations, and other
information for the period required by applicable regulation.
A Preclearance Officer shall review brokerage transaction confirmations,
account statements, Schedules B, C, D, E, F and Private Placement Checklists of
Access Persons for compliance with the Code. The reviews shall include, but are
not limited to;
(1) Comparison of brokerage confirmations, Schedule Bs, and/or brokerage
statements to preclearance request worksheets or, if a private
placement, the Private Placement Checklist;
(2) Comparison of brokerage statements and/or Schedule Fs to current
securities holding information;
(3) Comparison of Schedule C to current securities account information;
(4) Conducting periodic "back-testing" of access person transactions,
Schedule Es and/or Schedule Gs in comparison to fund and client
transactions;
A Preclearance Officer shall evidence review by initialing and dating the
appropriate document. Any apparent violations of the Code detected by a
Preclearance Officer during his or her review shall be promptly brought to the
attention of the Director of Compliance.
D. PERIODIC RESPONSIBILITIES OF THE LEGAL COMPLIANCE DEPARTMENT
The Legal Compliance Department shall consult with the General Counsel and
the Human Resources Department, as the case may be, to assure that:
(1) Adequate reviews and audits are conducted to monitor compliance with
the reporting, pre-clearance, prohibited transaction and other
requirements of the Code.
(2) Adequate reviews and audits are conducted to monitor compliance with
the reporting, pre-clearance, prohibited transaction and other
requirements of the Code.
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(3) All access persons and new employees of the Franklin Templeton Group
are adequately informed and receive appropriate education and training
as to their duties and obligations under the Code.
(4) There are adequate educational, informational and monitoring efforts
to ensure that reasonable steps are taken to prevent and detect
unlawful insider trading by access persons and to control access to
inside information.
(5) Written compliance reports are submitted to the Board of Directors of
Franklin Resources, Inc., and the Board of each relevant Fund at least
annually. Such reports will describe any issues arising under the Code
or procedures since the last report, including, but not limited to,
information about material violations of the Code or procedures and
sanctions imposed in response to the material violations.
(6) The Legal Compliance Department will certify at least annually to the
Fund's board of directors that the Franklin Templeton Group has
adopted procedures reasonably necessary to prevent Access Persons from
violating the Code, and
(7) Appropriate records are kept for the periods required by law.
E. APPROVAL BY FUND'S BOARD OF DIRECTORS
(1) Basis for Approval The Board of Directors/Trustees must base its
approval of the Code on a determination that the Code contains
provisions reasonably necessary to prevent access persons from
engaging in any conduct prohibited by rule 17j-1.
(2) New Funds
At the time a new fund is organized, the Legal Compliance Department will
provide the Fund's board of directors, a certification that the investment
adviser and principal underwriter have adopted procedures reasonably necessary
to prevent Access Persons from violating the Code. Such certification will state
that the Code contains provisions reasonably necessary to prevent Access Persons
from violating the Code.
(3) Material Changes to the Code of Ethics
The Legal Compliance Department will provide the Fund's board of directors
a written description of all material changes to the Code no later than six
months after adoption of the material change by the Franklin Templeton Group.
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II. COMPILATION OF DEFINITIONS OF IMPORTANT TERMS
For purposes of the Code of Ethics and Insider Trading Policy, the terms
below have the following meanings:
1934 ACT - The Securities Exchange Act of 1934, as amended.
1940 ACT - The Investment Company Act of 1940, as amended.
ACCESS PERSON - Each director, trustee, general partner or officer, and any
other person that directly or indirectly controls (within the meaning of
Section 2(a)(9) of the 1940 Act) the Franklin Templeton Group or a person,
including an Advisory Representative, who has access to information
concerning recommendations made to a Fund or client with regard to the
purchase or sale of a security.
ADVISORY REPRESENTATIVE - Any officer or director of Franklin Resources; any
employee who makes any recommendation, who participates in the
determination of which recommendation shall be made, or whose functions or
duties relate to the determination of which recommendation shall be made;
any employee who, in connection with his or her duties, obtains any
information concerning which securities are being recommended prior to the
effective dissemination of such recommendations or of the information
concerning such recommendations; and any of the following persons who
obtain information concerning securities recommendations being made by
Franklin Resources prior to the effective dissemination of such
recommendations or of the information concerning such recommendations: (i)
any person in a control relationship to Franklin Resources, (ii) any
affiliated person of such controlling person, and (iii) any affiliated
person of such affiliated person.
AFFILIATED PERSON - same meaning as Section 2(a)(3) of the Investment Company
Act of 1940. An "affiliated person" of an investment company includes
directors, officers, employees, and the investment adviser. In addition, it
includes any person owning 5% of the company's voting securities, any
person in which the investment company owns 5% or more of the voting
securities, and any person directly or indirectly controlling, controlled
by, or under common control with the company.
APPROPRIATE ANALYST - With respect to any access person, any securities analyst
or portfolio manager making investment recommendations or investing funds
on behalf of an Associated Client and who may be reasonably expected to
recommend or consider the purchase or sale of a security.
ASSOCIATED CLIENT - A Fund or client whose trading information would be
available to the access person during the course of his or her regular
functions or duties.
BENEFICIAL OWNERSHIP - Has the same meaning as in Rule 16a-1(a)(2) under the
1934 Act. Generally, a person has a beneficial ownership in a security if
he or she, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or
indirect pecuniary interest in the security. There is a presumption of a
pecuniary interest in a security held or acquired by a member of a person's
immediate family sharing the same household.
FUNDS - Investment companies in the Franklin Templeton Group of Funds.
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HELD OR TO BE ACQUIRED - A security is "held or to be acquired" if within
the most recent 15 days it (i) is or has been held by a Fund, or (ii) is
being or has been considered by a Fund or its investment adviser for
purchase by the Fund.
PORTFOLIO PERSON - Any employee of the Franklin Templeton Group, who, in
connection with his or her regular functions or duties, makes or
participates in the decision to purchase or sell a security by a Fund in
the Franklin Templeton Group, or any other client or if his or her
functions relate to the making of any recommendations about those purchases
or sales. Portfolio Persons include portfolio managers, research analysts,
traders, persons serving in equivalent capacities (such as Management
Trainees), persons supervising the activities of Portfolio Persons, and
anyone else designated by the Director of Compliance
PROPRIETARY ACCOUNTS - Any corporate account or other account including, but not
limited to, a limited partnership, a corporate hedge fund, a limited
liability company or any other pooled investment vehicle in which Franklin
Resources or its affiliates, owns 5 percent or more of the outstanding
capital or is entitled to 25% or more of the profits or losses in the
account (excluding any asset based investment management fees based on
average periodic net assets in accounts).
SECURITY - Any stock, note, bond, evidence of indebtedness, participation or
interest in any profit-sharing plan or limited or general partnership,
investment contract, certificate of deposit for a security, fractional
undivided interest in oil or gas or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit), guarantee of, or warrant or right to subscribe for or purchase
any of the foregoing, and in general any interest or instrument commonly
known as a security, except commodity futures, currency and currency
forwards. For the purpose of this Code, "security" does not include: (1)
Direct obligations of the Government of the United States; (2) Bankers'
acceptances, bank certificates of deposit, commercial paper and high
quality short-term debt instruments, including repurchase agreements; and
(3) Shares issued by open-end funds.
See Section III of Appendix A for a summary of different requirements for
different types of securities.
III. SECURITIES EXEMPT FROM THE PROHIBITED , REPORTING, AND PRE-CLEARANCE
PROVISIONS
A. PROHIBITED TRANSACTIONS
Securities that are EXEMPT from the prohibited transaction provisions of
Section 3.4 include:
(1) securities that are direct obligations of the U.S. Government, such as
Treasury bills, notes and bonds, and U.S. Savings Bonds and
derivatives thereof;
(2) high quality short-term instruments ("money market instruments")
including but not limited to (i) bankers' acceptances, (ii) U.S. bank
certificates of deposit; (iii) commercial paper; and (iv) repurchase
agreements;
(3) shares of registered open-end investment companies;
(4) commodity futures, currencies, currency forwards and derivatives
thereof;
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(5) securities that are prohibited investments for all Funds and
clients advised by the entity employing the access person; and
(6) transactions in securities issued or guaranteed by the
governments or their agencies or instrumentalities of Canada, the
United Kingdom, France, Germany, Switzerland, Italy and Japan and
derivatives thereof.
B. REPORTING AND PRECLEARANCE
Securities that are EXEMPT from both the reporting requirements of
Section 5 and preclearance requirements of Section 6 of the Code
include:
(1) securities that are direct obligations of the U.S. Government,
such as Treasury bills, notes and bonds, and U.S. Savings Bonds
and derivatives thereof;
(2) high quality short-term instruments ("money market instruments")
including but not limited to (i) bankers' acceptances, (ii) U.S.
bank certificates of deposit; (iii) commercial paper; and (iv)
repurchase agreements;
(3) shares of registered open-end investment companies; and
(4) commodity futures, currencies, currency forwards and derivatives
thereof.
IV. LEGAL REQUIREMENT
Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act") makes
it unlawful for any affiliated person of the Franklin Templeton Group in
connection with the purchase or sale of a security, including any option to
purchase or sell, and any security convertible into or exchangeable for, any
security that is "held or to be acquired" by a Fund in the Franklin Templeton
Group:
A. To employ any device, scheme or artifice to defraud a Fund;
B. To make to a Fund any untrue statement of a material fact or omit
to state to a Fund a material fact necessary in order to make the
statements made, in light of the circumstances under which they
are made, not misleading;
C. To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon a Fund; or
D. To engage in any manipulative practice with respect to a Fund.
A security is "held or to be acquired" if within the most recent
15 days it (i) is or has been held by a Fund, or (ii) is being or has been
considered by a Fund or its investment adviser for purchase by the Fund.
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APPENDIX B: FORMS AND SCHEDULES
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ACKNOWLEDGMENT FORM
CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING
To: DIRECTOR OF COMPLIANCE, LEGAL COMPLIANCE DEPARTMENT
I hereby acknowledge receipt of a copy of the Franklin Templeton Group's CODE OF
ETHICS AND POLICY STATEMENT ON INSIDER TRADING, AMENDED AND RESTATED, FEBRUARY
2000, which I have read and understand. I will comply fully with all provisions
of the Code and the Insider Trading Policy to the extent they apply to me during
the period of my employment. Additionally, I authorize any broker-dealer, bank
or investment adviser with whom I have securities accounts and accounts in which
I have beneficial ownership, to provide brokerage confirmations and statements
as required for compliance with the Code. I further understand and acknowledge
that any violation of the Code or Insider Trading Policy, including engaging in
a prohibited transaction or failure to file reports as required (see Schedules
B, C, D, E, F and G), may subject me to disciplinary action, including
termination of employment.
SIGNATURE:
PRINT NAME:
TITLE:
DEPARTMENT:
LOCATION:
DATE ACKNOWLEDGMENT WAS SIGNED:
RETURN TO: LEGAL COMPLIANCE DEPARTMENT, 2000 ALAMEDA DE LAS PULGAS - FLOOR 2
35
<PAGE> 37
SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS AND PRECLEARANCE DESK TELEPHONE & FAX
NUMBERS(19)
LEGAL OFFICER
MURRAY SIMPSON
EXECUTIVE VICE PRESIDENT & GENERAL COUNSEL
FRANKLIN RESOURCES, INC.
901 MARINERS ISLAND BLVD.
7TH FLOOR
SAN MATEO, CA 94404
(650) 525-7331
COMPLIANCE OFFICERS
<TABLE>
<CAPTION>
DIRECTOR OF COMPLIANCE PRECLEARANCE OFFICERS
<S> <C>
James M. Davis Stephanie Harwood
Franklin Resources, Inc. Wally Enrico
2000 Alameda de las Pulgas, Suite 200F Legal Compliance Department
San Mateo, CA 94403 2000 Alameda de las Pulgas, Suite 200E
(650) 312-2832 San Mateo, CA 94403
(650) 312-3693 (telephone)
(650) 312-5646 (facsimile)
Preclear, Legal (internal e-mail address)
[email protected] (external e-mail address)
</TABLE>
----------
(19) As of February 2000
36
<PAGE> 38
<PAGE> 39
SCHEDULE B: SECURITIES TRANSACTION REPORT
This report of personal securities transactions NOT reported by duplicate
confirmations and brokerage statements pursuant to Section 5.3 of the Code is
required pursuant to Rule 204-2(a) of the Investment Advisers Act of 1940 or
Rule 17j-1(c) of the Investment Company Act of 1940. The report must be
completed and submitted to the Compliance Department no later than 10 calendar
days after the end of the calendar quarter. Refer to Section 5.3 of the Code of
Ethics for further instructions.
<TABLE>
<CAPTION>
----- ---------- ----------------------------------------- ------------ ----------- ----- ------------- -----------------
TRADE BUY, SELL SECURITY DESCRIPTION, INCLUDING INTEREST TYPE OF QUANTITY OR PRICE BROKER-DEALER DATE PRECLEARANCE
DATE OR OTHER AND MATURITY (IF APPROPRIATE) SECURITY PRINCIPAL OR BANK OBTAINED FROM
(STOCK, AMOUNT COMPLIANCE DEPT.
BOND,
OPTION, ETC)
----- ---------- ----------------------------------------- ------------ ----------- ----- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
The report or recording of any transaction above shall not be construed as an
admission that I have any direct or indirect ownership in the securities.
<TABLE>
<S> <C> <C> <C>
----------------------------------- ---------------------------------- -------------- -------------------
(Print Name) (Signature) (Date) (Quarter Ending)
</TABLE>
RETURN TO: LEGAL COMPLIANCE DEPARTMENT, 2000 ALAMEDA DE LAS PULGAS, SUITE 200E,
SAN MATEO, CA 94403
37
<PAGE> 40
SCHEDULE C: INITIAL, ANNUAL & UPDATED DISCLOSURE OF ACCESS PERSONS SECURITIES
HOLDINGS
This report shall set forth the security name or description and security class
of each security holding in which you have a direct or indirect beneficial
interest, including holdings by a spouse, minor children, trusts, foundations,
and any account for which trading authority has been delegated to you, other
than authority to trade for a Fund in or a client of the Franklin Templeton
Group.. In lieu of listing each security position below, you may instead attach
copies of brokerage statements, sign below and return Schedule C and brokerage
statements to the Legal Compliance Department within 10 days if an initial
report or by January 30th of each year if an annual report. Refer to Sections
5.2.A and 5.4.A of the Code for additional filing instructions.
<TABLE>
<CAPTION>
------------------------------------ ------------------ ------------------- ------------------------ --------------------------
Security Description, Type of
including interest rate Security Quantity or
and maturity (if (Stock, Bond, Principal Name of Broker -
appropriate) Option, etc.) Amount Dealer or Bank Account Number
------------------------------------ ------------------ ------------------- ------------------------ --------------------------
<S> <C> <C> <C> <C>
</TABLE>
[ ] I DID NOT HAVE ANY PERSONAL SECURITIES HOLDINGS FOR YEAR ENDED ___________
[ ] I HAVE ATTACHED STATEMENTS CONTAINING ALL MY PERSONAL SECURITIES HOLDINGS
FOR THE YEAR ENDED ______
TO THE BEST OF MY KNOWLEDGE I HAVE DISCLOSED ALL OF MY SECURITIES ACCOUNTS
AND/OR INVESTMENTS IN WHICH I HAVE A DIRECT OR INDIRECT BENEFICIAL
INTEREST, INCLUDING SECURITY ACCOUNTS OF A SPOUSE, MINOR CHILDREN, TRUSTS,
FOUNDATIONS, AND ANY ACCOUNT FOR WHICH TRADING AUTHORITY HAS BEEN DELEGATED
AN UNAFFILIATED PARTY.
------------------- ----------------------- -------- -----------
PRINT NAME SIGNATURE DATE YEAR ENDED
* Securities that are EXEMPT from being reported on Schedule C include: (i)
securities that are direct obligations of the U.S. Government, such as Treasury
bills, notes and bonds, and U.S. Savings Bonds and derivatives thereof; (ii)
high quality short-term instruments ("money market instruments") including but
not limited to bankers' acceptances, U.S. bank certificates of deposit;
commercial paper; and repurchase agreements; (iii) shares of registered open-end
investment companies; and (iv) commodity futures, currencies, currency forwards
and derivatives thereof.
38
<PAGE> 41
SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT OPENING
DATE:
-----------------------------
TO: Preclearance Desk
Legal Compliance Department
2000 Alameda de las Pulgas, Suite 200E
San Mateo, CA 94403
(650) 312-3693
FAX: (650) 312-5646
FROM: NAME:
---------------------------------------
DEPARTMENT:
---------------------------------
LOCATION:
-----------------------------------
EXTENSION:
----------------------------------
ARE YOU A REG. REPRESENTATIVE? YES [ ] NO [ ]
ARE YOU AN ACCESS PERSON? YES [ ] NO [ ]
This is to advise you that I will be opening or have opened a securities account
with the following firm:
PLEASE FILL OUT COMPLETELY TO EXPEDITE PROCESSING
NAME ON ACCOUNT:
--------------------------------------------------------------
(If other than employee, please state relationship i.e., spouse,
son, daughter, trust, etc.)
ACCT # OR SSN #:
---------------------------------------------------------------
NAME OF FIRM:
------------------------------------------------------------------
ATTN:
--------------------------------------------------------------------------
ADDRESS OF FIRM:
---------------------------------------------------------------
CITY/STATE/ZIP:
----------------------------------------------------------------
* All Franklin registered representatives and Access Persons, PRIOR TO OPENING A
BROKERAGE ACCOUNT OR PLACING AN INITIAL ORDER, are required to notify the Legal
Compliance Department and the executing broker-dealer in writing. This includes
accounts in which the registered representative or access person has or will
have a financial interest (e.g., a spouse's account) or discretionary authority
(e.g., a trust account for a minor child).
Upon receipt of the NOTIFICATION OF SECURITIES ACCOUNT OPENING form, the Legal
Compliance Department will contact the broker-dealer identified above and
request that it receive duplicate confirmations and statements of your brokerage
account.
39
<PAGE> 42
SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST
If you have any beneficial ownership in a security and you recommend to the
Appropriate Analyst that the security be considered for purchase or sale by an
Associated Client, or if you carry out a purchase or sale of that security for
an Associated Client, you must disclose your beneficial ownership to the Legal
Compliance Department and the Appropriate Analyst in writing on Schedule E (or
an equivalent form containing similar information) before the purchase or sale,
or before or simultaneously with the recommendation.
<TABLE>
<CAPTION>
-------------------- ------------- --------- ------------ ----------------------- ----------------- -------------- ---------------
Method of Primary
Ownership Acquisition Date and Method Learned Portfolio Manager
Type (Direct Year (Purch/Gift/ that Security Under or Appropriate Name of Person Date of Verbal
Security Description or Indirect) Acquired Other) Consideration By Funds Analyst Notified Notification
-------------------- ------------- --------- ------------ ----------------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
-------------------------- ------------------ --------------
(Print Name) (Signature) (Date)
RETURN TO: LEGAL COMPLIANCE DEPARTMENT, 2000 ALAMEDA DE LAS PULGAS, SUITE 200E,
SAN MATEO, CA 94403
40
<PAGE> 43
SCHEDULE F: INITIAL, ANNUAL & UPDATED DISCLOSURE OF SECURITIES ACCOUNTS
This report shall set forth the name and description of each securities
account in which you have a direct or indirect beneficial interest, including
securities accounts of a spouse, minor children, trusts, foundations, and any
account for which trading authority has been delegated to you, other than
authority to trade for a Fund in, or a client of, the Franklin Templeton Group.
In lieu of listing each securities account below, you may instead attach copies
of the brokerage statements, sign below and return Schedule F and brokerage
statements to the Compliance Department.
<TABLE>
<CAPTION>
Name(s) on Account Name of Brokerage Firm, Address of Brokerage Firm, Account Name of Account
(registration shown on statement) Bank or Investment Adviser Bank or Invest. Adviser Number Executive/Representative
(Street, City, State and Zip Code)
--------------------------------- -------------------------- ----------------------------------- -------- ------------------------
<S> <C> <C> <C> <C>
</TABLE>
TO THE BEST OF MY KNOWLEDGE I HAVE DISCLOSED ALL OF MY SECURITIES ACCOUNTS IN
WHICH I HAVE A DIRECT OR INDIRECT BENEFICIAL INTEREST, INCLUDING SECURITY
ACCOUNTS OF A SPOUSE, MINOR CHILDREN, TRUSTS, FOUNDATIONS, AND ANY ACCOUNT FOR
WHICH TRADING AUTHORITY HAS BEEN DELEGATED TO ME.
<TABLE>
<S> <C> <C> <C>
-------------------------- ------------------------- -------------- -----------------------
PRINT NAME SIGNATURE DATE YEAR ENDED
</TABLE>
RETURN TO: LEGAL COMPLIANCE DEPARTMENT, 2000 ALAMEDA DE LAS PULGAS, SUITE 200E,
SAN MATEO, CA 94403
41
<PAGE> 44
SCHEDULE G: INITIAL AND ANNUAL CERTIFICATION OF DISCRETIONARY AUTHORITY
This report shall set forth the account name or description in which you have a
direct or indirect beneficial interest, including holdings by a spouse, minor
children, trusts, foundations, and as to which trading authority has been
delegated by you to an unaffiliated registered broker-dealer, registered
investment adviser, or other investment manager acting in a similar fiduciary
capacity, who exercises sole investment discretion.
<TABLE>
<CAPTION>
TYPE OF OWNERSHIP
NAME/DESCRIPTION OF BROKERAGE FIRM, DIRECT OWNERSHIP (DO) ACCOUNT NUMBER
NAME(S) AS SHOWN ON ACCOUNT OR INVESTMENT BANK, INVESTMENT ADVISER OR INVESTMENT INDIRECT OWNERSHIP (IO) (IF APPLICABLE)
----------------------------------------- -------------------------------------- ----------------------- ----------------------
<S> <C> <C> <C>
----------------------------------------- -------------------------------------- ----------------------- ----------------------
----------------------------------------- -------------------------------------- ----------------------- ----------------------
----------------------------------------- -------------------------------------- ----------------------- ----------------------
</TABLE>
TO THE BEST OF MY KNOWLEDGE I HAVE DISCLOSED ALL OF MY SECURITIES ACCOUNTS
AND/OR INVESTMENTS IN WHICH I HAVE A DIRECT OR INDIRECT BENEFICIAL INTEREST,
INCLUDING SECURITY ACCOUNTS OF A SPOUSE, MINOR CHILDREN, TRUSTS, FOUNDATIONS,
AND ANY ACCOUNT FOR WHICH TRADING AUTHORITY HAS BEEN DELEGATED AN UNAFFILIATED
PARTY. FURTHER, I CERTIFY THAT I DO NOT HAVE ANY DIRECT OR INDIRECT INFLUENCE OR
CONTROL OVER THE ACCOUNTS LISTED ABOVE.
<TABLE>
<S> <C> <C> <C>
-------------------------- ------------------------- -------------- -----------------------
PRINT NAME SIGNATURE DATE YEAR ENDED
</TABLE>
RETURN TO: LEGAL COMPLIANCE DEPARTMENT, 2000 ALAMEDA DE LAS PULGAS, SUITE 200E,
SAN MATEO, CA 94403
42
<PAGE> 45
SCHEDULE H: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED IN
PRIVATE PLACEMENTS
GENERAL INSTRUCTIONS: In considering requests by Access Persons for approval of
limited partnerships and other private placement securities transactions, the
Director of Compliance shall consult with an executive officer of Franklin
Resources, Inc. In deciding whether to approve the transaction, the Director of
Compliance and the executive officer shall take into account, among other
factors, whether the investment opportunity should be reserved for a Fund or
other client, and whether the investment opportunity is being offered to the
access person by virtue of his or her position with the Franklin Templeton
Group. IF THE ACCESS PERSON RECEIVES CLEARANCE FOR THE TRANSACTION, AN
INVESTMENT IN THE SAME ISSUER MAY ONLY BE MADE FOR A FUND OR CLIENT IF AN
EXECUTIVE OFFICER OF FRANKLIN RESOURCES, INC., WHO HAS BEEN INFORMED OF THE
ACCESS PERSON'S PRE-EXISTING INVESTMENT AND WHO HAS NO INTEREST IN THE ISSUER,
APPROVES THE TRANSACTION.
IN ORDER TO PROCESS YOUR REQUEST, PLEASE PROVIDE THE FOLLOWING INFORMATION:
1) Name/Description of proposed investment:
----------------------------------
2) Proposed Investment Amount:
-----------------------------------------------
3) Please attach pages of the offering memorandum (or other documents)
summarizing the investment opportunity, including:
a) Name of the partnership/hedge fund/issuer;
b) Name of the general partner, location & telephone number;
c) Summary of the offering; including the total amount the
offering/issuer;
d) Percentage your investment will represent of the total offering;
e) Plan of distribution; and
f) Investment objective and strategy,
PLEASE RESPOND TO THE FOLLOWING QUESTIONS:
4) Was this investment opportunity presented to you in your capacity as a
portfolio manager, trader or research analyst? If no, please explain the
relationship, if any, you have to the issuer or principals of the issuer.
5) Is this investment opportunity suitable for any fund/client that you
advise? If yes, why isn't the investment being made on behalf of the
fund/client? If no, why isn't the investment opportunity suitable for the
fund/clients?
6) Do any of the fund/clients that you advise presently hold securities of the
issuer of this proposed investment (e.g., common stock, preferred stock,
corporate debt, loan participations, partnership interests, etc)? If yes,
please provide the names of the funds/clients and security description.
43
<PAGE> 46
7) Do you presently have or will you have any managerial role with the
company/issuer as a result of your investment? If yes, please explain in
detail your responsibilities, including any compensation you will receive.
8) Will you have any investment control or input to the investment decision
making process?
9) If applicable, will you receive reports of portfolio holdings? If yes, when
and how frequently will these be provided?
Reminder: Personal securities transactions that do not generate brokerage
confirmations must be reported to the Legal Compliance Department on Schedule B
within 10 calendar days after you are notified.
--------------------------------
Name of Access Person
-------------------------------- ------------------
Access Person Signature Date
Approved by:
---------------------------------- ------------------
Chief Investment Officer Signature Date
--------------------------------------------------------------------------------
LEGAL COMPLIANCE USE ONLY
--------------------------------------------------------------------------------
DATE RECEIVED:
-------------------------------------------------
DATE ENTERED IN LOTUS NOTES:
-----------------------------------
DATE FORWARDED FRI EXECUTIVE OFFICER:
--------------------------
Precleared: [ ] [ ] (attach E-Mail) Date:
------------
Date Entered in APII:
------------------------------------------
--------------------------------------------------------------------------------
44
<PAGE> 47
APPENDIX C: INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER SUBSIDIARIES OF
FRANKLIN RESOURCES, INC. - FEBRUARY 2000
<TABLE>
<S> <C> <C> <C>
Franklin Advisers, Inc. IA Templeton Management Limited (Canada) IA
Franklin Advisory Services, LLC. IA Templeton Franklin Investment Services, Inc. IA/BD
Franklin Investment Advisory Services, Inc. IA Templeton Investment Counsel, Inc. IA
Franklin Management, Inc. IA Templeton Asset Management, Ltd. IA/FIA
Franklin Mutual Advisers, LLC IA Templeton Investment Management Co. Ltd. (Japan) FIA
Franklin Properties, Inc. REA Closed Joint-Stock Company Templeton (Russia) FIA
Franklin Templeton Distributors, Inc. IA/BD Templeton Unit Trust Management Ltd. (UK) FBD
Franklin Asset Management (Proprietary) Ltd. IA Orion Fund Management Ltd. FIA
Templeton (Switzerland), Inc. FBD Templeton Global Advisors Ltd. (Bahamas) IA
Templeton Franklin Investment Services (Asia) Ltd. FBD Templeton Asset Management (India) Pvt. Ltd. FIA/FBD
`Templeton Investment Management Limited (UK) IA/FIA Templeton Italia SIM S.p.A. (Italy) FBD
Templeton Global Strategic Services S.A. FBD Templeton Global Strategic Services (Deutschland) FBD
(Luxembourg) GmbH (Germany)
Templeton Investment Management (Australia) Ltd. FIA Templeton Funds Annuity Company INS
Franklin Templeton Investment Services, Inc. TA
Franklin Templeton Services, Inc. BM
</TABLE>
Codes:
IA: US registered investment adviser
BD: US registered broker-dealer
FIA: Foreign equivalent investment adviser
FBD: Foreign equivalent broker-dealer
TA: US registered transfer agent
BM: Business manager to the funds
REA: Real estate adviser
INS: Insurance company
45
<PAGE> 48
THE FRANKLIN TEMPLETON GROUP POLICY STATEMENT ON INSIDER TRADING
A. LEGAL REQUIREMENT
Pursuant to the Insider Trading and Securities Fraud Enforcement Act of
1988, it is the policy of the Franklin Templeton Group to forbid any officer,
director, employee, consultant acting in a similar capacity, or other person
associated with the Franklin Templeton Group from trading, either personally or
on behalf of clients, including all client assets managed by the entities in the
Franklin Templeton Group, on material non-public information or communicating
material non-public information to others in violation of the law. This conduct
is frequently referred to as "insider trading." The Franklin Templeton Group's
Policy Statement on Insider Trading applies to every officer, director, employee
or other person associated with the Franklin Templeton Group and extends to
activities within and outside their duties with the Franklin Templeton Group.
Every officer, director and employee must read and retain this policy statement.
Any questions regarding the Franklin Templeton Group's Policy Statement on
Insider Trading or the Compliance Procedures should be referred to the Legal
Department.
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material non-public information to
trade in securities (whether or not one is an "insider") or to communications of
material non-public information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(1) trading by an insider, while in possession of material non-public
information; or
(2) trading by a non-insider, while in possession of material non-public
information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential
or was misappropriated; or
(3) communicating material non-public information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below. If, after reviewing this policy statement, you have any
questions, you should consult the Legal Department.
1
<PAGE> 49
POLICY STATEMENT ON INSIDER TRADING
B. WHO IS AN INSIDER?
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
outside attorneys, accountants, consultants, bank lending officers, and the
employees of such organizations. In addition, an investment adviser may become a
temporary insider of a company it advises or for which it performs other
services. According to the U.S. Supreme Court, the company must expect the
outsider to keep the disclosed non-public information confidential and the
relationship must at least imply such a duty before the outsider will be
considered an insider.
C. WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of the company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme Court considered
as material certain information about the contents of a forthcoming newspaper
column that was expected to affect the market price of a security. In that case,
a Wall Street Journal reporter was found criminally liable for disclosing to
others the dates that reports on various companies would appear in the Wall
Street Journal and whether those reports would be favorable or not.
D. WHAT IS NON-PUBLIC INFORMATION?
Information is non-public until it has been effectively communicated to the
marketplace. One must be able to point to some fact to show that the information
is generally public. For example, information found in a report filed with the
Securities and Exchange Commission ("SEC"), or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal or other publications of general
circulation would be considered public.
2
<PAGE> 50
POLICY STATEMENT ON INSIDER TRADING
E. BASIS FOR LIABILITY
1. FIDUCIARY DUTY THEORY
In 1980, the Supreme Court found that there is no general duty to disclose
before trading on material non-public information, but that such a duty arises
only where there is a fiduciary relationship. That is, there must be a
relationship between the parties to the transaction such that one party has a
right to expect that the other party will not disclose any material non-public
information or refrain from trading. Chiarella v. U.S., 445 U.S. 22 (1980).
In Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court stated alternate
theories under which non-insiders can acquire the fiduciary duties of insiders.
They can enter into a confidential relationship with the company through which
they gain information (e.g., attorneys, accountants), or they can acquire a
fiduciary duty to the company's shareholders as "tippees" if they are aware or
should have been aware that they have been given confidential information by an
insider who has violated his fiduciary duty to the company's shareholders.
However, in the "tippee" situation, a breach of duty occurs only if the
insider personally benefits, directly or indirectly, from the disclosure. The
benefit does not have to be pecuniary but can be a gift, a reputational benefit
that will translate into future earnings, or even evidence of a relationship
that suggests a quid pro quo.
2. MISAPPROPRIATION THEORY
Another basis for insider trading liability is the "misappropriation"
theory, under which liability is established when trading occurs on material
non-public information that was stolen or misappropriated from any other person.
In U.S. v. Carpenter, supra, the Court found, in 1987, a columnist defrauded The
Wall Street Journal when he stole information from the Wall Street Journal and
used it for trading in the securities markets. It should be noted that the
misappropriation theory can be used to reach a variety of individuals not
previously thought to be encompassed under the fiduciary duty theory.
F. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material non-public information
are severe, both for individuals involved in such unlawful conduct and their
employers. A person can be subject to some or all of the penalties below even if
he or she does not personally benefit from the violation. Penalties include:
o civil injunctions;
o treble damages;
o disgorgement of profits;
o jail sentences;
3
<PAGE> 51
POLICY STATEMENT ON INSIDER TRADING
o fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited; and
o fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
In addition, any violation of this policy statement can result in serious
sanctions by the Franklin Templeton Group, including dismissal of any person
involved.
G. INSIDER TRADING PROCEDURES
Each access person, Compliance Officer, the Risk Management Department, and
the Legal Department, as the case may be, shall comply with the following
procedures.
1. IDENTIFYING INSIDE INFORMATION
Before trading for yourself or others, including investment companies or
private accounts managed by the Franklin Templeton Group, in the securities of a
company about which you may have potential inside information, ask yourself the
following questions:
o Is the information material?
o Is this information that an investor would consider important in
making his or her investment decisions?
o Is this information that would substantially affect the market price
of the securities if generally disclosed?
o Is the information non-public?
o To whom has this information been provided?
o Has the information been effectively communicated to the marketplace
(e.g., published in Reuters, The Wall Street Journal or other
publications of general circulation)?
If, after consideration of these questions, you believe that the information may
be material and non-public, or if you have questions as to whether the
information is material and non-public, you should take the following steps:
(i) Report the matter immediately to the designated Compliance Officer, or
if he or she is not available, to the Legal Department.
(ii) Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
the Franklin Templeton Group.
4
<PAGE> 52
POLICY STATEMENT ON INSIDER TRADING
(iii) Do not communicate the information inside or outside the Franklin
Templeton Group, other than to the Compliance Officer or the Legal
Department.
(iv) The Compliance Officer shall immediately contact the Legal Department
for advice concerning any possible material, non-public information.
(v) After the Legal Department has reviewed the issue and consulted with
the Compliance Officer, you will be instructed either to continue the
prohibitions against trading and communication noted in (ii) and
(iii), or you will be allowed to trade and communicate the
information.
(vi) In the event the information in your possession is determined by the
Legal Department or the Compliance Officer to be material and
non-public, it may not be communicated to anyone, including persons
within the Franklin Templeton Group, except as provided in (i) above.
In addition, care should be taken so that the information is secure.
For example, files containing the information should be sealed and
access to computer files containing material non-public information
should be restricted to the extent practicable.
2. RESTRICTING ACCESS TO OTHER SENSITIVE INFORMATION
All Franklin Templeton Group personnel also are reminded of the need to be
careful to protect from disclosure other types of sensitive information that
they may obtain or have access to as a result of their employment or association
with the Franklin Templeton Group.
(i) GENERAL ACCESS CONTROL PROCEDURES
The Franklin Templeton Group has established a process by which access to
company files that may contain sensitive or non-public information such as the
Bargain List and the Source of Funds List is carefully limited. Since most of
the Franklin Templeton Group files which contain sensitive information are
stored in computers, personal identification numbers, passwords and/or code
access numbers are distributed to Franklin Templeton Group computer access
persons only. This activity is monitored on an ongoing basis. In addition,
access to certain areas likely to contain sensitive information is normally
restricted by access codes.
5
<PAGE> 53
STATE STREET MASTER FUNDS (THE "TRUST")
CODE OF ETHICS
I. DEFINITIONS
1. "Access Person" shall have the same meaning as that set forth in
Rule 17j-1(a)(1) of the 1940 Act.
2. "Adviser" shall mean State Street Bank and Trust Company.
3. "Adviser Access Person" shall mean a director, officer or advisory
person, as defined in Rule 17j-1(a)(2), of the Adviser who, with respect to the
Trust, makes any recommendation, participates in the determination of which
recommendation shall be made, or whose principal function or duties relate to
the determination of which recommendation shall be made to the Trust; or who, in
connection with his or her duties, obtains any information concerning securities
recommendations being made by the Adviser to the Trust.
4. "Adviser's Code of Ethics" shall mean the Code of Ethics of State
Street Bank and Trust Company with respect to personal securities transactions.
5. "Beneficial Ownership" shall be interpreted in the manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
6. A Security is being "considered for purchase or sale" by a Fund when
a recommendation that such Fund purchase or sell the Security has been made by
the Adviser or an Access Person of the Adviser or Trust. "Code" shall mean this
Code of Ethics.
7. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act. Generally it 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 such company.
8. "Compliance Officer" shall mean (i) with respect to the Adviser, a
person designated by the Adviser to receive reports and take certain actions, as
provided in the Adviser's Code of Ethics, and (ii) with respect to the Trust, a
person designated by the Trust to receive reports and take certain actions, as
provided in this Code of Ethics.
9. "Fund" or "Funds" shall mean such portfolio or series of the Trust.
10. "Interested Person" shall have the meaning as considered in Section
2(a)(19) of the 1940 Act.
11. "Independent Trustee" shall mean any Trustee of the Trust who is
not an Interested Person of the Trust.
1
<PAGE> 54
12. An "Initial Public Offering" means an offering registered under the
Securities Act of 1933, 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.
13. "Investment Company Access Person" shall mean a trustee, officer or
advisory person, as defined in Rule 17j-1(a)(2), of the Trust other than an
Independent Trustee or an Adviser Access Person.
14. "Investment Personnel" of the Trust or the Adviser shall mean (a)
any employee of the Trust or the Adviser (or of any company in a control
relationship to the Trust or the 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 Trust; and (b) any natural
person who controls the Trust or the Adviser and who obtains information
concerning recommendations made to the Trust regarding the purchase or sale of
securities by the Trust.
15. "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) or pursuant to rule 504, rule 505, or rule 506 under the Securities
Act of 1933.
16. "Purchase" or "sale" of a security includes, among other things,
the writing of an option to purchase or sell a security.
17. "Security" shall have the same meanings as that set forth in
Section 2(a)(36) of the 1940 Act (generally, all securities) except that it
shall not include securities issued by the Government of the United States or an
agency or instrumentality thereof (including all short-term debt securities
which are "government securities" within the meaning of Section 2(a)(16) of the
1940 Act), bankers' acceptances, bank certificates of deposit, commercial paper
and shares of registered open-end investment companies.
18. "Trust" means the State Street Master Funds.
II. CODE PROVISIONS APPLICABLE TO ALL ACCESS PERSONS
No Access Person of the Trust, in connection with the purchase or sale,
directly or indirectly, by such Access Person of a Security held or to be
acquired by the Trust, shall:
1. employ any device, scheme or artifice to defraud the Trust;
2. make to the Trust any untrue statement of a material fact or omit to
state to the Trust a material fact necessary in order to make the
statements made, in light of the circumstances under which they are
made, not misleading;
3. engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon the Trust; or
4. engage in any manipulative practice with respect to the Trust.
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III. CODE PROVISIONS APPLICABLE ONLY TO ADVISER ACCESS PERSONS
1. Code of Ethics. The provisions of the Adviser's Code of Ethics are
hereby adopted as the Code of Ethics of the Trust applicable to Adviser Access
Persons. A violation of the Adviser's Code of Ethics by any Adviser Access
Person shall also constitute a violation of this Code of Ethics.
2. Reports. Adviser Access Persons shall file the reports required by
the Adviser's Code of Ethics. Such filings shall be deemed to be filings with
the Trust under this Code of Ethics, and shall at all times be available to the
Trust.
3. Review and Sanctions. At periodic intervals established by the
Trustees of the Trust, but no less frequently than annually, the Compliance
Officer of the Adviser shall report to the Board of Trustees of the Trust all
material violations by Adviser Access Persons of the Adviser's Code of Ethics
during such period and the corrective action taken by the Adviser.
IV. CODE PROVISIONS APPLICABLE ONLY TO INDEPENDENT TRUSTEES OF THE TRUST
1. Prohibited Purchases and Sales. No Independent Trustee of the Trust
shall purchase or sell, directly or indirectly, any Security in which such
Independent Trustee has, or by reason of such transaction acquires, any direct
or indirect Beneficial Ownership and which to such Independent Trustee's actual
knowledge at the time of such purchase or sale:
(a) is being considered for purchase or sale by a Fund; or
(b) is being purchased or sold by a Fund.
2. Exempted Transactions. The prohibitions of Section IV.1 of this Code
shall not apply to:
(a) purchases or sales effected in any account over which the
Independent Trustee has no direct or indirect influence or
control;
(b) purchases or sales which are non-volitional on the part of
the Independent Trustee;
(c) purchases or sales which are part of an automatic dividend
reinvestment plan;
(d) purchases effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired;
(e) sales of securities held in a margin account to the extent
necessary in order to meet margin requirements;
(f) purchases or sales other than those exempted in (a)
through (e) above, (i) which will not cause the Independent
Trustee to gain improperly a personal profit as a result of
such Independent Trustee's relationship with the Trust, or
(ii) which are only remotely potentially harmful to a Fund
because the proposed transaction would be unlikely to affect a
highly institutional market, or (iii) which, because of the
circumstances of the proposed transaction, are not related
economically to the Securities purchased or sold or to be
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purchased or sold by a Fund, and in each case which are
previously approved by the Compliance Officer of the Trust,
which approval shall be confirmed in writing.
3. Reporting.
(a) Whether or not one of the exemptions listed in Section
IV.2 hereof applies, each Independent Trustee of the Trust
shall file with the Compliance Officer of the Trust a dated
written report containing the information described in Section
IV.3(b) of this Code with respect to each transaction in any
Security in which such Independent Trustee has, or by reason
of such transaction acquires, any direct or indirect
Beneficial Ownership, if such Independent Trustee, at the time
the transaction was entered into, actually knew, or in the
ordinary course of fulfilling official duties as a trustee of
the Trust should have known, that during the 15-day period
immediately preceding or after the date of that transaction:
(i) such Security was or is to be purchased or sold
by a Fund, or
(ii) such Security was or is being considered for
purchase or sale by a Fund;
provided, however, that such Independent Trustee shall not be
required to make a report with respect to any transaction
effected for any account over which such Independent Trustee
does not have any direct or indirect influence or control.
Each such report shall be deemed to be filed with the Trust
for purposes of this Code, and may contain a statement that
the report shall not be construed as an admission by the
Independent Trustee that such Independent Trustee has any
direct or indirect Beneficial Ownership in the Security to
which the report relates.
(b) Such report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which
the report relates was effected, and shall contain the
following information:
(i) the date of the transaction, the title of and the
number of shares, and the principal amount of each
Security involved;
(ii) the nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
(iii) the price at which the transaction was
effected; and
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected.
Any report concerning a purchase or sale prohibited under Section IV.1 hereof
with respect to which the Independent Trustee relies upon one of the exemptions
provided in Section IV.2 shall contain a brief statement of the exemption relied
upon and the circumstances of the transaction.
4. Review. The Compliance Officer of the Trust shall review or
supervise the review of the personal securities transactions reported pursuant
to Section IV.3. As part of that review, each such reported securities
transaction shall be compared against completed and contemplated portfolio
transactions of the Trust to determine whether a violation of this Code may have
occurred. If the Compliance Officer of
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the Trust determines that a violation may have occurred, the Compliance Officer
of the Trust shall submit the pertinent information regarding the transaction to
the Trustees of the Trust. The Trustees shall evaluate whether a material
violation of this Code has occurred, taking into account all the exemptions
provided under Section IV.2. Before making any determination that a violation
has occurred, the Trustees shall give the person involved an opportunity to
supply additional information regarding the transaction in question and shall
consult with counsel for the Independent Trustee whose transaction is in
question.
5. Sanctions. If the Trustees of the Trust determine that a material
violation of this Code has occurred, the Trustees may take such action and
impose such sanctions as said Trustees deem appropriate.
V. CODE PROVISIONS APPLICABLE ONLY TO INVESTMENT COMPANY ACCESS PERSONS
1. Prohibited Purchases and Sales. No Investment Company Access
Person shall purchase or sell, directly or indirectly, any Security in which
such Investment Company Access Person has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership and which to such
Investment Company Access Person's actual knowledge as the time of such purchase
or sale:
(a) is being considered for purchase or sale by a Fund; or
(b) is being purchased or sold by a Fund.
2. Exempted Transactions. The prohibitions of Section V.1 of this Code
shall not apply to:
(a) purchases or sales effected in any account over which the
Investment Company Access Person has no direct or indirect
influence or control;
(b) purchases or sales which are non-volitional on the part of
the Investment Company Access Person;
(c) purchases or sales which are part of an automatic dividend
reinvestment plan;
(d) purchases effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired;
(e) sales of securities held in a margin account to the extent
necessary in order to meet margin requirements;
(f) purchases or sales other than those exempted in (a)
through (e) above, (i) which will not cause the Investment
Company Access Person to gain improperly a personal profit as
a result of such Investment Company Access Person's
relationship with the Trust, or (ii) which are only remotely
potentially harmful to a Fund because the proposed transaction
would be unlikely to affect a highly institutional market, or
(iii) which, because of the circumstances of the proposed
transaction, are not related economically to the Securities
purchased or sold or to be purchased or sold by a Fund, and in
each case which are previously approved by the Compliance
Officer of the Trust, which approval shall be confirmed in
writing.
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3. Reporting. Whether or not one of the exemptions listed in Section
V.2 hereof applies, each Investment Company Access Person shall file with the
Compliance Officer of the Trust:
(a) within 10 days of becoming an Investment Company Access
Person, a dated initial holdings report. Such report shall
contain the title of, the number of shares of, and the
principal amount of each security beneficially owned by the
Investment Company Access Person. Such report shall also list
the name of any broker, dealer or bank with whom the
Investment Company Access person maintained an account in
which any securities were held for the direct or indirect
benefit of the Investment Company Access Person as of the date
the person became an Investment Company Access Person;
(b) an annual holdings report which updates the information
provided in the initial holdings report. Such report shall
provide the information required in subparagraph (a) above,
which information must be as of a date no more than 30 days
prior to the date such report is submitted;
(c) a quarterly dated transaction written report containing
the information described below with respect to each
transaction in any Security in which such Investment Company
Access Person has, or by reason of such transaction acquires,
any direct or indirect Beneficial Ownership; provided,
however, that such Investment Company Access Person shall not
be required to make a report with respect to any transaction
effected for any account over which such Investment Company
Access Person does not have any direct or indirect influence
or control. Each such report shall be deemed to be filed with
the Trust for purposes of this Code, and may contain a
statement that the report shall not be construed as an
admission by the Investment Company Access Person that he or
she has any direct or indirect Beneficial Ownership in the
Security to which the report relates. Such report shall be
made not later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(i) the date of the transaction, the title of and the
number of shares, and the principal amount of each
Security involved;
(ii) the nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
(iii) the price at which the transaction was
effected; and
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected.
Any report concerning a purchase or sale prohibited under Section V.1 hereof
with respect to which the Investment Company Access Person relies upon one of
the exemptions provided in Section V.2 shall contain a brief statement of the
exemption relied upon and the circumstances of the transaction.
4. Review. The Compliance Officer of the Trust shall review or
supervise the review of the personal securities transactions reported pursuant
to Section V.3. As part of that review, each such reported securities
transaction shall be compared against completed and contemplated portfolio
transactions of the Trust to determine whether a violation of this Code may have
occurred. If the Compliance Officer of
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the Trust determines that a violation may have occurred, the Compliance Officer
of the Trust shall submit the pertinent information regarding the transaction to
the Trustees of the Trust. The Trustees shall evaluate whether a material
violation of this Code has occurred, taking into account all the exemptions
provided under Section V.2. Before making any determination that a violation has
occurred, the Trustees shall give the person involved an opportunity to supply
additional information regarding the transaction in question and shall consult
with counsel for the Investment Company Access Person whose transaction is in
question.
5. Sanctions. If the Trustees of the Trust determine that a material
violation of this Code has occurred, the Trustees may take such action and
impose such sanctions as said Trustees deem appropriate.
6. Exception to Reporting Requirements. No Investment Company Access
Person shall be required to comply with the provisions of Section V.3.(c) hereof
if the report required thereunder would duplicate information contained in
broker trade confirmations or account statements timely received by the
Designated Person of the Trust.
VI. CODE PROVISIONS APPLICABLE ONLY TO INVESTMENT PERSONNEL
Investments in IPOs and Limited Offerings. Investment Personnel must
obtain approval from the Compliance Officer of the Trust or the Adviser prior to
directly or indirectly acquiring beneficial ownership in any securities in an
Initial Public Offering or in a Limited Offering. In granting such approval, the
Compliance Officer shall consider, among other factors, whether the investment
opportunity in question should be reserved for the Trust and whether the
opportunity is being offered to an individual by virtue of his position with the
Trust or the Adviser.
VII. MISCELLANEOUS PROVISIONS
1. Approval of Code. This Code shall be deemed to be Trust's Code of
Ethics upon approval by the Trustees of the Trust, including a majority of the
Independent Trustees.
2. Amendment or Revision of the Code. Any amendment to or revision of
this Code of Ethics shall be promptly furnished to the Trust's Trustees and any
material amendment to or revision of this Code of Ethics must be approved by the
Trustees, including a majority of the Independent Trustees, no later than six
months after adoption of such amendment or revision.
3. Amendment or Revision of Adviser's Code of Ethics. Any amendment or
revision of the Adviser's Code of Ethics shall be deemed to be an amendment or
revision of Section III.1 of this Code, and such amendment or revision shall be
promptly furnished to the Independent Trustees of the Trust.
4. Annual Issues and Certification Report. At periodic intervals
established by the Trustees of the Trust, but no less frequently than annually,
the Compliance Officer of the Trust shall provide a written report to the
Trustees of the Trust regarding any issues which arose under this Code of Ethics
since the last report to the Board of Trustees, including, but not limited to,
information about material Code or procedure violations and sanctions imposed in
response to any material violations. In addition, the Compliance Officer of the
Trust will provide to the Trustees of the Trust in writing a certification that
the Trust has adopted procedures reasonably necessary to prevent Investment
Company Access Persons from violating this Code of Ethics.
5. Records. The Trust shall maintain records in the manner and to the
extent set forth below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the
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1940 Act and shall be available for examination by representatives of the
Securities and Exchange Commission:
(a) A copy of this Code and any other code that is, or at any
time within the past five years has been, in effect shall be
preserved in an easily accessible place;
(b) A record of any violation of this Code and of any action
taken as a result of such violation shall be preserved in an
easily accessible place for a period of not less than five
years following the end of the fiscal year in which the
violation occurs;
(c) A copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the
end of the fiscal year in which its is made, the first two
years in an easily accessible place; and
(d) A list of persons who are, or within the past five years
have been, required to make reports pursuant to this Code
shall be maintained in an easily accessible place.
6. Confidentiality. All reports of securities transactions and any
other information filed with the Trust or furnished to any person pursuant to
this Code shall be treated as confidential, but are subject to review as
provided herein and by representatives of the Securities and Exchange
Commission.
7. Interpretation of Provisions. The Trustees of the Trust may from
time to time adopt such interpretation of this Code as they deem appropriate.
8. Effect of Violation of this Code. In adopting Rule 17j-1, the
Securities and Exchange Commission specifically noted in Investment Company Act
Release No. 11421 that a violation of any provision of a particular code of
ethics, such as this Code, would not be considered a per se unlawful act
prohibited by the general anti-fraud provisions of the Rule. In adopting this
Code of Ethics, it is not intended that a violation of this Code is or should be
considered to be a violation of Rule 17j-1.
Adopted: [ ]
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MORGAN STANLEY DEAN WITTER AFRICA INVESTMENT FUND, INC.
MORGAN STANLEY DEAN WITTER ASIA-PACIFIC FUND, INC.
MORGAN STANLEY DEAN WITTER EASTERN EUROPE FUND, INC.
MORGAN STANLEY DEAN WITTER EMERGING MARKETS FUND, INC.
MORGAN STANLEY DEAN WITTER EMERGING MARKETS DEBT FUND, INC.
MORGAN STANLEY DEAN WITTER GLOBAL OPPORTUNITY BOND FUND, INC.
MORGAN STANLEY DEAN WITTER HIGH YIELD FUND, INC.
MORGAN STANLEY DEAN WITTER INDIA INVESTMENT FUND, INC.
THE LATIN AMERICAN DISCOVERY FUND, INC.
THE MALAYSIA FUND, INC.
THE PAKISTAN INVESTMENT FUND, INC.
THE THAI FUND, INC.
THE TURKISH INVESTMENT FUND, INC.
(THE "CLOSED-END FUNDS")
AND
MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
MORGAN STANLEY DEAN WITTER STRATEGIC ADVISER FUND, INC.
(THE "OPEN-END FUNDS", AND TOGETHER WITH THE CLOSED-END FUNDS, THE "FUNDS")
AND
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
("MSDW INVESTMENT MANAGEMENT")
AND
MILLER ANDERSON & SHERRERD, LLP
("MAS", AND TOGETHER WITH MSDW INVESTMENT MANAGEMENT, THE "INVESTMENT MANAGERS")
AND
MORGAN STANLEY & CO. INCORPORATED
("MS&CO.")
CODE OF ETHICS
1. Purposes
This Code of Ethics has been adopted by the Funds, the Investment
Managers and MS&Co., the principal underwriter of the Open-End Funds, in
accordance with Rule 17j-1 under the Investment Company Act of 1940, as amended
(the "Act"). Rule 17j-1 under the Act generally proscribes fraudulent or
manipulative practices with respect to purchases or sales of securities held or
to be acquired by investment companies, if effected by affiliated persons (as
defined under the Act) of such companies. Specifically, Rule 17j-1 provides that
it is unlawful for any affiliated person of or principal underwriter for a
registered investment company, or any affiliated person of an investment adviser
of or principal underwriter for a registered investment company, in connection
with the purchase or sale, directly or indirectly, by such person of a security
held or to be acquired by such registered investment company:
(a) To employ any device, scheme or artifice to defraud such
registered investment company;
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(b) To make to such registered investment company any untrue
statement of a material fact or omit to state to such
registered investment company a material fact necessary in
order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any such
registered investment company; or
(d) To engage in any manipulative practice with respect to such
registered investment company.
While Rule 17j-1 is designed to protect only the interests of the Funds
and their stockholders, the Investment Managers apply the policies and
procedures described in this Code of Ethics to all employees of the Investment
Managers to protect the interests of their non-Fund clients as well
(hereinafter, where appropriate, non-Fund clients of the Investment Managers are
referred to as "Advisory Clients" and any reference to an Advisory Client(s)
relates only to the activities of employees of the Investment Managers).
The purpose of this Code of Ethics is to (i) ensure that Access Persons
conduct their personal securities transactions in a manner which does not (a)
create an actual or potential conflict of interest with the Funds' or an
Advisory Client's portfolio transactions, (b) place their personal interests
before the interest of the Funds and their stockholders or an Advisory Client or
(c) take unfair advantage of their relationship to the Funds or an Advisory
Client and (ii) provide policies and procedures consistent with the Act and Rule
17j-1 designed to give effect to the general prohibitions set forth in Rule
17j-l.
Among other things, the procedures set forth in this Code of Ethics
require that all (i) Access Persons review this Code of Ethics at least
annually, (ii) Access Persons, unless excepted by Sections 8. (d) or (e) of this
Code of Ethics, report transactions in Covered Securities, (iii) Access Persons
refrain from engaging in certain transactions, and (iv) employees of the
Investment Managers pre-clear with the Compliance Department or the trading desk
at MAS any transactions in Covered Securities.
2. Definitions
(a) "Access Person" means (i) any director, officer or Advisory
Person of the Funds or of the Investment Managers, and (ii)
any director or officer of MS&Co., who, in the ordinary course
of business, makes, participates in or obtains information
regarding the purchase or sale of Covered Securities by the
Funds.
(b) "Advisory Person" means any employee of the Funds, or of the
Investment Managers (or of any company in a control
relationship to the Funds or the Investment Managers), 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 the Funds or an Advisory
Client, or whose functions relate to the making of any
recommendations with respect to such purchases or sales.
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(c) "Beneficial ownership" shall be interpreted in the same manner
as it would be in determining whether a person is subject to
the provisions of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an Access Person
has or acquires.
(d) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act.
(e) "Compliance Department" means the MSDW Investment Management
or MAS Compliance Department.
(f) "Covered Security" means a security as defined in Section
2(a)(36) of the Act, except that it does not include: (i)
shares of registered open-end investment companies, (ii)
direct obligations of the Government of the United States, and
(iii) bankers' acceptances, bank certificates of deposit,
commercial paper, and high quality short-term debt
instruments, including repurchase agreements.
(g) "Disinterested Director" means a director of a Fund who is not
an "interested person" of such Fund within the meaning of
Section 2(a)(19) of the Act.
(h) "Purchase or sale (or sell)" with respect to a Covered
Security means any acquisition or disposition of a direct or
indirect beneficial interest in a Covered Security, including,
inter alia, the writing or buying of an option to purchase or
sell a Covered Security.
(i) "Security held or to be acquired" means (i) any Covered
Security which, within the most recent 15 days, is or has been
held by a Fund or an Advisory Client, or is being or has been
considered by a Fund or an Advisory Client or the Investment
Managers for purchase by a Fund or an Advisory Client and (ii)
any option to purchase or sell, and any security convertible
into or exchangeable for, a Covered Security described in this
paragraph.
3. Prohibited Transactions
(a) No Access Person or employee of the Investment Managers shall
purchase or sell any Covered Security which to his or her
actual knowledge at the time of such purchase or sale:
(i) is being considered for purchase or sale by a Fund or an
Advisory Client; or
(ii) is being purchased or sold by a Fund or an Advisory
Client.
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(b) No employee of the Investment Managers shall purchase or sell
a Covered Security while there is a pending "buy" or "sell"
order in the same or a related security for a Fund or an
Advisory Client until that order is executed or withdrawn.
(c) No Advisory Person shall purchase or sell a Covered Security
within seven calendar days before or after any portfolio(s) of
the Funds over which such Advisory Person exercises investment
discretion or an Advisory Client over which the Advisory
Person exercises investment discretion purchases or sells the
same or a related Covered Security. Any profits realized or
unrealized by the Advisory Person on a prohibited purchase or
sale within the proscribed period shall be disgorged to a
charity.
(d) No employee of the Investment Managers shall profit from the
purchase and sale or sale and purchase of the same (or
equivalent) Covered Security within 60 calendar days, except
that he or she may sell a Covered Security for a loss after 30
calendar days. Any profits realized within 60 calendar days on
such purchase or sale shall be disgorged to a charity.
(e) No employee of the Investment Managers shall purchase any
securities in an initial public offering.
(f) No employee of the Investment Managers shall purchase
privately-placed securities unless such purchase is
pre-approved by the Compliance Department. Any such person who
has previously purchased privately-placed securities must
disclose such purchases to the Compliance Department before
such person participates in a Fund's or an Advisory Client's
subsequent consideration of an investment in the securities of
the same or a related issuer. Upon such disclosure, the
Compliance Department shall appoint another person with no
personal interest in the issuer, to conduct an independent
review of such Fund's or such Advisory Client's decision to
purchase securities of the same or a related issuer.
(g) No Access Person or employee of the Investment Managers shall
recommend the purchase or sale of any Covered Securities to a
Fund or to an Advisory Client without having disclosed to the
Compliance Department his or her interest, if any, in such
Covered Securities or the issuer thereof, including without
limitation (i) his or her direct or indirect beneficial
ownership of any securities of such issuer, (ii) any
contemplated purchase or sale by such person of such
securities, (iii) any position with such issuer or its
affiliates, and (iv) any present or proposed business
relationship between such issuer or its affiliates, on the one
hand, and such person or any party in which such person has a
significant interest, on the other; provided, however, that in
the event the interest of such person in such securities or
the issuer thereof is not material to his or her personal net
worth and any contemplated purchase or sale by such person in
such securities cannot reasonably be expected to have a
material adverse effect on any such purchase or sale by a Fund
or an Advisory Client or on the market for the securities
generally, such person shall not be required to disclose his
or her interest in the securities or the issuer thereof in
connection with any such recommendation.
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(h) No Access Person or employee of the Investment Managers shall
reveal to any other person (except in the normal course of his
or her duties on behalf of a Fund or an Advisory Client) any
information regarding the purchase or sale of any Covered
Security by a Fund or an Advisory Client or consideration of
the purchase or sale by a Fund or an Advisory Client of any
such Covered Security.
4. Pre-Clearance of Covered Securities Transactions and Permitted
Brokerage Accounts
No employee of MSDW Investment Management shall purchase or sell
Covered Securities without prior written authorization from its Compliance
Department. No employee of MAS shall purchase or sell Covered Securities without
prior written authorization from the appropriate trading desk. Unless otherwise
indicated by the Compliance Department, pre-clearance of a purchase or sale
shall be valid and in effect only for the business day in which such
pre-clearance is given; provided, however, that the approval of an unexecuted
purchase or sale is deemed to be revoked when the employee becomes aware of
facts or circumstances that would have resulted in the denial of approval of the
approved purchase or sale were such facts or circumstances made known to the
Compliance Department or MAS trading desk, as appropriate, at the time the
proposed purchase or sale was originally presented for approval. The Investment
Managers require all of their employees to maintain their personal brokerage
accounts at MS&Co. or a broker/dealer affiliated with MS&Co. (hereinafter, a
"Morgan Stanley Account"). Outside personal brokerage accounts are permitted
only under very limited circumstances and only with express written approval by
the Compliance Department. The Compliance Department has implemented procedures
reasonably designed to monitor purchases and sales effected pursuant to the
aforementioned pre-clearance procedures.
5. Exempted Transactions
(a) The prohibitions of Section 3 and Section 4 of this Code of
Ethics shall not apply to:
(i) Purchases or sales effected in any account over which an
Access Person or an employee of the Investment Managers
has no direct or indirect influence or control;
(ii) Purchases or sales which are non-volitional;
(iii) Purchases which are part of an automatic purchase plan
directly with the issuer or its agent or which are part
of an automatic dividend reinvestment plan; or
(iv) Purchases effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its
securities and sales of such rights so acquired, but
only to the extent such rights were acquired from such
issuer.
(b) Notwithstanding the prohibitions of Sections 3. (a), (b) and
(c) of this Code of Ethics, the Compliance Department or MAS
trading desk, as appropriate, may approve a purchase or sale
of a Covered Security by employees of the Investment Managers
which would appear to be in
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contravention of the prohibitions in Sections 3. (a), (b) and
(c) if it is determined that (i) the facts and circumstances
applicable at the time of such purchase or sale do not
conflict with the interests of a Fund or an Advisory Client,
or (ii) such purchase or sale is only remotely potentially
harmful to a Fund or an Advisory Client because it would be
very unlikely to affect a highly institutional market, or
because it is clearly not related economically to the
securities to be purchased, sold or held by such Fund or
Advisory Client, and (iii) the spirit and intent of this Code
of Ethics is met.
6. Restrictions on Receiving Gifts
No employee of the Investment Managers shall receive any gift or other
consideration in merchandise, service or otherwise of more than de minimis value
from any person, firm, corporation, association or other entity that does
business with or on behalf of the Funds or an Advisory Client.
7. Service as a Director
No employee of the Investment Managers shall serve on the board of
directors of a publicly-traded company without prior written authorization from
the Compliance Department. Approval will be based upon a determination that the
board service would not conflict with the interests of the Funds and their
stockholders or an Advisory Client.
8. Reporting
(a) Unless excepted by Section 8. (d) or (e) of this Code of
Ethics, each Access Person must disclose all personal holdings
in Covered Securities to the Compliance Department for its
review no later than 10 days after becoming an Access Person
and annually thereafter. The initial and annual holdings
reports must contain the following information:
(i) The title, number of shares and principal amount of each
Covered Security in which the Access Person has any
direct or indirect beneficial ownership;
(ii) The name of any broker, dealer or bank with or through
whom the Access Person maintained an account in which
any securities were held for the direct or indirect
benefit of the Access Person; and
(iii) The date the report was submitted to the Compliance
Department by the Access Person.
(b) Unless excepted by Section 8. (d) or (e) of this Code of
Ethics, each Access Person and each employee of the Investment
Managers must report to the Compliance Department for its
review within 10 days of the end of a calendar quarter the
information described below with respect to transactions in
Covered Securities in which such person has, or by reason of
such transactions acquires any direct or indirect beneficial
interest:
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(i) 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;
(ii) The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(iii) The price of the Covered Security at which the purchase
or sale was effected;
(iv) The name of the broker, dealer or bank with or through
which the purchase or sale was effected; and
(v) The date the report was submitted to the Compliance
Department by such person.
(c) Unless excepted by Section 8. (d) or (e) of this Code of
Ethics, each Access Person and each employee of the Investment
Managers must report to the Compliance Department for its
review within 10 days of the end of a calendar quarter the
information described below with respect to any account
established by such person in which any securities were held
during the quarter for the direct or indirect benefit of such
person:
(i) The name of the broker, dealer or bank with whom the
account was established;
(ii) The date the account was established; and
(iii) The date the report was submitted to the Compliance
Department by such person.
(d) An Access Person will not be required to make any reports
described in Sections 8. (a), (b) and (c) above for any
account over which the Access Person has no direct or indirect
influence or control. An Access Person or an employee of the
Investment Managers will not be required to make the annual
holdings report under Section 8. (a) and the quarterly
transactions report under Section 8. (b) with respect to
purchases or sales effected for, and Covered Securities held
in: (i) a Morgan Stanley Account, (ii) an account in which the
Covered Securities were purchased pursuant to an automatic
purchase plan set up directly with the issuer or its agent or
pursuant to a dividend reinvestment plan, or (iii) an account
for which the Compliance Department receives duplicate trade
confirmations and quarterly statements. An Access Person or an
employee of MSDW Investment Management will not be required to
make a report under Section 8. (c) for any account in which
only shares of open-end registered investment companies can be
purchased or sold. Lastly, an employee of MSDW Investment
Management will not be required to make a report under Section
8. (c) for any account established with MS&Co. or a
broker/dealer affiliated with MS&Co., or for any account which
was pre-approved by the Compliance Department.
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(e) A Disinterested Director of a Fund, who would be required to
make a report solely by reason of being a Fund director, is
not required to make initial and annual holdings reports.
Additionally, such Disinterested Director need only make a
quarterly transactions report for a purchase or sale of
Covered Securities if he or she, at the time of that
transaction, knew or, in the ordinary course of fulfilling his
or her official duties as a Disinterested Director of a Fund,
should have known that, during the 15-day period immediately
preceding or following the date of the Covered Securities
transaction by him or her, such Covered Security is or was
purchased or sold by a Fund or was being considered for
purchase or sale by a Fund.
(f) The reports described in Sections 8. (a), (b) and (c) above
may contain a statement that the reports shall not be
construed as an admission by the person making such reports
that he or she has any direct or indirect beneficial ownership
in the Covered Securities to which the reports relate.
9. Annual Certifications
All Access Persons and employees of the Investment Managers must
certify annually that they have read, understood and complied with the
requirements of this Code of Ethics and recognize that they are subject to this
Code of Ethics by signing the certification attached hereto as Exhibit A.
10. Board Review
The management of the Funds and representatives or officers of the
Investment Managers and, with respect to the Open-End Funds, MS&Co., shall each
provide each Fund's Board of Directors, at least annually, with the following:
(a) a summary of existing procedures concerning personal investing
and any changes in the procedures made during the past year;
(b) a description of any issues arising under this Code of Ethics
or procedures since the last such report, including, but not
limited to, information about material violations of this Code
of Ethics or procedures and sanctions imposed in response to
material violations;
(c) any recommended changes in the existing restrictions or
procedures based upon a Fund's or the Investment Managers'
experience under this Code of Ethics, evolving industry
practices or developments in applicable laws and regulations;
and
(d) a certification (attached hereto as Exhibits B, C, D, and E,
as appropriate) that each has adopted procedures reasonably
necessary to prevent its Access Persons from violating this
Code of Ethics.
8
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11. Sanctions
Upon discovering a violation of this Code of Ethics, the Board of
Directors of such Fund or of the Investment Managers, as the case may be, may
impose such sanctions as it deems appropriate.
12. Recordkeeping Requirements
The management of the Funds and representatives or officers of the
Investment Managers and, with respect to the Open-End Funds, MS&Co., each shall
maintain, as appropriate, the following records for a period of five years, the
first two years in an easily accessible place, and shall make these records
available to the Securities and Exchange Commission or any representative of
such during an examination of the Funds or of the Investment Managers:
(a) a copy of this Code of Ethics or any other Code of Ethics
which was in effect at any time within the previous five
years;
(b) a record of any violation of this Code of Ethics during the
previous five years, and of any action taken as a result of
the violation;
(c) a copy of each report required by Section 8. of this Code of
Ethics, including any information provided in lieu of each
such report;
(d) a record of all persons, currently or within the past five
years, who are or were subject to this Code of Ethics and who
are or were required to make reports under Section 8. of this
Code of Ethics;
(e) a record of all persons, currently or within the past five
years, who are or were responsible for reviewing the reports
required under Section 8. of this Code of Ethics; and
(f) a record of any decision, and the reasons supporting the
decision, to approve the acquisition of securities described
in Sections 3. (e) and (f) of this Code of Ethics.
9
<PAGE> 70
EXHIBIT A
MORGAN STANLEY DEAN WITTER AFRICA INVESTMENT FUND, INC.
MORGAN STANLEY DEAN WITTER ASIA-PACIFIC FUND, INC.
MORGAN STANLEY DEAN WITTER EASTERN EUROPE FUND, INC.
MORGAN STANLEY DEAN WITTER EMERGING MARKETS FUND, INC.
MORGAN STANLEY DEAN WITTER EMERGING MARKETS DEBT FUND, INC.
MORGAN STANLEY DEAN WITTER GLOBAL OPPORTUNITY BOND FUND, INC.
MORGAN STANLEY DEAN WITTER HIGH YIELD FUND, INC.
MORGAN STANLEY DEAN WITTER INDIA INVESTMENT FUND, INC.
THE LATIN AMERICAN DISCOVERY FUND, INC.
THE MALAYSIA FUND, INC.
THE PAKISTAN INVESTMENT FUND, INC.
THE THAI FUND, INC.
THE TURKISH INVESTMENT FUND, INC.
(THE "CLOSED-END FUNDS")
AND
MORGAN STANLEY DEAN WITTER INSTITUTIONAL FUND, INC.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
MORGAN STANLEY DEAN WITTER STRATEGIC ADVISER FUND, INC.
(THE "OPEN-END FUNDS", AND TOGETHER WITH THE CLOSED-END FUNDS, THE "FUNDS")
AND
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
("MSDW INVESTMENT MANAGEMENT")
AND
MILLER ANDERSON & SHERRERD, LLP
("MAS", AND TOGETHER WITH MSDW INVESTMENT MANAGEMENT, THE "INVESTMENT MANAGERS")
AND
MORGAN STANLEY & CO., INCORPORATED
("MS&CO.")
CODE OF ETHICS
ANNUAL CERTIFICATION
I hereby certify that I have read and understand the Code of Ethics
(the "Code") which has been adopted by the Funds, the Investment Managers and
MS&Co. and recognize that it applies to me and agree to comply in all respects
with the policies and procedures described therein. Furthermore, I hereby
certify that I have complied with the requirements of the Code in effect, as
amended, for the year ended December 31, ____, and that all of my reportable
transactions in Covered Securities were executed and reflected accurately in a
Morgan Stanley Account (as defined in the Code) or that I have attached a report
that satisfies the annual holdings disclosure requirement as described in
Section 8. (a) of the Code.
Date: , Name:
--------- ---- ----------------------------------
Signature:
-----------------------------
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CODE OF ETHICS
FOR
MERRILL LYNCH'S ASSET MANAGEMENT GROUP (MLAMG)
REGISTERED INVESTMENT COMPANIES
INVESTMENT ADVISERS
PRINCIPAL UNDERWRITER
SECTION 1 - BACKGROUND
This Code of Ethics has been approved and adopted by the Boards of
Directors of the MLAMG Investment Advisers and Principal Underwriter and the
Boards of Directors of each of the MLAMG funds in compliance with Rule 17j-1
under the Investment Company Act of 1940. Except as otherwise provided, the Code
applies to all "MLAMG employees," which term includes all employees and
officers, Directors and Trustees of MLAMG and the MLAMG funds. (MLAMG includes
all AMG investment advisory affiliates and affiliated principal underwriter with
the exception of Mercury Asset Management Ltd. and Mercury Asset Management
International Ltd., who maintain their own Codes of Ethics. MLAMG Funds include
the Funds advised by the AMG investment advisory affiliates (with the exception
of Mercury Asset Management Ltd. and Mercury Asset Management International
Ltd.) or distributed by the AMG affiliated principal underwriter.)
Section 17(j) under the Investment Company Act of 1940 makes it
unlawful for persons affiliated with investment companies, their principal
underwriters or their investment advisers to engage in personal transactions in
securities which are held or are to be acquired by a Fund, if such personal
transactions are made in contravention of rules adopted by the Securities and
Exchange Commission to prevent fraudulent, deceptive or manipulative practices.
Pursuant to this authority, the Securities and Exchange Commission adopted Rule
17j-1 and further amended the Rule on October 29, 1999. Rule 17j-1 does not
specify practices, which are considered to be fraudulent, deceptive or
manipulative. Instead, the Rule requires each Fund, investment adviser and
principal underwriter to adopt its own Code of Ethics, which must contain
provisions reasonably necessary to prevent an employee with access to
information from engaging in conduct prohibited by the principles of the Rule.
The Rule also requires that reasonable diligence be used and procedures be
instituted which are reasonably necessary to prevent violations of the Code of
Ethics.
SECTION 2 - STATEMENT OF GENERAL FIDUCIARY PRINCIPLES
The Code of Ethics is based on the principle that the MLAMG employees
of the registered investment companies (the "Funds") the Funds' Investment
Advisers, and the Funds' Principal Underwriter owe a fiduciary duty to, among
others, the shareholders of
<PAGE> 72
the Funds to conduct their personal securities transactions in a manner which
does not interfere or appear to interfere with any Fund transactions or
otherwise take unfair advantage of their relationship to the Funds. All MLAMG
employees must adhere to this general principle as well as comply with the
specific provisions set forth herein. It bears emphasis that technical
compliance with these provisions will not automatically insulate from scrutiny
transactions which show a pattern of compromise or abuse of an employee's
fiduciary duties to the Funds. Accordingly, all MLAMG employees must seek to
avoid any actual or potential conflicts between their personal interest and the
interest of the Funds. In sum all MLAMG employees shall place the interest of
the Funds before personal interests.
SECTION 3 - INSIDER TRADING POLICY
All MLAMG employees are subject to MLAMG's Insider Trading Policy,
which is considered an integral part of this Code of Ethics. MLAMG's Insider
Trading Policy prohibits MLAMG employees from buying or selling any security
while in the possession of material nonpublic information about the issuer of
the security. The policy also prohibits MLAMG employees from communicating to
third parties any material nonpublic information about any security or issuer of
securities. Additionally, no MLAMG employee may use his or her position or
knowledge of MLAMG activities or the activities of any Merrill Lynch & Co., Inc.
entity to benefit the Funds or to gain personal benefit. Any violation of
MLAMG's Insider Trading Policy may result in sanctions which could include
termination of employment with MLAMG. (See Section 10--Sanctions)
SECTION 4 - RESTRICTIONS RELATING TO SECURITIES TRANSACTIONS
A. GENERAL TRADING RESTRICTIONS FOR ALL EMPLOYEES
The following restrictions apply to all MLAMG employees (as defined in
Section 1) other than disinterested directors (i.e., any Director or Trustee who
is not an "interested person" of a MLAMG fund within the meaning of Section
2(a)(10) of the Investment Company Act of 1940):
1. ACCOUNTS AT MERRILL LYNCH. No employee may engage in personal
securities transactions other than through an account maintained with
Merrill Lynch, Pierce, Fenner & Smith Inc. or other such Merrill Lynch
broker/dealer entity ("Merrill Lynch") unless (i) written permission is
obtained from the Compliance Director or (ii) the transaction involves
an exempted security (see Section 3 above) and the transaction is
effected in a non-brokerage account. Accounts of employees include the
accounts of their spouses, dependent relatives and members of the same
household, trustee and custodial accounts or any other account in which
the employee has a financial interest or over which the employee has
investment discretion.
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2. PRECLEARANCE. All employees must obtain approval from the Compliance
Director or delegatee in the Compliance Department prior to entering
any securities transactions (with the exception of exempted securities
as listed in Section 5) in all accounts as defined in Section 4, Item
1. Approval of a transaction, once given, is effective only for the
business day on which approval was requested or until the employee
discovers that the information provided at the time the transaction was
approved is no longer accurate.
3. RESTRICTIONS ON PURCHASES. No employee may purchase any security which
at the time is being purchased, or to his or her knowledge is being
considered for purchase, by any Fund managed by the MLAMG. This
restriction, however, does not apply to personal trades of employees
which coincide with trades by any MLAMG index fund.
4. RESTRICTIONS ON SALES. No employee may sell any security which at the
time is actually being sold, or to his knowledge is being considered
for sale, by any Fund managed by MLAMG. This restriction, however, does
not apply to personal trades of employees which coincide with trades by
any MLAMG index fund.
5. RESTRICTIONS ON RELATED SECURITIES. The restrictions and procedures
applicable to the transactions in securities by employees set forth in
this Code of Ethics shall similarly apply to related securities whose
value or return is related, in whole or in part, to the value or return
of a security purchased or sold or being contemplated for purchase or
sale during the relevant period by the Fund. For example, options or
warrants to purchase common stock, and convertible debt and convertible
preferred stock would be considered related to the underlying common
stock for purposes of this policy. In sum, the related security would
be treated as if it were the underlying security for the purpose of the
pre-clearance procedures described herein.
6. PRIVATE PLACEMENTS. Purchases and sales of "private placement"
securities (including all private equity partnerships, hedge funds,
limited partnership or venture capital funds) must be precleared
directly with the MLAMG Compliance Director or designee. No employee
may engage in any such transaction unless the Compliance Director or
his designee and the employee's senior management have previously
determined that the contemplated investment does not involve any
potential for conflict with the investment activities of the Funds.
This approval will not be granted unless the employee can clearly
demonstrate that (a) the investment is not presently appropriate for
any Fund, (b) it is highly unlikely that the investment will be
appropriate for a Fund in the future, and (c) the investment is not
being offered to the employee because of his or her position with MLAMG
or business that the employee has done, or is expected to do, on behalf
of MLAMG Funds.
If after receiving the required approval, an employee has any material
role in the
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<PAGE> 74
subsequent consideration by any Fund of an investment in the same or
affiliated issuer, the employee must disclose his or her interest in
the private placement investment to the MLAMG Compliance Director. The
decision to purchase securities of the issuer by a Fund must be
independently reviewed and authorized by both the MLAMG Compliance
Director and the employee's senior management.
7. IPOS. Inasmuch as MLAMG is an affiliate of a registered broker-dealer,
it's employees, as defined above, are subject to the free-riding and
withholding prohibitions of the National Association of Securities
Dealers, Inc. (NASD) which restrict the instances in which an employee
of a broker-dealer (or an employee of an affiliate of a broker-dealer
such as a MLAMG employee) would be permitted to participate in an
initial public offering. In the event an employee were to participate
in a so called "hot" issue, such trade would be subject to reversal
(i.e., "busted") with all costs and expenses related thereto to be
borne by such employee. Closed-end investment companies, founders
stock, promoter stock, or any other similar stock of an issuer in the
early stages of development would not be considered "hot issues" for
purposes of this Code of Ethics, unless NASD member firms or issuers of
the security are prohibited from selling such a security to a MLAMG
employee.
8. PROHIBITION ON SHORT-TERM PROFITS. All employees shall be prohibited
from profiting on any sale and subsequent purchase, or any purchase and
subsequent sale of the same (or equivalent) securities occurring within
60 calendars days ("short-term profit"). This holding period also
applies to all permitted options transactions; therefore, an employee
may not purchase or write an option if the option will expire in less
than 60 days (unless the employee is buying or writing an option on a
security that he or she has held more than 60 days). In determining
short-term profits, all transactions within a 60-day period in all
accounts related to the employee shall be netted regardless of an
employee's intentions to do otherwise (i.e., tax or other trading
strategies). Should an employee fail to preclear a trade that results
in a short-term profit, the trade would be subject to reversal with all
costs and expenses related to the trade borne by the employee, and the
employee would be required to disgorge the profit. Transactions nor
required to be precleared under Section 5 will not be subject to this
prohibition.
B. TRADING RESTRICTIONS FOR DECISION-MAKING EMPLOYEES
The following additional restrictions apply to decision-making employees
(i.e., employees who recommend or determine which securities transactions a Fund
undertakes). The MLAMG Compliance Department will retain and keep current a list
of decision-making employees.
1. NOTIFICATION. A decision-making employee must notify the MLAMG
Compliance Director of any intended transactions in a security for his
or her own personal
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<PAGE> 75
account which is owned or contemplated for purchase by a Fund for which
the employee has decision-making authority.
2. BLACKOUT PERIODS
SALES. No decision-making employee may sell a security until at least
30 DAYS after the Fund for which the employee has decision-making
authority has completed purchasing such security. Similarly, no
decision-making employee may sell a security until at least 7 DAYS
after the Fund for which the employee has decision-making authority has
completed selling such security.
PURCHASES. No decision-making employee may purchase a security until at
least 15 DAYS after the Fund for which the employee has decision-making
authority has completed purchasing such security. Similarly, no
decision-making employee may purchase a security until at least 30 DAYS
after the Fund for which the employee has decision-making authority has
completed selling such security. There shall be no exceptions to these
prohibitions.
3. OPTIONS. No decision-making employee may purchase a put option or write
a call option where a Fund for which such person has decision-making
responsibilities holds a long position in the underlying security.
4. ESTABLISHING POSITIONS COUNTER TO FUND POSITIONS. No decision-making
employee may establish a long position in a personal account in a
security if a Fund for which he or she is a decision-making employee
holds a put option on such security (aside from a put purchased for
hedging purposes where the fund holds the underlying security), has
written a call option on such security, or otherwise maintains a
position that would benefit from a decrease in the value of the
underlying security (e.g., a short sale other than a short sale
"against-the-box").
5. SHORT SALES. No decision-making employee may short sell any security
where a Fund for which the employee has decision-making authority holds
a long position in the same security or where such Fund otherwise
maintains a position in respect of which the Fund would benefit from an
increase in the value of the security.
6. PURCHASING AN INVESTMENT FOR A FUND THAT IS A PERSONAL HOLDING. A
decision-making employee may not purchase an investment for a Fund that
is also a personal holding of the employee (or a holding controlled by
the employee or a dependent relative or spouse of the employee), or the
value of which is materially linked to a personal holding, unless the
decision-making employee has obtained prior approval from his or her
senior management. The employee's senior management may grant such
approval upon determining that the investment for the Fund is a
suitable investment for that Fund. Senior management will be required
to submit an approval form to the MLAMG Compliance Director.
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7. INDEX FUNDS. The restrictions of this Section 4.B. do not apply to
purchases and sales of securities by decision-making employees which
coincide with trades by any MLAMG index fund, EXCEPT that a
decision-making employee may not write a call or buy a put on the index
that the Fund for which the employee has decision-making authority is
designed to replicate. (JW--do we want managers of index funds to be
able to writing calls on the index that their index funds
replicate--seems counter.)
8. EXCEPTION POLICY. An exception to any of the policies set forth herein
may be granted only upon a showing by the employee to a MLAMG Code of
Ethics Review Committee that such employee would suffer extreme
financial hardship should an exception not be granted.
C. TRADING RESTRICTIONS FOR DISINTERESTED DIRECTORS
The following restrictions apply only to employees who are
disinterested directors (as defined in Section 4.A.):
1. RESTRICTIONS ON PURCHASES. No disinterested director may purchase any
security which to his knowledge at the time is being purchased or is
being considered for purchase by any Fund managed by MLAMG.
2. RESTRICTIONS ON SALES. No disinterested director may sell any security
which to his knowledge at the time is being sold or is being considered
for sale by any Fund managed by MLAMG.
3. RESTRICTIONS ON TRADES IN SECURITIES RELATED IN VALUE. The restrictions
applicable to the transactions in securities by disinterested directors
shall similarly apply to securities whose value or return is related,
in whole or in part, to the value or return of a security purchased or
sold by the Fund (see Section 4.A.5.).
SECTION 5 - EXEMPTED TRANSACTIONS/SECURITIES
MLAMG has determined that the following securities transactions do not
present the opportunity for improper trading activities that Rule 17j-1 is
designed to prevent; therefore, the restrictions set forth in Section 4 of this
Code shall not apply to the following transactions/securities (unless otherwise
noted within the Code of Ethics). THE REPORTING REQUIREMENTS LISTED IN SECTION
6, HOWEVER, SHALL APPLY TO B-F OF THIS SECTION.
A. Purchases or sales effected in any account over which the employee has no
direct or indirect influence or control.
B. Purchases or sales which are non-volitional on the part of either the
employee or a Fund.
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C. Purchases which are made by reinvesting cash dividends pursuant to an
automatic dividend reinvestment plan.
D. Purchases effected upon the exercise of rights issued by an issuer pro rata
to all holders of a class of its securities, to the extent such rights were
acquired from such issuer.
E. Purchases or sales of indexes, option on indexes, indexed products,
futures, options on futures, currencies, futures on currencies and
commodities. (JW, I AM SURE WE WILL WANT TO TIGHTEN THIS UP.)
F. The receipt of a bona fide gift of securities does not require
preclearance. (Donations of securities, however, require preclearance.)
G. Purchases or sales of direct obligations of the U.S. Government.
H. Purchases or sales of open-end investment companies (including money market
funds), variable annuities and unit investment trusts.
A. Purchases or sales of bank certificates, bankers acceptances, commercial
paper and other high quality short-term debt instruments, including
repurchase agreements.
J. Merrill Lynch common stock which is purchased and sold within any Merrill
Lynch employee benefit plan and stock purchased and sold through similar
such employer-sponsored plans in which a spouse of an employee may
participate. Since it is MLAMG's belief that (i) common stock acquired in
employee benefit plans is compensation related and not entirely under the
control of MLAMG and (ii) transactions in such stock acquired through
employee benefit plans are most often based on an employee's view of the
employer's financial condition or the employee's overall exposure to such
stock, rather than information obtained in the course of one's employment
with MLAMG, these transactions have been exempted from the Code of Ethics.
SECTION 6 - REPORTING BY EMPLOYEES
The requirements of this Section 6 apply to all MLAMG employees other
than disinterested Directors and Trustees. The requirements will also apply to
all transactions in the accounts of spouses, dependent relatives and members of
the same household, trustee and custodial accounts or any other account in which
the employee has a financial interest or over which the employee has investment
discretion. The requirements to not apply to securities acquired for accounts
over which the employee has no direct or indirect control or influence.
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All employees whose accounts are maintained at Merrill Lynch are deemed
to have automatically complied with the requirements of this Section 6 B. and C.
as to reporting executed transactions and personal holdings. Transactions and
holdings in such accounts are automatically reported to the MLAMG Compliance
Department through the automated Merrill Lynch Employee Activity Review System.
Employees who have approved accounts outside of Merrill Lynch are
deemed to have complied with the requirements of this Section 6 B. and C.
provided that the MLAMG Compliance Department receives duplicate statements and
confirmations directly from their brokers or dealers.
Employees who effect transactions outside of a brokerage account (i.e.,
a security purchased through an automatic investment program directly with an
issuer) will be deemed to have complied with this requirement by preclearing
transactions with the MLAMG Compliance Department and by reporting their
holdings annually on the "Personal Securities Holdings" form, as required by the
MLAMG Compliance Department. (JW--WE MAY NEED TO GET MORE INFO ON THESE
TRANSACTIONS THAN WE CURRENTLY ASK FOR (SECURITY NAME AND TRANSACTION TYPE)).
A. INITIAL HOLDINGS REPORT. All employees must disclose their personal
securities holdings to the MLAMG Compliance Department within ten (10) days
of commencement of employment with MLAMG. With respect to exempt
transactions/securities referred to in Section 5 which do not require
preclearance/reporting, employees must report the holdings of those exempt
securities defined in Section 5.B.-F. (This reporting requirement does not
apply to holdings that are the result of transactions in exempt securities
as defined in Section 5.A., and G.-I.) Initial holdings reports must
identify the title, number of shares, and principal amount with respect to
each security holding.
B. RECORDS OF SECURITIES TRANSACTIONS. All employees must preclear each
securities transaction (with the exception of exempt transactions in
Section 5) to the MLAMG Compliance Department. At the time of preclearance,
the employee must provide a complete description of the security and the
nature of the transaction. As indicated above, employees whose accounts are
maintained at Merrill Lynch or who provide monthly statements directly from
their brokers/dealers are deemed to have automatically complied with the
requirement to report executed transactions.
C. ANNUAL HOLDINGS REPORT. All employees must submit an annual holdings report
as required by the MLAMG Compliance Department as of a date no more than 30
days before the report is submitted. As indicated above, employees whose
accounts are maintained at Merrill Lynch or who provide monthly statements
directly from their brokers/dealers are deemed to have automatically
complied with this requirement.
With respect to exempt transactions/securities referred to in Section 5
which do not require preclearance/reporting, employees must report the
holdings of those exempt
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<PAGE> 79
securities defined in Section 5.B.-F. This reporting requirement, however,
does not apply to holdings that are the result of transactions in exempt
securities as defined in Section 5.A., and G.-I.)
D. ANNUAL CERTIFICATION OF COMPLIANCE. All MLAMG employees, including
disinterested directors, must certify annually to the MLAMG Compliance
Department that (1) they have read and understand and agree to abide by
this Code of Ethics; (2) they have complied with all requirements of the
Code of Ethics, except as otherwise notified by the MLAMG Compliance
Department that they have no complied with certain of such requirements;
and (3) they have reported all transactions required to be reported under
the Code of Ethics.
E. REVIEW OF TRANSACTIONS AND HOLDINGS REPORTS. All transactions reports and
holdings reports will be reviewed by appropriate management or compliance
personnel according to procedures established by the MLAMG Compliance
Department. Management is required to certify that they have reviewed such
reports.
SECTION 7 - REPORTING BY DISINTERESTED DIRECTORS
A disinterested director of a Fund need only report a transaction in a
security if such director, at the time of that transaction, knew or, in the
ordinary course of fulfilling his official duties as a director of such Fund,
should have known that, during the 15-day period immediately preceding the date
of the transaction by the director, such security was purchased or sold by such
Fund or was being considered for purchase or sale by its investment adviser. In
reporting such transactions, disinterested directors must provide: the date of
the transaction, a complete description of the security, number of shares,
principal amount, nature of the transaction, price, commission, and name of
broker/dealer through which the transaction was effected.
As indicated in Section 6, disinterested directors are required to
certify annually to the MLAMG Compliance Department that (1) they have read and
understand and agree to abide by this Code of Ethics; (2) they have complied
with all requirements of the Code of Ethics, except as otherwise reported to the
MLAMG Compliance Department that they have no complied with certain of such
requirements; and (3) they have reported all transactions required to be
reported under the Code of Ethics.
SECTION 8 - APPROVAL AND REVIEW BY BOARDS OF DIRECTORS
Prior to obtaining the services of the MLAMG Investment Advisers and
Principal Underwriter, the Board of Directors of a MLAMG Fund, including a
majority of directors who are disinterested directors, must approve this Code of
Ethics. Additionally, any material changes to this Code must be approved by the
Board of Directors within six months after adoption of the material change. The
Board of Directors must base their approval of the Code and any material changes
to the Code on a determination that the Code contains provisions reasonably
necessary to prevent employees from engaging in any
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<PAGE> 80
conduct prohibited by Rule 17j-1. Prior to approving the Code or any material
change to the Code, the Board of Directors must receive a certification from the
Fund, the Investment Adviser or Principal Underwriter that it has adopted
procedures reasonably necessary to prevent employees from violating the Code of
Ethics.
SECTION 9 - REVIEW OF MLAMG ANNUAL REPORTS
At least annually, the Fund, the Investment Adviser and the Principal
Underwriter must furnish to the Fund's Board of Directors, and the Board of
Directors must consider, a written report that (1) describes any issues arising
under this 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 of Ethics or procedures and sanctions imposed in response to the
material violations and (2) certifies that the Fund, Investment Adviser and
Principal Underwriter have adopted procedures reasonably necessary to prevent
employees from violating this Code of Ethics.
SECTION 10 - SANCTIONS
Potential violations of the Code of Ethics are brought to the attention
of the MLAMG Compliance Director or his designee and are investigated. Upon
completion of the investigation, if necessary, the matter would be reviewed by
the Code of Ethics Review Committee and the employee's senior management, and a
determination would be made by the Code of Ethics Review Committee as to whether
any sanction should be imposed. Since violations of the Code of Ethics do not
necessarily constitute violations of Rule 17j-1, the sanctions for violations of
the Code of Ethics will vary. Sanctions will include, but are not limited to, a
letter of caution or warning, reversal of a trade, disgorgement of a profit or
absorption of costs associated with a trade, suspension of personal trading
privileges, suspension of employment (with or without compensation), fine, civil
referral to the SEC, criminal referral, and termination of employment for cause.
SECTION 11 - EXCEPTIONS
An exception to any of the policies, restrictions or requirements set forth
herein may be granted only upon a showing by the employee to the MLAMG
Compliance Director that such employee would suffer extreme financial hardship
should an exception not be granted. Should the subject of the exception request
involve a transaction in a security, a change in the employee's investment
objectives or special new investment opportunities would not constitute
acceptable reasons for a waiver.
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<PAGE> 81
CODE OF ETHICS
1. Purposes
This Code of Ethics (the "Code") has been adopted by the Directors of J.P.
Morgan Investment Management Inc. (the "Adviser"), in accordance with Rule
17j-1(c) promulgated under the Investment Company Act of 1940, as amended (the
"Act"). Rule 17j-1 under the Act generally proscribes fraudulent or
manipulative practices with respect to purchases or sales of securities Held or
to be Acquired (defined in Section 2(k) of this Code) by investment companies,
if effected by associated persons of such companies. The purpose of this Code
is to adopt provisions reasonably necessary to prevent Access Persons from
engaging in any unlawful conduct as set forth in Rule 17j-1(b) as follows:
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:
(a) To employ any device, scheme or artifice to defraud the Fund;
(b) 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;
(c) To engage in any act, practice, or course of business that operates
or would operate as a fraud or deceit on the Fund; or
(d) To engage in any manipulative practice with respect to the Fund.
2. Definitions
(a) "Access Person" means any director, officer, general partner or
Advisory Person of the Adviser.
(b) "Administrator" means Morgan Guaranty Trust Company.
(c) "Advisory Person" means (i) any employee of the Adviser or the
Administrator (or any company in a control relationship to the Adviser) who, in
connection with his or her regular functions or duties, makes, participates in,
or obtains information regarding the purchase or sale of securities for a
<PAGE> 82
Fund, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a control
relationship to the Adviser who obtains information concerning recommendations
regarding the purchase or sale of securities by a Fund.
(d) "Beneficial ownership" shall be interpreted in the same manner as it
would be under Exchange Act Rule 16a-1(a)(2)in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder.
(e) "Control" has the same meaning as in Section 2(a)(9) of the Act.
(f) "Covered Security" shall have the meaning set forth in Section
2(a)(36) of the Act, except that it shall not include shares of open-end funds,
direct obligations of the United States Government, bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements.
(g) "Fund" means an Investment Company registered under the Investment
Company Act of 1940.
(h) "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 the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act.
(i) "Limited Offering" means an offering that is exempt from registration
under the Securities Act pursuant to Section 4(2) or Section 4(6) or pursuant
to Rule 504, Rule 505, or Rule 506 under the Securities Act.
(j) "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
(k) "Security Held or to be Acquired" by a Adviser means: (i) any Covered
Security which, within the most recent 15 days, is or has been held by a Fund
or other client of the Adviser or is being or has been considered by the
Adviser for purchase by a Fund or other client of the Adviser; and (ii) any
option to purchase or sell, and any security convertible into or exchangeable
for, a Covered Security described in Section 2(k)(i) of this Code.
3. Statement of Principles
It is understood that the following general fiduciary principles govern
the personal investment activities of Access Persons:
(a) the duty to at all times place the interests of shareholders and other
clients of the Adviser first;
(b) the requirement that all personal securities transactions be conducted
consistent with this Code of Ethics and in such a manner as to avoid any actual
or potential conflict of interest or any abuse of an individual's position of
trust and responsibility;
(c) the fundamental standard that Investment Personnel may not take
inappropriate advantage of their position; and
(d) all personal transactions must be oriented toward investment, not
short-term or speculative trading.
It is further understood that the procedures, reporting and recordkeeping
requirements set forth below are hereby adopted and certified by the Adviser as
reasonably necessary to prevent Access Persons from violating the provisions of
this Code of Ethics.
<PAGE> 83
4. Procedures to be followed regarding Personal Investments by Access Persons
(a) Pre-clearance requirement. Each Access Person must obtain prior
written approval from his or her group head (or designee) and from the
Adviser's trading desk before transacting in any Covered Security based on
certain guidelines set forth from time to time by the Adviser's compliance
Department. For details regarding transactions in mutual funds, see Section
4(e).
(b) Brokerage transaction reporting requirement. Each Access Person
working in the United States must maintain all of his or her accounts and the
accounts of any person of which he or she is deemed to be a beneficial owner
with a broker designated by the Adviser and must direct such broker to provide
broker trade confirmations to the Adviser's legal/compliance department, unless
an exception has been granted by the Adviser's legal/compliance department.
Each Access Person to whom an exception to the designated broker requirement
has been granted must instruct his or her broker to forward all trade confirms
and monthly statements to the Adviser's legal/compliance department. Access
Persons located outside the United States are required to provide details of
each brokerage transaction of which he or she is deemed to be the beneficial
owner, to the Adviser's legal/compliance group, within the customary period for
the confirmation of such trades in that market.
(c) Initial public offerings (new issues). Access Persons are prohibited
from participating in Initial Public Offerings, whether or not J.P. Morgan or
any of its affiliates is an underwriter of the new issue, while the issue is in
syndication.
(d) Minimum investment holding period. Each Access Person is subject to a
60-day minimum holding period for personal transactions in Covered Securities.
An exception to this minimum holding period requirement may be granted in the
case of hardship as determined by the legal/compliance department.
(e) Mutual funds. Each Access Person must pre-clear transactions in shares
of closed-end Funds with the Adviser's trading desk, as they would with any
other Covered Security. See Section 4(a). Each Access Person must obtain
pre-clearance from his or her group head(or designee) before buying or selling
shares in an open-end Fund or a sub-advised Fund managed by the Adviser if such
Access Person or the Access Person's department has had recent dealings or
responsibilities regarding such mutual fund.
(f) Limited offerings. An Access Person may participate in a limited
offering only with written approval of such Access Person's group head (or
designee) and with advance notification to the Adviser's compliance group.
(g) Blackout periods. Advisory Persons are subject to blackout periods 7
calendar days before and after the trade date of a Covered Security where such
Advisory Person makes, participates in, or obtains information regarding the
purchase or sale of such Covered Security for any of their client accounts. In
addition, Access Persons are prohibited from executing a transaction in a
Covered Security during a period in which there is a pending buy or sell order
on the Adviser's trading desk.
(h) Prohibitions. Short sales are generally prohibited. Transactions in
options, rights, warrants, or other short-term securities and in futures
contracts (unless for bona fide hedging) are prohibited, except for purchases
<PAGE> 84
of options on widely traded indices specified by the Adviser's compliance group
if made for investment purposes.
(i) Securities of J.P. Morgan. No Access Person may buy or sell any
security issued by J.P. Morgan from the 27th of each March, June, September,
and December until the first full business day after earnings are released in
the following month. All transactions in securities issued by J.P. Morgan must
be pre-cleared with the Adviser's compliance group and executed through an
approved trading area. Transactions in options and short sales of J.P. Morgan
stock are prohibited.
(j) Certification requirements. In addition to the reporting requirements
detailed in Sections 6 below, each Access Person, no later than 30 days after
becoming an Access Person, must certify to the Adviser's compliance group that
he or she has complied with the broker requirements in Section 4(b).
5. Other Potential Conflicts of Interest
(a) Gifts. No employee of the Adviser or the Administrator may (i)accept
gifts, entertainment, or favors from a client, potential client, supplier, or
potential supplier of goods or services to the Adviser or the Administrator
unless what is given is of nominal value and refusal to accept it would be
discourteous or otherwise harmful to the Adviser or Administrator; (ii)provide
excessive gifts or entertainment to clients or potential clients; and (iii)
offer bribes, kickbacks, or similar inducements.
(b) Outside Business Activities. The prior consent of the Chairman of the
Board of J.P. Morgan, or his or her designee, is required for an officer of the
Adviser or Administrator to engage in any business-related activity outside of
the Adviser or Administrator, whether the activity is intermittent or
continuing, and whether or not compensation is received. For example, such
approval is required such an officer to become:
-An officer, director, or trustee of any corporation (other than a
nonprofit corporation or cooperative corporation owning the building in
which the officer resides);
-A member of a partnership (other than a limited partner in a
partnership established solely for investment purposes);
-An executor, trustee, guardian, or similar fiduciary advisor (other
than for a family member).
6. Reporting Requirements
(a) Every Access Person must report to the Adviser:
(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 Covered 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.
<PAGE> 85
(ii) Quarterly Transaction Reports. No later than 10 days after the
end of a calendar quarter, with respect to any transaction during the
quarter in a Covered Security in which the Access Person had any
direct or indirect Beneficial Ownership: (A) the date of the
transaction, the title, the interest rate and maturity date (if
applicable), the number of shares and principal amount of each
Covered Security involved; (B) the nature of the transaction; (C) the
price of the Covered Security at which the transaction was effected;
(D) the name of the broker, dealer or bank with or through which the
transaction was effected; and (E) the date that the report is
submitted by the Access Person.
(iii) New Account Report. No later than 10 days after the calendar
quarter, with respect to any account established by the Access Person
in which any Covered Securities were held during the quarter for the
direct or indirect benefit of the Access Person: (A) the name of the
broker, dealer or bank with whom the Access Person established the
account; (B) the date the account was established; and (C) the date
that the report is submitted by the Access Person.
(iv) Annual Holdings Report. Annually, the following information
(which information must be current as of a date no more than 30 days
before the report is submitted): (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 Covered 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.
(b) Exceptions from the Reporting Requirements.
(i) Notwithstanding the provisions of Section 6(a), no Access Person
shall be required to make:
A. a report with respect to transactions effected for any
account over which such person does not have any direct or
indirect influence or control;
B. a Quarterly Transaction or New Account Report under
Sections 6(a)(ii) or (iii) if the report would duplicate
information contained in broker trade confirmations or
account statements received by the Adviser with respect to
the Access Person no later than 10 days after the calendar
quarter end, if all of the information required by Sections
6(a)(ii) or (iii), as the case may be, is contained in the
broker trade confirmations or account statements, or in the
records of the Adviser.
(c) Each Access Person shall promptly report any transaction which is, or
might appear to be, in violation of this Code. Such report shall
contain the information required in Quarterly Transaction Reports
filed pursuant to Section 6(a)(ii).
(d) All reports prepared pursuant to this Section 6 shall be filed with
the appropriate compliance personnel designated by the Adviser and
reviewed in accordance with procedures adopted by such personnel.
<PAGE> 86
(e) The Adviser will identify all Access Persons who are required to file
reports pursuant to this Section 6 and will inform them of their
reporting obligation.
(f) The Adviser no less frequently than annually shall furnish to a
Fund's board of directors for their consideration a written report
that:
(a) describes any issues under this Code of Ethics or related
procedures since the last report to the board of directors,
including, but 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 Adviser has adopted procedures
reasonably necessary to prevent Access Persons from
violating this Code of Ethics.
7. Recordkeeping Requirements
The Adviser must at its principal place of business maintain records in
the manner and extent set out in this Section of this Code and must make
available to the Securities and Exchange Commission (SEC) at any time and
from time to time for reasonable, periodic, special or other examination:
(a) A copy of its code of ethics 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
Section 6(a) including any information provided in lieu of a
quarterly transaction report, 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 as Access
Persons or who are or were responsible for reviewing these
reports, must be maintained in an easily accessible place.
(e) A copy of each report required by 6(f) above 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.
(f) A record of any decision and the reasons supporting the decision
to approve the acquisition by Access Persons of securities under
Section 4(f) above, for at least five years after the end of the
fiscal year in which the approval is granted.
8. Sanctions
Upon discovering a violation of this Code, the Directors of the Adviser
may impose such sanctions as they deem appropriate, including, inter alia,
financial penalty, a letter of censure or suspension or termination of the
employment of the violator.
<PAGE> 87
INDEPENDENCE INVESTMENT ASSOCIATES, INC.
AND SUBSIDIARIES
CODE OF ETHICS
Independence Investment Associates, Inc. ("Independence Investment"), together
with its subsidiaries Independence International Associates, Inc. ("Independence
International") and Independence Fixed Income Associates, Inc. ("Independence
Fixed Income") (collectively, "Independence"), is committed to the highest
ethical and professional standards. This Code of Ethics provides guidance to
officers and employees of Independence (collectively referred to as "employees")
when they conduct any personal investment transactions. Employees are expected
to place the interests of clients ahead of their personal interests and to treat
all client accounts in a fair and equitable manner.
Employees are encouraged to raise any questions concerning the Code of Ethics
with Patricia Thompson, Vice President and Compliance Officer (the "Compliance
Officer").
CODE PROVISIONS
1. BAN ON TRANSACTIONS IN SECURITIES OF COMPANIES ON THE WORKING LISTS AND
BAN ON TRANSACTIONS IN CORPORATE FIXED INCOME SECURITIES
No employee of Independence or "family member"(1) of such an employee may trade
in: (i) securities of companies on the Independence Investment domestic equity
and real estate working lists (collectively, "the Domestic Working Lists"), or
any securities or derivatives that derive their value principally from the value
of securities of companies on the Domestic Working Lists; (ii) securities of
companies on the Independence International international and Canadian working
lists (collectively, the "International Working Lists"), or any securities or
derivatives that derive their value principally from the value of securities of
companies on the International Working Lists; or (iii) any corporate fixed
income securities, domestic or international, or any securities or derivatives
that derive their value principally from any corporate fixed income securities.
Copies of the Domestic and International Working Lists are available from the
Compliance Office. Exemptions may be requested by contacting the Compliance
Office in writing. Exemptions may be granted for securities held at the time of
employment, held at the time of an employee becoming subject to one of the above
restrictions, held prior to a security being placed on a Working List or for
other compelling reasons. The securities referenced in footnote 2 below are
excluded from the bans contained in this section.
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(1) For the purposes of this Code, the term "family member" means an employee's
"significant other", spouse or other relative, whether related by blood,
marriage or otherwise, who either (i) shares the same home, or (ii) is
financially dependent upon the employee, or (iii) whose investments are
controlled by the employee. The term also includes any unrelated individual for
whom an employee controls investments and materially contributes to the
individual's financial support.
<PAGE> 88
2. PRE-CLEARANCE
Independence requires that all permitted personal trades for employees and their
"family members", as defined in this Code, be pre-cleared. This requirement for
pre-clearance approval applies to all transactions in debt and equity
securities(2) and derivatives which are not otherwise banned pursuant to this
Code and includes private placements (including 144A's) whether described in
footnote 2 below or not, in order to avoid any perception of favored treatment
from other industry personnel or companies. Transactions in publicly-registered,
tax-exempt, domestic debt securities (municipal bonds) are excluded from this
pre-clearance requirement. A request for pre-clearance should be submitted in
writing to the Compliance Office using the electronic pre-clearance system or a
written equivalent and should contain:
a) The employee's name and name of individual trading, if
different,
b) Name of security and ticker symbol, if publicly traded,
c) CUSIP number, if publicly traded,
d) Whether sale or purchase,
e) If sale, date of purchase,
f) If a private placement, the seller and/or the broker and
whether or not the seller and/or the broker is one with whom
the associate does business on a regular basis,
g) The date of the request,
h) The type of security and the appropriate trading room(s) for
pre-clear,
i) A statement that the employee has checked with the appropriate
trading room(s) and that no trades of the security have been
placed for client accounts and remain open, and
j) The initialed approval of the appropriate trading room(s).
At present, there are five trading rooms: the Independence Investment domestic
equity trading room, the Independence International international trading room,
the Independence Investment corporate fixed income trading room, the
Independence Investment global fixed income trading room and the Independence
Fixed Income trading room in McLean, Virginia. Clearance of private placements
or other transactions may be denied if the transaction would raise issues
regarding the appearance of impropriety. A sample form for pre-clearance is
attached. Please note that approval is effective only for the date granted.
----------
(2) Excludes (i) direct obligations of the Government of the United States; (ii)
bankers' acceptances, bank certificates of deposit, commercial paper and high
quality (one of the two highest rating categories by a Nationally Recognized
Statistical Rating Organization) short-term debt instruments (maturity at
issuance of less than 366 days), including repurchase agreements; and (iii)
shares issued by registered open-end investment companies (mutual funds).
<PAGE> 89
3. NO PURCHASES OF INITIAL PUBLIC OFFERINGS (IPOS)
In addition to the bans contained in Section 1, no employee or "family member"
may purchase any newly issued publicly-offered securities until the next
business (trading) day after the offering date and after receipt of
pre-clearance approval. No purchase should be at other than the market price
prevailing on, or subsequent to, such business day.
See also the prohibition on such purchases contained in a separate Independence
policy, the Company Conflict and Business Practice Policy.
4. DEALING WITH BROKERS AND VENDORS
Independence employees should consult the Company Conflict and Business Practice
Policy regarding business dealings with brokers and vendors. Certain activities
may require the approval of the President of Independence and the General
Counsel of John Hancock Life Insurance Company. Employees are reminded that any
dealings with and/or potential expenditures involving public officials are
further limited by Section X of the Company Conflict and Business Practice
Policy.
5. SERVICE AS DIRECTOR
Employees should refer to the Company Conflict and Business Practice Policy
regarding service on boards of publicly traded companies as well as service on
certain privately held company, non-profit or association boards.
6. ACCESS PERSONS: INITIAL AND ANNUAL DISCLOSURES OF PERSONAL HOLDINGS
For purposes of Rule 17j-1 under the Investment Company Act of 1940,
Independence has decided to treat all directors, officers and employees of
Independence as though they were "access persons." Therefore, all directors,
officers and employees of Independence, within 10 days after becoming an "access
person" and annually thereafter, must disclose all securities in which they have
any direct or indirect beneficial ownership, and the name of any broker, dealer
or bank with whom the individual maintained an account in which any securities
were held for the direct or indirect benefit of the individual. Any securities
referenced in footnote 2, above, are exempted from this disclosure, as are any
accounts over which the "access person" has no direct or indirect influence or
control. Both "initial" and "annual" reports furnished under this section must
contain the information required by Rule 17j-1(d)(1).
<PAGE> 90
7. QUARTERLY REPORTS
Independence requires all directors, officers and employees to file Individual
Securities Transactions Reports ("Quarterlies") by the 10th day of the month
following the close of a quarter. These are required of directors, officers and
certain employees by Rule 204-2(a)(12) under the Investment Advisers Act of 1940
and by Rule 17j-1(d)(1) under the Investment Company Act of 1940 and must
contain all of the information required by those rules. All securities
transactions in which the individual has any direct or indirect beneficial
ownership must be disclosed except for (i) transactions effected in any account
over which the individual has no direct or indirect influence or control; and
(ii) transactions in the securities referenced in footnote 2 above. The format
for these reports has changed and each individual should carefully review the
information requested and be sure that all required information has been
disclosed.
8. INSIDE INFORMATION POLICY AND PROCEDURES
Please refer to a separate Independence policy, the Company Inside Information
Policy and Procedures. In addition to the reporting requirements under this Code
of Ethics, employees are subject to certain reporting obligations under the
Company Inside Information Policy and Procedures. These include reporting
accounts over which the employee has investment discretion and a requirement
that notice of each transaction in such an account be sent to the Compliance
Officer within 10 days of a transaction.
The Standards of Practice Handbook (AIMR 1999), noted below, contains a useful
discussion on the prohibition against the use of material, non-public
information.
9. CONFLICT OF INTEREST AND BUSINESS PRACTICE POLICY
As required by its parent company, Independence has adopted the Company Conflict
and Business Practice Policy which is distributed annually to each employee for
review and certification of compliance. The provisions of the Company Conflict
and Business Practice Policy, therefore, are not incorporated within this Code
of Ethics.
10. ANNUAL REPORT TO THE BOARD
Independence will be required to report annually to its Board of Directors that
all employees have received a copy of this Code of Ethics and have certified
their compliance.
Independence will summarize for the Board existing procedures and any changes
made during the past year or recommended to be made, and will identify to the
Board, and may identify to the Board of Directors of any registered investment
company advised by Independence, any violations requiring significant remedial
action during the past year.
<PAGE> 91
11. ASSOCIATION FOR INVESTMENT MANAGEMENT AND RESEARCH ("AIMR")
STANDARDS OF PRACTICE HANDBOOK (9TH ED. 1999)
At Independence, some employees have earned the Chartered Financial Analyst
designation ("CFA(R)") and are subject to the Code of Ethics and Standards of
Professional Conduct contained in the AIMR Standards of Practice Handbook.
Employees are reminded that the Handbook is an excellent resource for
information on professional conduct. Copies are available from the Compliance
Officer.
12. CODE OF ETHICS ENFORCEMENT
Employees are required annually to certify their compliance with this Code of
Ethics. The Compliance Officer may grant exemptions/exceptions to the
requirements of the Code on a case by case basis if the proposed conduct appears
to involve no opportunity for abuse. All exceptions/exemptions shall be in
writing and copies shall be maintained with a copy of the Code. A record shall
be maintained of any decision to grant pre-clearance to a private placement
transaction, or to grant an exemption to the ban on purchases of IPO's, together
with the reasons supporting the decision. The Compliance Office will conduct
post-trade monitoring and other audit procedures reasonably designed to assure
compliance with the Code of Ethics. Employees are advised that the Code's
procedures will be monitored and enforced, with potential sanctions for
violations including a written warning, disgorgement of profits, fines,
suspension, termination and, where required, reports to the AIMR or the
appropriate regulatory authority. Copies of all reports filed, records of
violations and copies of letters or other records of sanctions imposed will be
maintained in a compliance file. Significant violations of the Code may be
referred by the Compliance Officer to the Independence Board of Directors for
review and/or appropriate action.
Adopted by the Independence Board of Directors on November 21, 1994. Amended and
restated on February 27, 1996. Amended and restated as of January 15, 1997.
Amended and restated as of May 12, 1998. Amended and restated as of February 28,
2000.
<PAGE> 92
GOLDMAN SACHS ASSET MANAGEMENT
GOLDMAN SACHS FUNDS MANAGEMENT, L.P.
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
CODE OF ETHICS
Effective January 23, 1991
(as revised April 1, 2000)
I. DEFINITIONS
A. "Access Person" with respect to Goldman Sachs Asset Management
("GSAM") means (because GSAM is a unit within the Investment
Management Division, a separate operating division, of
Goldman, Sachs & Co., and Goldman, Sach & Co. is primarily
engaged in a business other than advising registered
investment companies or other advisory clients) only those
officers, general partners or Advisory Persons (as defined
below) of GSAM who, with respect to any Investment Company (as
defined below), make recommendations or participate in the
determination of which recommendation shall be made to any
Investment Company, or whose principal function or duties
relate to the determination of which recommendation shall be
made to any Investment Company, or who, in connection with
their duties, obtain any information concerning such
recommendations on Covered Securities (as defined below) which
are being made to the Investment Company. "Access Person" with
respect to Goldman Sachs Asset Management International
("GSAMI") and Goldman Sachs Funds Management, L.P. ("GSFM")
means any director, officer, general partner or Advisory
Person of GSAMI or GSFM, as the case may be.
B. "Adviser" means each of GSAM, GSAMI and GSFM.
C. "Advisory Person" means (i) any officer or employee of the
Adviser or any company in a control relationship to the
Adviser who, in connection with his or her regular functions
or duties, makes, participates in or obtains information
regarding the purchase or sale of a Covered Security by an
Investment Company, or whose functions relate to the making of
any recommendations with respect to such purchases or sales;
and (ii) any natural person in a control relationship to the
Adviser who obtains information concerning the recommendations
made to an Investment Company with regard to the purchase or
sale of a Covered Security.
D. "Beneficial ownership" of a security shall be interpreted in
the same manner as it would be under Rule 16a-1 (a) (2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"),
in determining whether a person is the beneficial
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owner of a security for purposes of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.
E. "Board of Trustees" means the board of trustees or directors,
including a majority of the disinterested trustees/directors,
of any Investment Company for which an Adviser serves as an
investment adviser, sub-adviser or principal underwriter.
F. "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Investment Company Act of 1940, as
amended (the "Investment Company Act"). Section 2(a)(9)
generally provides that "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 such company.
G. "Covered Security" means a security as defined in Section 2(a)
(36) of the Investment Company Act, except that it does not
include: (i) direct obligations of the Government of the
United States; (ii) banker's acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt
instruments (any instrument having a maturity at issuance of
less than 366 days and that is in one of the two highest
rating categories of a nationally recognized statistical
rating organization), including repurchase agreements; and
(iii) shares of registered open-end investment companies.
H. "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
the reporting requirements of Sections 13 or 15(d) of the
Exchange Act.
I. "Investment Company" means a company registered as such under
the Investment Company Act, or any series thereof, for which
the Adviser is the investment adviser, sub-adviser or
principal underwriter.
J. "Investment Personnel" of the Adviser means (i) any employee
of the Adviser (or of any company in a control relationship to
the 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 an Investment Company or (ii) any natural person who
controls the Adviser and who obtains information concerning
recommendations made to an Investment Company regarding the
purchase or sale of securities by an Investment Company.
K. 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) or pursuant to Rule 504, Rule 505
or Rule 506 under the Securities Act of 1933.
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L. "Purchase or sale of Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered
Security or any security that is exchangeable for or
convertible into another security.
M. "Review Officer" means the officer of the Adviser designated
from time to time by the Adviser to receive and review reports
of purchases and sales by Access Persons. The term
"Alternative Review Officer" shall mean the officer of the
Adviser designated from time to time by the Adviser to receive
and review reports of purchases and sales by the Review
Officer, and who shall act in all respects in the manner
prescribed herein for the Review Officer. It is recognized
that a different Review Officer and Alternative Review Officer
may be designated with respect to each Adviser.
N. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation. With respect to an analyst of the
Adviser, the foregoing period shall commence on the day that
he or she decides to recommend the purchase or sale of the
security to the Adviser for an Investment Company.
O. A security is "held or to be acquired" if within the most
recent 15 days it (1) is or has been held by the Investment
Company, or (2) is being or has been considered by the Adviser
for purchase by the Investment Company.
II. LEGAL REQUIREMENTS
Section 17(j) of the Investment Company Act provides, among other
things, that it is unlawful for any affiliated person of the Adviser to engage
in any act, practice or course of business in connection with the purchase or
sale, directly or indirectly, by such affiliated person of any security held or
to be acquired by an Investment Company in contravention of such rules and
regulations as the Securities and Exchange Commission (the "Commission") may
adopt to define and prescribe means reasonably necessary to prevent such acts,
practices or courses of business as are fraudulent, deceptive or manipulative.
Pursuant to Section 17(j), the Commission has adopted Rule 17j-1 which provides,
among other things, that it is unlawful for any affiliated person of the Adviser
in connection with the purchase or sale, directly or indirectly, by such person
of a Covered Security held or to be acquired by an Investment Company:
(1) To employ any device, scheme or artifice to defraud
such Investment Company;
(2) To make any untrue statement of a material fact to
such Investment Company or omit to state a material
fact necessary in order to make the statements made
to such Investment Company, in light of the
circumstances under which they are made, not
misleading;
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(3) To engage in any act, practice, or course of business
that operates or would operate as a fraud or deceit
upon any such Investment Company; or
(4) To engage in any manipulative practice with respect
to such Investment Company.
III. STATEMENT OF POLICY
It is the policy of the Adviser that no Access Person shall engage in
any act, practice or course of conduct that would violate the provisions of Rule
17j-1. The fundamental position of the Adviser is, and has been, that each
Access Person shall place at all times the interests of each Investment Company
and its shareholders first in conducting personal securities transactions.
Accordingly, private securities transactions by Access Persons of the Adviser
must be conducted in a manner consistent with this Code and so as to avoid any
actual or potential conflict of interest or any abuse of an Access Person's
position of trust and responsibility. Further, Access Persons should not take
inappropriate advantage of their positions with, or relationship to, any
Investment Company, the Adviser or any affiliated company.
Without limiting in any manner the fiduciary duty owed by Access
Persons to the Investment Companies or the provisions of this Code, it should be
noted that the Adviser and the Investment Companies consider it proper that
purchases and sales be made by Access Persons in the marketplace of securities
owned by the Investment Companies; provided, however, that such securities
transactions comply with the spirit of, and the specific restrictions and
limitations set forth in, this Code. Such personal securities transactions
should also be made in amounts consistent with the normal investment practice of
the person involved and with an investment, rather than a trading, outlook. Not
only does this policy encourage investment freedom and result in investment
experience, but it also fosters a continuing personal interest in such
investments by those responsible for the continuous supervision of the
Investment Companies' portfolios. It is also evidence of confidence in the
investments made. In making personal investment decisions with respect to any
security, however, extreme care must be exercised by Access Persons to ensure
that the prohibitions of this Code are not violated. Further, personal investing
by an Access Person should be conducted in such a manner so as to eliminate the
possibility that the Access Person's time and attention is being devoted to his
or her personal investments at the expense of time and attention that should be
devoted to management of an Investment Company's portfolio. It bears emphasis
that technical compliance with the procedures, prohibitions and limitations of
this Code will not automatically insulate from scrutiny personal securities
transactions which show a pattern of abuse by an Access Person of his or her
fiduciary duty to any Investment Company.
IV. EXEMPTED TRANSACTIONS
The Statement of Policy set forth above shall be deemed not to be
violated by and the prohibitions of Section V of this Code shall not apply to:
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A. Purchases or sales of securities effected for, or held in, any
account over which the Access Person has no direct or indirect
influence or control;
B. Purchases or sales of securities which are not eligible for
purchase or sale by an Investment Company;
C. Purchases or sales of securities which are non-volitional on
the part of either the Access Person or an Investment Company;
D. Purchases or sales of securities which are part of an
automatic dividend reinvestment, cash purchase or withdrawal
plan provided that no adjustment is made by the Access Person
to the rate at which securities are purchased or sold, as the
case may be, under such a plan during any period in which the
security is being considered for purchase or sale by an
Investment Company;
E. Purchases of securities effected upon the exercise of rights
issued by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired;
F. Tenders of securities pursuant to tender offers which are
expressly conditioned on the tender offer's acquisition of all
of the securities of the same class;
G. Purchases or sales of publicly-traded shares of companies that
have a market capitalization in excess of $10 billion; and
H. Other purchases or sales which, due to factors determined by
the Adviser, only remotely potentially impact the interests of
an Investment Company because the securities transaction
involves a small number of shares of an issuer with a large
market capitalization and high average daily trading volume or
would otherwise be very unlikely to affect a highly
institutional market.
V. PROHIBITED PURCHASES AND SALES
A. While the scope of actions which may violate the Statement of
Policy set forth above cannot be exactly defined, such actions
would always include at least the following prohibited
activities:
(1) No Access Person shall purchase or sell, directly or
indirectly, any Covered 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 the Covered Security:
(i) is being considered for purchase or sale by
an Investment Company; or
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(ii) is being purchased or sold by an Investment
Company.
(2) No Access Person shall reveal to any other person
(except in the normal course of his or her duties on
behalf of an Investment Company) any information
regarding securities transactions by an Investment
Company or consideration by an Investment Company or
the Adviser of any such securities transaction.
(3) No Access Person shall engage in, or permit anyone
within his or her control to engage in, any act,
practice or course of conduct which would operate as
a fraud or deceit upon, or constitute a manipulative
practice with respect to, an Investment Company or an
issuer of a any security owned by an Investment
Company.
(4) No Access Person shall enter an order for the
purchase or sale of a Covered Security which an
Investment Company is purchasing or selling or
considering for purchase or sale until the later of
(1) the day after the Investment Company's
transaction in that Covered Security is completed or
(2) after the Investment Company is no longer
considering the security for purchase or sale, unless
the Review Officer determines that it is clear that,
in view of the nature of the Covered Security and the
market for such Covered Security, the order of the
Access Person will not adversely affect the price
paid or received by the Investment Company. Any
securities transactions by an Access Person in
violation of this Subsection D must be unwound, if
possible, and the profits, if any, will be subject to
disgorgement based on the assessment of the
appropriate remedy as determined by the Adviser.
(5) No Access Person shall, in the absence of prior
approval by the Review Officer, sell any Covered
Security that was purchased, or purchase a Covered
Security that was sold, within the prior 30 calendar
days (measured on a last-in first-out basis).
B. In addition to the foregoing, the following provision will
apply to Investment Personnel of the Adviser:
(1) Investment Personnel must, as a regulatory
requirement and as a requirement of this Code, obtain
prior approval before directly or indirectly
acquiring beneficial ownership in any securities in
an Initial Public Offering or in a Limited Offering.
In addition, Investment Personnel must comply with
any additional restrictions or prohibitions that may
be adopted by the Adviser from time to time.
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(2) No Investment Personnel shall accept any gift or
personal benefit valued in excess of such de minimis
amount established by the Adviser from time to time
in its discretion (currently this amount is $100
annually) from any single person or entity that does
business with or on behalf of an Investment Company.
Gifts of a de minimis value (currently these gifts
are limited to gifts whose reasonable value is no
more than $100 annually from any single person or
entity), and customary business lunches, dinners and
entertainment at which both the Investment Personnel
and the giver are present, and promotional items of
de minimis value may be accepted. Any solicitation of
gifts or gratuities is unprofessional and is strictly
prohibited.
(3) No Investment Personnel shall serve on the board of
directors of any publicly traded company, absent
prior written authorization and determination by the
Review Officer that the board service would be
consistent with the interests of the Investment
Companies and their shareholders. Such interested
Investment Personnel may not participate in the
decision for any Investment Company to purchase and
sell securities of such company.
VI. BROKERAGE ACCOUNTS
Access Persons are required to direct their brokers to supply for the
Review Officer on a timely basis duplicate copies of confirmations of all
securities transactions in which the Access Person has a beneficial ownership
interest and related periodic statements, whether or not one of the exemptions
listed in Section IV applies. If an Access Person is unable to arrange for
duplicate copies of confirmations and periodic account statements to be sent to
the Review Officer, he or she must immediately notify the Review Officer.
VII. PRECLEARANCE PROCEDURE
With such exceptions and conditions as the Adviser deems to be
appropriate from time to time and consistent with the purposes of this Code (for
example, exceptions based on an issuer's market capitalization, the amount of
public trading activity in a security, the size of a particular transaction or
other factors), prior to effecting any securities transactions in which an
Access Person has a beneficial ownership interest, the Access Person must
receive approval by the Adviser. Any approval is valid only for such number of
day(s) as may be determined from time to time by the Adviser. If an Access
Person is unable to effect the securities transaction during such period, he or
she must re-obtain approval prior to effecting the securities transaction.
The Adviser will decide whether to approve a personal securities
transaction for an Access Person after considering the specific restrictions and
limitations set forth in, and the spirit of, this Code of Ethics, including
whether the security at issue is being considered for purchase or sale for an
Investment Company. The Adviser is not required to give any explanation for
refusing to approve a securities transaction.
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VIII. REPORTING
A. Every Access Person shall report to the Review Officer the
information (1) described in Section VIII-C of this Code with
respect to transactions in any Covered Security in which such
Access Person has, or by reason of such transaction acquires
or disposes of, any direct or indirect beneficial ownership in
the Covered Security or (2) described in Sections VIII-D or
VIII-E of this Code with respect to securities holdings
beneficially owned by the Access Person.
B. Notwithstanding Section VIII-A of this Code, an Access Person
need not make a report where the report would duplicate
information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) under the Investment Advisers Act of 1940 or if
the report would duplicate information contained in broker
trade confirmations or account statements received by the
Review Officer and all of the information required by Section
VIII-C, D or E is contained in such confirmations or account
statements. The quarterly transaction reports required under
Section VIII-A(1) shall be deemed made with respect to (1) any
account where the Access Person has made provisions for
transmittal of all daily trading information regarding the
account to be delivered to the designated Review Officer for
his or her review or (2) any account maintained with the
Adviser or an affiliate. With respect to Investment Companies
for which the Adviser does not act as investment adviser or
sub-adviser, reports required to be furnished by officers and
trustees of such Investment Companies who are Access Persons
of the Adviser must be made under Section VIII-C of this Code
and furnished to the designated review officer of the relevant
investment adviser.
C. Quarterly Transaction Reports. Unless quarterly transaction
reports are deemed to have been made under Section VIII-B of
this Code, every quarterly transaction report shall be made
not later than 10 days after the end of the calendar quarter
in which the transaction to which the report relates was
effected, and shall contain the following information:
(1) The date of the transaction, the title, the interest
rate and maturity date (if applicable), class and 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 whom the transaction was effected;
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(5) The date that the report was submitted by the Access
Person; and
(6) With respect to any account established by an 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 was submitted by
the Access Person.
D. Initial Holdings Reports. No later than 10 days after becoming
an Access Person, each Access Person must submit a report
containing the following information:
(1) 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;
(2) 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
(3) The date that the report is submitted by the
Access Person.
E. Annual Holdings Reports. Between January 1st and January 30th
of each calendar year, every Access Person shall submit the
following information (which information must be current as of
a date no more than 30 days before the report is submitted):
(1) The title, number of shares and principal
amount of each Covered Security in which the
Access Person had any direct or indirect
beneficial ownership;
(2) The name of any broker, dealer or bank with
whom the Access Person maintains an account
in which any Covered 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.
F. If no transactions in any securities required to be reported
under Section VIII-A(1) were effected during a quarterly
period by an Access Person, such Access Person
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shall report to the Review Officer not later than 10 days
after the end of such quarterly period stating that no
reportable securities transactions were effected.
G. These reporting requirements shall apply whether or not one of
the exemptions listed in Section IV applies except that an
Access Person shall not be required to make a report with
respect to securities transactions effected for, and any
Covered Securities held in, any account over which such Access
Person does not have any direct or indirect influence or
control.
H. Any such report may contain a statement that the report shall
not be construed as an admission by the person making such
report that (1) he or she has or had any direct or indirect
beneficial ownership in the Covered Security to which the
report relates (a "Subject Security") or (2) he or she knew or
should have known that the Subject Security was being
purchased or sold, or considered for purchase or sale, by an
Investment Company on the same day.
IX. APPROVAL OF CODE OF ETHICS AND AMENDMENTS TO THE CODE OF
ETHICS
The Board of Trustees of each Investment Company shall approve this
Code of Ethics. Any material amendments to this Code of Ethics must be approved
by the Board of Trustees of each Investment Company no later than six months
after the adoption of the material change. Before their approval of this Code of
Ethics and any material amendments hereto, the Adviser shall provide a
certification to the Board of Trustees of each such Investment Company that the
Adviser has adopted procedures reasonably necessary to prevent Access Persons
from violating the Code of Ethics.
X. ANNUAL CERTIFICATION OF COMPLIANCE
Each Access Person shall certify to the Review Officer annually on the
form annexed hereto as Form A that he or she (A) has read and understands this
Code of Ethics and any procedures that are adopted by the Adviser relating to
this Code, and recognizes that he or she is subject thereto; (B) has complied
with the requirements of this Code of Ethics and such procedures; (C) has
disclosed or reported all personal securities transactions and beneficial
holdings in Covered Securities required to be disclosed or reported pursuant to
the requirements of this Code of Ethics and any related procedures.
XI. CONFIDENTIALITY
All reports of securities transactions, holding reports and any other
information filed with the Adviser pursuant to this Code shall be treated as
confidential, except that reports of securities transactions and holdings
reports hereunder will be made available to the Investment Companies and to the
Commission or any other regulatory or self-regulatory organization to the extent
required by law or regulation or to the extent the Adviser considers necessary
or advisable in cooperating with an investigation or inquiry by the Commission
or any other regulatory or self-regulatory organization.
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XII. REVIEW OF REPORTS
A. The Review Officer shall be responsible for the review of the
quarterly transaction reports required under VIII-C and
VIII-F, and the initial and annual holdings reports required
under Sections VIII-D and VIII-E, respectively, of this Code
of Ethics. In connection with the review of these reports, the
Review Officer or the Alternative Review Officer shall take
appropriate measures to determine whether each reporting
person has complied with the provisions of this Code of Ethics
and any related procedures adopted by the Adviser.
B. On an annual basis, the Review Officer shall prepare for the
Board of Trustees of each Investment Company and the Board of
Trustees of each Investment Company shall consider:
(1) A report on the level of compliance during the previous
year by all Access Persons with this Code and any related
procedures adopted by the Adviser, including without
limitation the percentage of reports timely filed and the
number and nature of all material violations and sanctions
imposed in response to material violations. An Alternative
Review Officer shall prepare reports with respect to
compliance by the Review Officer;
(2) A report identifying any recommended changes to existing
restrictions or procedures based upon the Adviser's experience
under this Code, evolving industry practices and developments
in applicable laws or regulations; and
(3) A report certifying to the Board of Trustees that the
Adviser has adopted procedures that are reasonably necessary
to prevent Access Persons from violating this Code of Ethics.
XIII. SANCTIONS
Upon discovering a violation of this Code, the Adviser may impose such
sanction(s) as it deems appropriate, including, among other things, a letter of
censure, suspension or termination of the employment of the violator and/or
restitution to the affected Investment Company of an amount equal to the
advantage that the offending person gained by reason of such violation. In
addition, as part of any sanction, the Adviser may require the Access Person or
other individual involved to reverse the trade(s) at issue and forfeit any
profit or absorb any loss from the trade. It is noted that violations of this
Code may also result in criminal prosecution or civil action. All material
violations of this Code and any sanctions imposed with respect thereto shall be
reported periodically to the Board of Trustees of the Investment Company with
respect to whose securities the violation occurred.
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XIV. INTERPRETATION OF PROVISIONS
The Adviser may from time to time adopt such interpretations of this
Code as it deems appropriate.
XV. IDENTIFICATION OF ACCESS PERSONS AND INVESTMENT PERSONNEL
The Adviser shall identify all persons who are considered to be Access
Persons and Investment Personnel, and shall inform such persons of their
respective duties and provide them with copies of this Code and any related
procedures adopted by the Adviser.
XVI. EXCEPTIONS TO THE CODE
Although exceptions to the Code will rarely, if ever, be granted, a
designated Officer of the Adviser, after consultation with the Review Officer,
may make exceptions on a case by case basis, from any of the provisions of this
Code upon a determination that the conduct at issue involves a negligible
opportunity for abuse or otherwise merits an exception from the Code. All such
exceptions must be received in writing by the person requesting the exception
before becoming effective. The Review Officer shall report any exception to the
Board of Trustees of the Investment Company with respect to which the exception
applies at its next regularly scheduled Board meetings.
XVII. RECORDS
The Adviser shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the conditions
described in Rule 31a-2(f)(1) and Rule 17j-1 under the Investment Company Act
and shall be available for examination by representatives of the Commission.
A. A copy of this Code and any other code which is, or at any
time within the past five years has been, in effect shall be
preserved for a period of not less than five years in an
easily accessible place;
B. A record of any violation of this Code and of any action taken
as a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
C. A copy of each initial holdings report, annual holdings report
and quarterly transaction report made by an Access Person
pursuant to this Code (including any brokerage confirmation or
account statements provided in lieu of the reports) shall be
preserved for a period of not less than five years from the
end of the fiscal year in which it is made, the first two
years in an easily accessible place;
D. A list of all persons who are, or within the past five years
have been, required to make initial holdings, annual holdings
or quarterly transaction reports pursuant to this Code shall
be maintained in an easily accessible place;
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E. A list of all persons, currently or within the past five years
who are or were responsible for reviewing initial holdings,
annual holdings or quarterly transaction reports shall be
maintained in an easily accessible place;
F. A record of any decision and the reason supporting the
decision to approve the acquisition by Investment Personnel of
Initial Public Offerings and Limited Offerings shall be
maintained for at least five years after the end of the fiscal
year in which the approval is granted; and
G. A copy of each report required by Section XII-B of this Code
must be maintained for at least five years after the end of
the fiscal year in which it was made, the first two years in
an easily accessible plan.
XVIII. SUPPLEMENTAL COMPLIANCE AND REVIEW PROCEDURES
The Adviser may establish, in its discretion, supplemented compliance
and review procedures (the "Procedures") that are in addition to those set forth
in this Code in order to provide additional assurance that the purposes of this
Code are fulfilled and/or assist the Adviser in the administration of this Code.
The Procedures may be more, but shall not be less, restrictive than the
provisions of this Code. The Procedures, and any amendments thereto, do not
require the approval of the Board of Trustees of an Investment Company.
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BRANDYWINE
ASSET
MANAGEMENT,
INC.
CODE OF ETHICS
Dated: May 1, 2000
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<PAGE> 106
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Topic Page
----- ----
<S> <C>
I. Introduction 1
A. Individuals and Entities Covered by the Code 1
B. Fiduciary Duty 1
1. The Client Come First 1
2. Avoid Taking Advantage 1
3. Comply with the Code 1
II. Personal Securities Transactions 2
A. Preclearance Requirements for Access Persons 2
1. General Requirement 2
2. Trade Authorization Request Forms 2
3. Length of Trade Authorization Approval 2
4. No Explanation Required for Refusals 2
B. Prohibited Transactions 3
1. Always Prohibited Securities Transactions 3
a. Inside Information 3
b. Market Manipulation 3
c. Others 3
2. Generally Prohibited Securities Transactions 3
a. Initial Public Offerings
(Investment Personnel only) 3
b. One Day Blackout
(all Access Persons) 3
c. Seven-Day Blackout
(Portfolio Managers only) 3
d. 60-Day Blackout (Investment
Personnel only) 4
e. Private Placements (Investment
Personnel only) 4
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<TABLE>
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C. Exemptions 4
1. Exemptions from Preclearance and Treatment as
a. Mutual Funds 5
b. No Knowledge 5
c. Legg Mason, Inc. Stock 5
d. Certain Corporate Actions 5
e. Systematic Investment Plans 5
f. Option-Related Activity 5
g. Commodities, Futures, and Options on Futures 5
h. Rights 6
i. Miscellaneous 6
2. Exemption from Treatment as a Prohibited Transaction 6
a. Options on Broad-Based Indices 6
E. Reporting Requirements 6
1. Initial and Periodic Disclosure of Personal Holdings by Access
Persons 6
2. Transaction and Periodic Statement Reporting Requirements 6
3. Disclaimers 7
4. Availability of Reports 7
III. Fiduciary Duties 7
A. Confidentiality 7
B. Gifts 8
1. Accepting Gifts 8
2. Solicitation of Gifts 8
3. Giving Gifts 8
C. Corporate Opportunities 8
D. Undue Influence 8
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<TABLE>
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<S> <C>
E. Service as a Director 9
IV. Compliance with the Code of Ethics 9
A. Compliance Committee 9
1. Membership, Voting and Quorum 9
2. Investigating Violations of the Code 9
3. Annual Reports 9
B. Remedies 10
1. Sanctions 10
2. Sole Authority 10
3. Review 10
C. Exceptions to the Code 10
D. Inquiries Regarding the Code 11
V. Definitions 11
"Access Person" 11
"Beneficial Interest" 11
"Brandywine" 12
"Client Account and/or Client 12
"Code" 12
"Compliance Committee 12
"Equivalent Security" 12
"Immediate Family" 13
"Investment Personnel" and "Investment Person" 13
"Legal and Compliance Department" 13
"Portfolio Manager" 13
"Securities Transaction" 13
"Security" 13
VI. Appendices to the Code 14
Appendix 1 - Legal and Compliance Department Contacts and Compliance
Committee Roster i
Appendix 2 - Acknowledgement of Receipt of Code of Ethics, Personal
Holdings Report and Report of Directorships and Other
Positions ii
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<TABLE>
<CAPTION>
<S> <C>
Appendix 3 - Form Letter to Broker, Dealer or Bank v
Appendix 4 - Certification of No Beneficial Interest vi
Appendix 5 - New Account(s) Report vii
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<PAGE> 110
I. INTRODUCTION
A. Individuals and Entities Covered by the Code. Unless the use of another
Code of Ethics has been approved in writing by the Legal and Compliance
Department, all Access Persons(1) are subject to the provisions of this Code.
B. Fiduciary Duty. The Code is based on the principle that Access Persons
owe a fiduciary duty to Brandywine's Clients and must avoid activities,
interests and relationships that might interfere with making decisions in the
best interests of Brandywine's Clients.
As fiduciaries, Access Persons must at all times comply with the following
principles:
1. The Client Comes First. Access Persons must scrupulously avoid
serving their personal interests ahead of the interests of
Brandywine's Clients. An Access Person may not induce or cause
Brandywine's Clients to take action, or not to take action, for
the Access Person's personal benefit, rather than for the benefit
of Brandywine's Clients. For example, an Access Person would
violate this Code by causing a Client to purchase a Security the
Access Person owned for the purpose of increasing the price of
that Security.
2. Avoid Taking Advantage. Access Persons may not use their
knowledge of open, executed, or pending portfolio transactions to
profit by the market effect of such transactions. Receipt of
investment opportunities, perquisites, or gifts from persons
seeking business with Brandywine's Clients could call into
question the exercise of an Access Person's independent judgment.
3. Comply With the Code. Doubtful situations should be resolved in
favor of Brandywine's Clients. Technical compliance with the
Code's procedures will not automatically insulate from scrutiny
any Securities Transactions that indicate an abuse of fiduciary
duties.
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(1) Capitalized words are defined in Section V (Definitions).
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II. PERSONAL SECURITIES TRANSACTIONS
A. Preclearance Requirements for Access Persons.
1. General Requirement. Except for the transactions specified in
Section II.D.1, any Securities Transaction in which an Access
Person has or acquires a Beneficial Interest must be precleared
with a Preclearance Officer.
2. Trade Authorization Requests. Prior to entering an order for a
Securities Transaction that requires preclearance, the Access
Person must make a request via the CTIiTrade(TM) system. The
system will return an approval or disapproval of the request
based upon the firm's trading activities and holdings at that
time.
NO ORDER FOR A SECURITIES TRANSACTION FOR WHICH PRECLEARANCE
AUTHORIZATION IS REQUIRED MAY BE PLACED PRIOR TO THE RECEIPT OF
AUTHORIZATION OF THE TRANSACTION. VERBAL APPROVALS ARE NOT
PERMITTED.
3. Length of Trade Authorization Approval. The authorization
provided by CTIiTrade(TM) is effective until the earlier of (1)
its revocation, (2) 9:30 a.m. Eastern Time the following market
day (for example, if authorization is provided on a Monday, it is
effective until 9:30 a.m. Eastern Time on Tuesday provided it is
a market day.), or (3) the moment the Access Person learns that
the approval is no longer permissible under the Code. If the
order for the Securities Transaction is not executed within that
period, a new authorization must be obtained before execution. If
the Securities Transaction is placed but has not been executed
before the authorization expires (as, for example, in the case of
a limit order), no new authorization is necessary unless the
person placing the original order for the Securities Transaction
amends it in any way, or learns that the approval is no longer
permissible under the Code.
4. No Explanation Required for Refusals. In some cases, Brandywine
has the right to refuse to authorize a Securities Transaction for
a reason that is confidential. Brandywine is not required to give
an explanation for refusing to authorize any Securities
Transaction.
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B. Prohibited Transactions.
1. Always Prohibited Securities Transactions. The following
Securities Transactions are prohibited and will not be authorized
under any circumstances:
a. Inside Information. Any transaction in a Security by an
individual who possesses material nonpublic information
regarding the Security or the issuer of the Security;
b. Market Manipulation. Transactions intended to raise, lower,
or maintain the price of any Security or to create a false
appearance of active trading;
c. Others. Any other transaction deemed by Brandywine to
involve a conflict of interest, possible diversions of
corporate opportunity, or an appearance of impropriety.
2. Generally Prohibited Securities Transactions. Unless exempted by
Section II.D, the following Securities Transactions are
prohibited and will not be authorized by Brandywine absent
exceptional circumstances. The prohibitions apply only to the
categories of Access Persons specified.
a. Initial Public Offerings (Investment Personnel only). Any
purchase of a Security by Investment Personnel in an initial
public offering (other than a new offering of a registered
open-end investment company);
b. One Day Blackout (all Access Persons). Any purchase or sale
of a Security by an Access Person on any day during which
any Brandywine Client or Fund account has a pending buy or
sell order, or has effected a buy or sell transaction, in
the same Security (or Equivalent Security);
c. Seven-Day Blackout (Portfolio Managers only). Any purchase
or sale of a Security by a Portfolio Manager within seven
calendar days of a purchase or sale of the same Security (or
Equivalent Security) by a Fund managed by that Portfolio
Manager. For example, if a Fund trades a Security on day
one, day eight is the first day the Portfolio Manager may
trade that Security for an account in which he or she has a
Beneficial Interest;
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d. 60-Day Blackout (Investment Personnel only). (1) Purchase of
a Security in which an Investment Person thereby acquires a
Beneficial Interest within 60 days of a sale of the Security
(or an Equivalent Security) in which such Investment Person
had a Beneficial Interest, and (2) sale of a Security in
which an Investment Person has a Beneficial Interest within
60 days of a purchase of the Security (or an Equivalent
Security) in which such Investment Person had a Beneficial
Interest, if, in either case, a Fund with which the
Investment Person is associated held the same Security at
any time during the 60 days; unless the Investment Person
agrees to give up all profits on the transaction to a
charitable organization specified in accordance with Section
IV.B.I. Of course, Investment Personnel must place the
interests of the Funds first; they may not avoid or delay
purchasing or selling a security for a Fund in order to
profit personally; and
e. Private Placements (Investment Personnel only). Acquisition
of a Beneficial Interest in Securities in a private
placement by Investment Personnel is strongly discouraged.
The Compliance Committee or their designee will give
permission only after considering, among other facts,
whether the investment opportunity should be reserved for a
Brandywine Client account and whether the opportunity is
being offered to the person by virtue of the person's
position as an Investment Person. Investment Personnel who
have acquired a Beneficial Interest in Securities in a
private placement are required to disclose their Beneficial
Interest to the Legal and Compliance Department. If the
Investment Person is subsequently involved in a decision to
buy or sell a Security (or an Equivalent Security) from the
same issuer for a Fund, then the decision to purchase or
sell the Security (or an Equivalent Security) must be
independently authorized by a Portfolio Manager with no
personal interest in the issuer.
C. Exemptions.
1. Exemptions from Preclearance and Treatment as a Prohibited
Transaction. The following Securities Transactions are exempt
from the preclearance requirements set forth in Section II.A. and
the prohibited transaction restrictions set forth in Section
II.C.:
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a. Mutual Funds. Any purchase or sale of a Security issued by
any registered open-end investment companies (including but
not limited to Mutual Fund Clients);
b. No Knowledge. Securities Transactions where the Access
Person has no knowledge of the transaction before it is
completed (for example, Securities Transactions effected for
an Access Person by a trustee of a blind trust, or
discretionary trades involving an investment partnership or
investment club, in connection with which the Access Person
is neither consulted nor advised of the trade before it is
executed);
c. Legg Mason, Inc. Stock. Any purchase or sale of Legg Mason,
Inc. stock.
d. Certain Corporate Actions. Any acquisition of Securities
through stock dividends, dividend reinvestments, stock
splits, reverse stock splits, mergers, consolidations,
spin-offs, or other similar corporate reorganizations or
distributions generally applicable to all holders of the
same class of Securities;
e. Systematic Investment Plans. Any acquisition of a security
pursuant to a systematic investment plan that has previously
been approved pursuant to the Code. A systematic investment
plan is one pursuant to which a prescribed investment will
be made automatically on a regular, predetermined basis
without affirmative action by the Access Person.
f. Options-Related Activity. Any acquisition or disposition of
a security in connection with an option-related Securities
Transaction that has been previously approved pursuant to
the Code. For example, if an Access Person receives approval
to write a covered call, and the call is later exercised,
the provisions of Sections II.A. and II.C. are not
applicable to the sale of the underlying security.
g. Commodities, Futures, and Options on Futures. Any Securities
Transaction involving commodities, futures (including
currency futures and futures on securities comprising part
of a broad-based, publicly traded market based index of
stocks) and options on futures.
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h. Rights. Any acquisition of Securities through the exercise
of rights issued by an issuer pro rata to all holders of a
class of its Securities, to the extent the rights were
acquired in the issue; and
i. Miscellaneous. Any transaction in the following: (1) bankers
acceptances, (2) bank certificates of deposit, (3)
commercial paper, (4) repurchase agreements, (5) Securities
that are direct obligations of the U.S. Government, and (6)
other Securities as may from time to time be designated in
writing by the Compliance Committee on the ground that the
risk of abuse is minimal or non-existent.
2. Exemption from Treatment as a Prohibited Transaction. The
following Securities Transactions are exempt from the prohibited
transaction restrictions that are set forth in Section II.C. THEY
ARE NOT EXEMPT FROM THE PRECLEARANCE REQUIREMENTS SET FORTH IN
SECTION II.A:
a. Options on Broad-Based Indices. The prohibitions in Section
II.C.2. b, c, and d are not applicable to any Securities
Transaction involving options on certain broad-based indices
designated by the Legal and Compliance Department. The
broad-based indices designated by the Legal and Compliance
Department may be changed from time to time and presently consist
of the S&P 500, the S&P 100, NASDAQ 100, Nikkei 300, NYSE
Composite, and Wilshire Small Cap indices.
E. Reporting Requirements
1. Initial and Periodic Disclosure of Personal Holdings by Access
Persons. Within ten (10) days of being designated as an Access
Person and thereafter on an annual basis (during the month of
April), an Access Person must acknowledge receipt and review of
the Code and disclose all Securities in which such Access Person
has a Beneficial Interest on the Acknowledgement of Receipt of
Code of Ethics and Personal Holdings Report (Appendix 2).
2. Transaction and Periodic Statement Reporting Requirements. An
Access Person must arrange for the Legal and Compliance
Department to receive directly from any broker, dealer, or bank
that effects any Securities Transaction in which the Access
Person has or acquires a Beneficial Interest, duplicate copies of
each confirmation for each such transaction and periodic
statements for each account in which such Access Person has a
Beneficial Interest. Attached as Appendix 6 is a
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form of letter that may be used to request such documents from
such entities.
IF AN ACCESS PERSON OPENS AN ACCOUNT AT A BROKER, DEALER, OR BANK
THAT HAS NOT PREVIOUSLY BEEN DISCLOSED, THE ACCESS PERSON MUST
IMMEDIATELY NOTIFY THE LEGAL AND COMPLIANCE DEPARTMENT IN WRITING
OF THE EXISTENCE OF THE ACCOUNT AND MAKE ARRANGEMENTS TO COMPLY
WITH THE REQUIREMENTS SET FORTH HEREIN. Access Persons may (but
are not required to) report the opening of a new account by
completing the New Account(s) Report that is attached as Appendix
8.
If an Access Person is not able to arrange for duplicate
confirmations and periodic statements to be sent, the Access
Person must immediately notify the Legal and Compliance
Department.
3. Disclaimers. Any report of a Securities Transaction for the
benefit of a person other than the individual in whose account
the transaction is placed may contain a statement that the report
should 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.
4. Availability of Reports. All information supplied pursuant to
this Code may be made available for inspection to the Compliance
Committee of Brandywine, the Board of Directors of each Legg
Mason Fund, the Chairman of the Board and the Vice Chairman of
Legg Mason, Inc., the Code of Ethics Review Committee, the Legal
and Compliance Departments of Brandywine and Legg Mason, Inc.,
Preclearance Officers, the Access Person's department manager (or
designee), any party to which any investigation is referred by
any of the foregoing and the Securities and Exchange Commission.
III. FIDUCIARY DUTIES
A. Confidentiality. Access Persons are prohibited from revealing
information relating to the investment intentions, activities or
portfolios of Brandywine's Clients, except to persons whose
responsibilities require knowledge of the information.
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B. Gifts. The following provisions on gifts apply to all Investment
Personnel.
1. Accepting Gifts. On occasion, because of their position,
Investment Personnel may be offered, or may receive without
notice, gifts from Clients, brokers, vendors, or other persons
not affiliated with such entities. Acceptance of extraordinary or
extravagant gifts is not permissible. Any such gifts must be
declined or returned in order to protect the reputation and
integrity of Brandywine. Gifts of a nominal value (i.e., gifts
whose reasonable value is no more than $100 a year), and
customary business meals, entertainment (e.g., sporting events),
and promotional items (e.g., pens, mugs, T-shirts) may be
accepted.
If an Investment Person receives any gift that might be
prohibited under this Code, the Investment Person must
immediately inform the Legal and Compliance Department.
2. Solicitation of Gifts. Investment Personnel may not solicit gifts
or gratuities.
3. Giving Gifts. Investment Personnel may not personally give gifts
with an aggregate value in excess of $100 per year to persons
associated with securities or financial organizations, including
exchanges, other member organizations, commodity firms, news
media, or Clients of the firm.
C. Corporate Opportunities. Access Persons may not take personal
advantage of any opportunity properly belonging to Brandywine's
Clients. For example, an Investment Person should not acquire a
Beneficial Interest in a Security of limited availability without
first offering the opportunity to purchase such Security to Brandywine
for its Clients.
D. Undue Influence. Access Persons may not cause or attempt to cause any
Client account to purchase, sell or hold any Security in a manner calculated to
create any personal benefit to the Access Person. If an Access Person stands to
benefit materially from an investment decision for a Client account, and the
Access Person is making or participating in the investment decision, then the
Access Person must disclose the potential benefit to those persons with
authority to make investment decisions for Brandywine's Clients (or, if the
Access Person in question is a person with authority to make investment
decisions for Brandywine's Clients, to the Legal and Compliance Department). The
person to whom the Access Person reports the interest, in consultation with the
Legal and Compliance Department, must determine whether or not the Access Person
will be restricted in making or participating in the investment decision.
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E. Service as a Director. No Investment Person may serve on the board of
directors of a publicly-held company (other than Brandywine, its affiliates, and
any mutual funds managed by Brandywine) absent prior written authorization by
the Compliance Committee. This authorization will rarely, if ever, be granted
and, if granted, will normally require that the affected Investment Person be
isolated, through a Chinese Wall or other procedures, from those making
investment decisions related to the issuer on whose board the Investment Person
sits.
IV. COMPLIANCE WITH THE CODE OF ETHICS
A. Compliance Committee
1. Membership, Voting and Quorum. The Compliance Committee is
comprised of the individuals identified in Appendix 1. The
Committee shall vote by majority vote with two members serving as
a quorum. Vacancies may be filled and, in the case of extended
absences or periods of unavailability, alternates may be
selected, by a majority vote of the remaining members of the
Committee; provided, however, that at least one member of the
Committee shall also be a member of the Legal and Compliance
Department.
2. Investigating Violations of the Code. The Legal and Compliance
Department is responsible for investigating any suspected
violation of the Code and shall report the results of each
investigation to the Compliance Committee. The Compliance
Committee is responsible for reviewing the results of any
investigation of any reported or suspected violation of the Code.
Any violation of the Code by an Access Person will be reported to
the Executive Committee no less frequently than each quarterly
meeting.
3. Annual Reports. The Legal and Compliance Department will review
the Code at least once a year, in light of legal and business
developments and experience in implementing the Code, and will
report to the Compliance Committee:
a. Summarizing existing procedures concerning personal
investing and any changes in the procedures made during the
past year;
b. Identifying any violation requiring significant remedial
action during the past year; and
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c. Identifying any recommended changes in existing restrictions
or procedures based on its experience under the Code,
evolving industry practices, or developments in applicable
laws or regulations.
B. Remedies
1. Sanctions. If the Compliance Committee determines that an Access
Person has committed a violation of the Code, the Committee may
impose sanctions and take other actions as it deems appropriate,
including a letter of caution or warning, suspension of personal
trading rights, suspension of employment (with or without
compensation), fine, civil referral to the Securities and
Exchange Commission, criminal referral, and termination of the
employment of the violator for cause. The Compliance Committee
may also require the Access Person to reverse the transaction in
question and forfeit any profit or absorb any loss associated or
derived as a result. The amount of profit shall be calculated by
the Compliance Committee and shall be forwarded to a charitable
organization selected by the Compliance Committee. No member of
the Compliance Committee may review his or her own transaction.
2. Sole Authority. The Compliance Committee has sole authority,
subject to the review set forth in Section IV.B.3 below, to
determine the remedy for any violation of the Code, including
appropriate disposition of any monies forfeited pursuant to this
provision. Failure to promptly abide by a directive to reverse a
trade or forfeit profits may result in the imposition of
additional sanctions.
3. Review. Whenever the Compliance Committee determines that an
Access Person has committed a violation of this Code that merits
remedial action, it will report no less frequently than quarterly
to the Executive Committee, information relating to the
investigation of the violation, including any sanctions imposed.
The Executive Committee may modify such sanctions as they deem
appropriate. Such Committee shall have access to all information
considered by the Compliance Committee in relation to the case.
The Compliance Committee may determine whether or not to delay
the imposition of any sanctions pending review by the Executive
Committee. No member of the Executive Committee may review his or
her own transaction.
C. Exceptions to the Code. Although exceptions to the Code will rarely, if
ever, be granted, the Legal and Compliance Department may grant exceptions to
the requirements of
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the Code on a case by case basis if the Legal and Compliance Department finds
that the proposed conduct involves negligible opportunity for abuse. All such
exceptions must be in writing and must be reported as soon as practicable to the
Compliance Committee and to the Executive Committee at the next regularly
scheduled meeting after the exception is granted.
D. Inquiries Regarding the Code. The Legal and Compliance Department will
answer any questions about this Code or any other compliance-related matters.
V. DEFINITIONS
When used in the Code, the following terms have the meanings set forth
below:
"ACCESS PERSON" means:
(1) every director or officer of Brandywine;
(2) every employee of Brandywine who in connection with his or her regular
functions, makes, participates in, or obtains information regarding
the purchase or sale of a Security for a Client account;
(3) every natural person in a control relationship with Brandywine who
obtains information concerning recommendations made with regard to the
purchase or sale of a Security, prior to its dissemination or prior to
the execution of all resulting trades;
(4) such other persons as the Legal and Compliance Department shall
designate.
Any uncertainty as to whether an individual is an Access Person should be
brought to the attention of the Legal and Compliance Department. Such questions
will be resolved in accordance with, and this definition shall be subject to,
the definition of "Access Person" found in Rule 17j-1(e) (1) promulgated under
the Investment Company Act of 1940, as amended.
"BENEFICIAL INTEREST" means the opportunity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, to
profit, or share in any profit derived from, a transaction in the subject
Securities.
An Access Person is deemed to have a Beneficial Interest in the following:
(1) any Security owned individually by the Access Person;
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(2) any Security owned jointly by the Access Person with others (for
example, joint accounts, spousal accounts, UTMA accounts,
partnerships, trusts and controlling interests in corporations);
and
(3) any Security in which a member of the Access Person's Immediate
Family has a Beneficial Interest if:
a. the Security is held in an account over which the Access
Person has decision making authority (for example, the
Access Person acts as trustee, executor, or guardian); or
b. the Security is held in an account for which the Access
Person acts as a broker or investment adviser
representative.
In addition, an Access Person is presumed to have a Beneficial Interest in
any Security in which a member of the Access Person's Immediate Family has a
Beneficial Interest if the Immediate Family member resides in the same household
as the Access Person. This presumption may be rebutted if the Access Person is
able to provide the Legal and Compliance Department with satisfactory assurances
that the Access Person has no material Beneficial Interest in the Security and
exercises no control over investment decisions made regarding the Security.
Access Persons may use the form attached as Appendix 7 (Certification of No
Beneficial Interest) in connection with such requests.
Any uncertainty as to whether an Access Person has a Beneficial Interest in
a Security should be brought to the attention of the Legal and Compliance
Department. Such questions will be resolved in accordance with, and this
definition shall be subject to, the definition of "beneficial owner" found in
Rules 16a-1(a) (2) and (5) promulgated under the Securities Exchange Act of
1934, as amended.
"BRANDYWINE" means Brandywine Asset Management, Inc.
"CLIENT ACCOUNT" AND/OR "CLIENT" means all existing clients of Brandywine,
including but not limited to Mutual Fund clients.
"CODE" means this Code of Ethics, as amended.
"COMPLIANCE COMMITTEE" means the Compliance Committee of Brandywine as
shown on Appendix 1
"EQUIVALENT SECURITY" means any Security issued by the same entity as the
issuer of a subject Security that is exchangeable for or convertible into the
underlying security including, but not limited to, options, rights, warrants,
stock appreciation rights, preferred stock, restricted
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stock, phantom stock, and bonds. Options on securities are included even if,
technically, they are issued by the Options Clearing Corporation or a similar
entity.
"IMMEDIATE FAMILY" of an Access Person means any of the following persons:
child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
stepparent father-in-law
Immediate Family includes adoptive relationships and other relationships
(whether or not recognized by law) that the Legal and Compliance Department
determines could lead to the possible conflicts of interest, diversions of
corporate opportunity, or appearances of impropriety which this Code is intended
to prevent.
"INVESTMENT PERSONNEL" and "INVESTMENT PERSON" mean each Portfolio Manager
and any Access Person who, in connection with his or her regular functions or
duties, provides information and advice to a Portfolio Manager or who helps
execute a Portfolio Manager's decisions.
"LEGAL AND COMPLIANCE DEPARTMENT" means the Legal and Compliance Department
of Brandywine
"PORTFOLIO MANAGER" means a person who has or shares principal day-to-day
responsibility for managing the portfolio of a Fund. One need not bear the
official title of Portfolio Manager to be so designated for purposes of this
Code.
"SECURITIES TRANSACTION" means a purchase or sale of Securities in which an
Access Person has or acquires a Beneficial Interest.
"SECURITY" includes stock, notes, bonds, debentures, and other evidences of
indebtedness (including loan participations and assignments), limited
partnership interests, investment contracts, and all derivative instruments of
the foregoing, such as options and warrants. "Security" does not include futures
or options on futures, but the purchase and sale of such instruments are
nevertheless subject to the reporting requirements of the Code.
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VI. APPENDICES TO THE CODE
The following appendices are attached to and are a part of the Code:
Appendix 1. Legal & Compliance Department Contacts & Compliance
Committee Roster;
Appendix 2. Acknowledgement of Receipt of Code of Ethics, Personal
Holdings Report and Report of Directorships and Other
Positions;
Appendix 3. Form Letter to Broker, Dealer or Bank.
Appendix 4. Certification of No Beneficial Interest.
Appendix 5. New Account(s) Report.
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APPENDIX 1
LEGAL & COMPLIANCE DEPARTMENT CONTACTS & COMPLIANCE
COMMITTEE ROSTER
LEGAL AND COMPLIANCE DEPARTMENT
Stefanie J. Little, Manager
Colleen Morales, Assistant
COMPLIANCE COMMITTEE
Stefanie J. Little
David G. Lee
Paul L. Lesutis
Earl J. Gaskins
Steven M. Tonkovich
Paula L. Kaper
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APPENDIX 2
ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS, PERSONAL
HOLDINGS REPORT AND REPORT OF DIRECTORSHIPS AND OTHER
POSITIONS
I acknowledge that I have received the Code of Ethics dated _____________ and
represent that:
1. I have read the Code of Ethics and I understand that it applies to me and
to all Securities in which I have or acquire any Beneficial Interest. I
have read the definition of "Beneficial Interest" and understand that I may
be deemed to have a Beneficial Interest in Securities owned by members of
my Immediate Family and that Securities Transactions effected by members of
my Immediate Family may therefore be subject to this Code.
2. In accordance with Section II.A. of the Code, I will obtain prior written
authorization for all Securities Transactions in which I have or acquire a
Beneficial Interest, except for transactions exempt from preclearance under
Section II.D.1 of the Code.
3. In accordance with Section II.E.2. of the Code of Ethics, I will report all
non-exempt Securities Transactions in which I have or acquire a Beneficial
Interest.
4. I agree to disgorge and forfeit any profits on prohibited transactions in
accordance with the requirements of the Code.
5. I will comply with the Code of Ethics in all other respects.
6. In accordance with Section II.E.1. of the Code, the following is a list of
all Securities in which I have a Beneficial Interest:
(1) Provide the information requested below for each account that you
maintain with a broker, dealer or bank. INDICATE "NONE" IF
APPROPRIATE.
<TABLE>
<CAPTION>
NAME OF BROKER, DEALER, or
BANK* ACCOUNT TITLE ACCOUNT NUMBER
--------------------------- -------------------------------- --------------------------
<S> <C> <C>
--------------------------- -------------------------------- --------------------------
--------------------------- -------------------------------- --------------------------
--------------------------- -------------------------------- --------------------------
--------------------------- -------------------------------- --------------------------
--------------------------- -------------------------------- --------------------------
</TABLE>
(2) Attach the most recent account statement for each account identified
above.
----------
* Accounts which only hold mutual funds are exempt from this reporting
requirement.
ii
<PAGE> 126
(3) If you own Beneficial Interests in Securities that are not listed on
an attached account statement list them below. Include private equity
investments. INDICATE "NONE" IF APPROPRIATE.
<TABLE>
<CAPTION>
NAME OF ACCOUNT ACCOUNT NAME OF SECURITY NUMBER OF
BROKER, TITLE (include NUMBER SHARES/PRINCIPAL
DEALER, OR name of Account AMOUNT
BANK* Owner)
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
<S> <C> <C> <C> <C>
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
------------------------------ ---------------------- ----------------- ------------------------ -----------------------------
</TABLE>
(Attach separate sheet if necessary)
7. (INVESTMENT PERSONNEL ONLY) In accordance with Section III.E. of the Code,
the following is a list of publicly-held companies on which I serve as a
member of the board of directors. INDICATE "NA" OR "NONE" IF APPROPRIATE.
<TABLE>
<CAPTION>
NAME OF COMPANY BOARD MEMBER SINCE
--------------------------------------- -------------------------------------------
<S> <C>
--------------------------------------- -------------------------------------------
--------------------------------------- -------------------------------------------
--------------------------------------- -------------------------------------------
--------------------------------------- -------------------------------------------
--------------------------------------- -------------------------------------------
</TABLE>
8. The following is a list of all directorships and other positions that I
hold, and all directorships and other positions that I have held at any
time since the beginning of my employment with Brandywine in business
organizations, partnerships, proprietorships and trusts. INDICATE "NA" OR
"NONE" IF APPROPRIATE.
<TABLE>
<CAPTION>
TYPE OF
NAME OF COMPANY POSITION BUSINESS SINCE
---------------------------------- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
</TABLE>
----------
* Accounts which only hold mutual funds are exempt from this reporting
requirement.
iii
<PAGE> 127
9. The following is a list of all directorships and other positions that I
hold, and all directorships and other positions that I have held at any
time since the beginning of my employment with Brandywine in charitable and
educational organizations. INDICATE "NA" OR "NONE" IF APPROPRIATE.
<TABLE>
<CAPTION>
TYPE OF
NAME OF COMPANY POSITION BUSINESS SINCE
---------------------------------- ----------------------------------- -------------------------- -----------
<S> <C> <C> <C>
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
---------------------------------- ----------------------------------- -------------------------- -----------
</TABLE>
10. I certify that the information on this form is accurate and complete as of
today's date.
11. I agree to immediately advise the Legal and Compliance Department of
Brandywine of any material changes to the information contained on this
form.
-------------------------------------
Access Person's Name
------------------------------------- -------------------------
Access Person's Signature Date
iv
<PAGE> 128
APPENDIX 3
FORM OF LETTER TO BROKER, DEALER OR BANK
(Date)
(Name
and Address)
Subject: Account # ______________________
Dear ___________________________ :
My employer, Brandywine Asset Management, Inc., is an Investment Adviser.
Pursuant to my employer's Code of Ethics, please send duplicate confirmations of
individual SECURITIES* transactions as well as duplicate periodic BROKERAGE*
statements for the referenced account directly to:
SJL - BRANDYWINE ASSET MANAGEMENT, INC.
201 NORTH WALNUT STREET, SUITE 1200
MSC: COETH
WILMINGTON, DE 19801
Thank you for your cooperation. If you have any questions, please contact
me or the Brandywine Compliance Assistant at (302) 654-6162.
Sincerely,
(Name of Access Person)
---------
* ACCOUNTS WHICH HOLD ONLY MUTUAL FUNDS ARE EXEMPT FROM THESE REPORTING
REQUIREMENTS.
v
<PAGE> 129
APPENDIX 4
CERTIFICATION OF NO BENEFICIAL INTEREST
I have read the Code of Ethics and I understand that it applies to me and to all
Securities in which I have or acquire any Beneficial Interest. I have read the
definition of "Beneficial Interest" and understand that I may be deemed to have
a Beneficial Interest in Securities owned by members of my Immediate Family and
that Securities Transactions effected by members of my Immediate Family may
therefore be subject to this Code.
The following accounts are maintained by one or more members of my Immediate
Family who reside in my household:
<TABLE>
<CAPTION>
Relationship of Immediate
Family Member Account Number Account Name Brokerage Firm
------------------------- -------------- ------------ --------------
<S> <C> <C> <C>
</TABLE>
I certify that with respect to each of the accounts listed above (initial
appropriate boxes):
[ ] I do not own individually or jointly with others any of the
securities held in the account.
[ ] I do not possess or exercise decision making authority over the
account.
[ ] I do not act as a broker or investment adviser representative for the
account.
I agree that I will notify the Legal and Compliance Department immediately if
any of the information I have provided in this certification becomes inaccurate
or incomplete.
------------------------------
Access Person's Signature
------------------------------
Print Name
------------------------------
Date
vi
<PAGE> 130
APPENDIX 5
NEW ACCOUNT(S) REPORT
I recently opened the following account(s) in which I have a Beneficial
Interest:
<TABLE>
<CAPTION>
DATE NAME OF BROKER, DEALER
OPENED OR BANK* ACCOUNT TITLE ACCOUNT NUMBER
----------------- ---------------------------------- ------------------------------- --------------------------
<S> <C> <C> <C>
----------------- ---------------------------------- ------------------------------- --------------------------
----------------- ---------------------------------- ------------------------------- --------------------------
----------------- ---------------------------------- ------------------------------- --------------------------
----------------- ---------------------------------- ------------------------------- --------------------------
----------------- ---------------------------------- ------------------------------- --------------------------
</TABLE>
---------------------------------------
Access Person's Name (Please print)
---------------------------------------
Access Person's Signature
---------------------------------------
Date
----------
** Accounts which only hold mutual funds are exempt from this reporting
requirement.
vii
<PAGE> 131
CONFIDENTIAL INFORMATION AND
SECURITIES TRADING POLICY
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 132
<TABLE>
<CAPTION>
CONTENTS
Page
<S> <C>
INTRODUCTION ............................................................................ 1
PART I
APPLICABLE TO ALL ASSOCIATES
SECTION ONE
CONFIDENTIAL INFORMATION.................................................... 2
-Types of Confidential Information.......................................... 2
-Rules for Protecting Confidential Information.............................. 3
-Supplemental Procedures.................................................... 4
SECTION TWO
INSIDER TRADING AND TIPPING................................................. 5
-Legal Prohibitions......................................................... 5
-Mellon's Policy............................................................ 6
SECTION THREE
RESTRICTIONS ON THE FLOW OF INFORMATION
WITHIN MELLON (THE "CHINESE WALL").......................................... 7
-Rules for Maintaining the Chinese Wall..................................... 7
-Reporting Receipt of Material Nonpublic Information........................ 8
-Functions "Above the Wall"................................................. 9
-Supplemental Procedures.................................................... 9
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS IN MELLON SECURITIES...........................10
-Beneficial Ownership.......................................................11
SECTION FIVE
RESTRICTIONS ON TRANSACTIONS IN OTHER SECURITIES............................12
SECTION SIX
CLASSIFICATION OF ASSOCIATES................................................14
-Insider Risk Associate.....................................................14
-Investment Associate.......................................................15
-Other Associate............................................................15
PART II
APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY ............................................................................16
-Prohibition on Investments in Securities of Financial
Services Organizations....................................................16
-Conflict of Interest.......................................................17
-Preclearance for Personal Securities Transactions..........................17
-Personal Securities Transactions Reports...................................19
-Confidential Treatment.....................................................19
</TABLE>
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 133
<TABLE>
<S> <C>
PART III
APPLICABLE TO INVESTMENT
ASSOCIATES ONLY ............................................................................20
-Special Standards of Conduct for Investment Associates.....................20
-Preclearance for Personal Securities Transactions..........................21
-Personal Securities Transactions Reports...................................23
-Confidential Treatment.....................................................24
PART IV
APPLICABLE TO OTHER
ASSOCIATES ONLY ............................................................................25
-Preclearance for Personal Securities Transactions..........................25
-Personal Securities Transactions Reports...................................25
-Restrictions on Transactions in Other Securities...........................25
-Confidential Treatment.....................................................26
PART V
APPLICABLE TO NONMANAGEMENT
BOARD MEMBERS ............................................................................27
-Nonmanagement Board Member.................................................27
-Standards of Conduct for Nonmanagement Board Member........................27
-Preclearance for Personal Securities Transactions..........................28
-Personal Securities Transactions Reports...................................29
-Confidential Treatment.....................................................29
GLOSSARY DEFINITIONS.................................................................30
INDEX OF EXHIBITS ............................................................................33
</TABLE>
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 134
INTRODUCTION
Mellon Bank Corporation ("Mellon") and its associates, and
the registered investment companies for which The Dreyfus
Corporation ("Dreyfus") and/or Mellon serves as investment
adviser, sub-investment adviser or administrator, are
subject to certain laws and regulations governing the use of
confidential information and personal securities trading.
Mellon has developed this Confidential Information and
Securities Trading Policy (the "Policy") to establish
specific standards to promote compliance with applicable
laws. Further, the Policy is intended to protect Mellon's
business secrets and proprietary information as well as that
of its customers and any entity for which it acts in a
fiduciary capacity.
The Policy set forth procedures and limitations which govern
the personal securities transactions of every Mellon
associate and certain other individuals associated with the
registered investment companies for which Dreyfus and/or
Mellon serves as investment adviser, sub-investment adviser
or administrator. The Policy is designed to reinforce
Mellon's reputation for integrity by avoiding even the
appearance of impropriety in the conduct of Mellon's
business.
Associates should be aware that they may be held personally
liable for any improper or illegal acts committed during the
course of their employment, and that "ignorance of the law"
is not a defense. Associates may be subject to civil
penalties such as fines, regulatory sanctions including
suspensions, as well as criminal penalties.
Associates outside the United States are also subject to
applicable laws of foreign jurisdictions, which may differ
substantially from U.S. law and which may subject such
associates to additional requirements. Such associates must
comply with applicable requirements of pertinent foreign
laws as well as with the provisions of the Policy. To the
extent any particular portion of the Policy is inconsistent
with foreign law, associates should consult the General
Counsel or the Manager of Corporate Compliance.
Any provision of this Policy may be waived or exempted at
the discretion of the Manager of Corporate Compliance. Any
such waiver or exemption will be evidenced in writing and
maintained in the Risk Management and Compliance Department.
Associates must read the Policies and MUST COMPLY
with them. Failure to comply with the provisions of
the Policies may result in the imposition of serious
sanctions, including but not limited to disgorgement
of profits, dismissal, substantial personal liability
and referral to law enforcement agencies or other
regulatory agencies. Associates should retain the
Policies in their records for future reference. Any
questions regarding the Policies should be referred
to the Manager of Corporate Compliance or his/her
designee.
1
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 135
PART I - APPLICABLE TO ALL ASSOCIATES
SECTION ONE
CONFIDENTIAL INFORMATION
As an associate you may receive information about Mellon,
its customers and other parties that, for various reasons,
should be treated as confidential. All associates are
expected to strictly comply with measures necessary to
preserve the confidentiality of information.
TYPES OF CONFIDENTIAL INFORMATION - Although it is
impossible to provide an exhaustive list of information that
should remain confidential, the following are examples of
the general types of confidential information that
associates might receive in the ordinary course of carrying
out their job responsibilities.
o Information Obtained from Business Relations - An associate
might receive confidential information regarding customers
or other parties with whom Mellon has business
relationships. If released, such information could have a
significant effect on their operations, their business
reputations or the market price of their securities.
Disclosing such information could expose both the associate
and Mellon to liability for damages.
o Mellon Financial Information - An associate might receive
financial information regarding Mellon before such
information has been disclosed to the public. It is the
policy of Mellon to disclose all material corporate
information to the public in such a manner that all those
who are interested in Mellon and its securities have equal
access to the information. Disclosing such information to
unauthorized persons could subject both the associate and
Mellon to liability under the federal securities laws.
o Mellon Proprietary Information - Certain nonfinancial
information developed by Mellon - such as business plans,
customer lists, methods of doing business, computer
software, source codes, databases and related documentation
- constitutes valuable Mellon proprietary information.
Disclosure of such information to unauthorized persons could
harm, or reduce a benefit to, Mellon and could result in
liability for both the associate and Mellon.
o Mellon Examination Information - Banks and certain other
Mellon subsidiaries are periodically examined by regulatory
agencies. Certain reports made by those regulatory agencies
are the property of those agencies and are strictly
confidential. Giving information from these reports to
anyone not officially connected with Mellon is a criminal
offense.
o Portfolio Management Information - Portfolio management
information relating to investment accounts or funds managed
by Mellon or Dreyfus, including investment decisions or
strategies developed for the benefit of investment companies
advised by Dreyfus, is for the benefit of such account or
fund. Disclosure or exploitation of such information by an
associate in an unauthorized manner may cause detriment to
such accounts or funds and may subject the associate to
liability under the federal securities laws.
2
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 136
RULES FOR PROTECTING CONFIDENTIAL INFORMATION - The
following are some basic rules to follow to protect
confidential information.
o Limited Communication to Outsiders - Confidential
information should not be communicated to anyone outside
Mellon, except to the extent they need to know the
information in order to provide necessary services to
Mellon.
o Limited Communication to Insiders - Confidential information
should not be communicated to other associates, except to
the extent they need to know the information to fulfill
their job responsibilities and their knowledge of the
information is not likely to result in misuse or a conflict
of interest. In this regard, Mellon has established specific
restrictions with respect to material nonpublic information
in order to separate and insulate different functional areas
and personnel within Mellon. Please refer to Section Three,
"Restrictions on The Flow of Information Within Mellon" (The
"Chinese Wall").
o Corporate Use Only - Confidential information should be used
only for Corporate purposes. Under no circumstances may an
associate use it, directly or indirectly, for personal gain
or for the benefit of any outside party who is not entitled
to such information.
o Other Customers - Where appropriate, customers should be
made aware that associates will not disclose to them other
customers' confidential information or use the confidential
information of one customer for the benefit of another.
o Notification of Confidentiality - When confidential
information is communicated to any person, either inside or
outside Mellon, they should be informed of the information's
confidential nature and the limitations on its further
communication.
o Prevention of Eavesdropping - Confidential matters should
not be discussed in public or in places, such as in building
lobbies, restaurants or elevators, where unauthorized
persons may overhear. Precautions, such as locking materials
in desk drawers overnight, stamping material "Confidential"
and delivering materials in sealed envelopes, should be
taken with written materials to ensure they are not read by
unauthorized persons.
o Data Protection - Data stored on personal computers and
diskettes should be properly secured to ensure they are not
accessed by unauthorized persons. Access to computer files
should be granted only on a need-to-know basis. At a
minimum, associates should comply with applicable Mellon
policies on electronic data security.
3
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 137
o Confidentiality Agreements - Confidentiality agreements to
which Mellon is a party must be complied with in addition
to, but not in lieu of, this Policy. Confidentiality
agreements that deviate from commonly used forms should be
reviewed in advance by the Legal Department.
o Contact with the Public - All contacts with institutional
shareholders or securities analysts about Mellon must be
made through the Investor Relations Division of the Finance
Department. All contacts with the media and all speeches or
other public statements made on behalf of Mellon or about
Mellon's businesses must be cleared in advance by Corporate
Affairs. In speeches and statements not made on behalf of
Mellon, care should be taken to avoid any implication that
Mellon endorses the views expressed.
SUPPLEMENTAL PROCEDURES - Mellon entities, departments,
divisions and groups should establish their own supplemental
procedures for protecting confidential information, as
appropriate. These procedures may include:
o establishing records retention and destruction policies;
o using code names;
o limiting the staffing of confidential matters (for example,
limiting the size of working groups and the use of temporary
employees, messengers and word processors); and
o requiring written confidentiality agreements from certain
associates.
Any supplemental procedures should be used only to protect
confidential information and not to circumvent appropriate
reporting and recordkeeping requirements.
4
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 138
SECTION TWO
INSIDER TRADING AND TIPPING
LEGAL PROHIBITIONS - Federal securities laws generally
prohibit the trading of securities while in possession of
"material nonpublic" information regarding the issuer of
those securities (insider trading). Any person who passes
along the material nonpublic information upon which a trade
is based (tipping) may also be liable.
"Material" - Information is material if there is a
substantial likelihood that a reasonable investor would
consider it important in deciding whether to buy, sell or
hold securities. Obviously, information that would affect
the market price of a security would be material. Examples
of information that might be material include:
o a proposal or agreement for a merger, acquisition or
divestiture, or for the sale or purchase of substantial
assets;
o tender offers, which are often material for the party making
the tender offer as well as for the issuer of the securities
for which the tender offer is made;
o dividend declarations or changes;
o extraordinary borrowings or liquidity problems;
o defaults under agreements or actions by creditors, customers
or suppliers relating to a company's credit standing;
o earnings and other financial information, such as large or
unusual write-offs, write-downs, profits or losses;
o pending discoveries or developments, such as new products,
sources of materials, patents, processes, inventions or
discoveries of mineral deposits;
o a proposal or agreement concerning a financial
restructuring;
o a proposal to issue or redeem securities, or a development
with respect to a pending issuance or redemption of
securities;
o a significant expansion or contraction of operations;
o information about major contracts or increases or decreases
in orders;
o the institution of, or a development in, litigation or a
regulatory proceeding;
o developments regarding a company's senior management;
o information about a company received from a director of that
company; and
o information regarding a company's possible noncompliance
with environmental protection laws.
This list is not exhaustive. All relevant circumstances must
be considered when determining whether an item of
information is material.
5
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 139
"Nonpublic" - Information about a company is nonpublic if it
is not generally available to the investing public.
Information received under circumstances indicating that it
is not yet in general circulation and which may be
attributable, directly or indirectly, to the company or its
insiders is likely to be deemed nonpublic information.
If an associate can refer to some public source to show that
the information is generally available (that is, available
not from inside sources only) and that enough time has
passed to allow wide dissemination of the information, the
information is likely to be deemed public. While information
appearing in widely accessible sources - such as newspapers
- becomes public very soon after publication, information
appearing in less accessible sources - such as regulatory
filings - may take up to several days to be deemed public.
Similarly, highly complex information might take longer to
become public than would information that is easily
understood by the average investor.
MELLON'S POLICY - Associates who possess material nonpublic
information about a company - whether that company is
Mellon, another Mellon entity, a Mellon customer or
supplier, or other company - may not trade in that company's
securities, either for their own accounts or for any account
over which they exercise investment discretion. In addition,
associates may not recommend trading in those securities and
may not pass the information along to others, except to
associates who need to know the information in order to
perform their job responsibilities with Mellon. These
prohibitions remain in effect until the information has
become public.
Associates who have investment responsibilities should take
appropriate steps to avoid receiving material nonpublic
information. Receiving such information could create severe
limitations on their ability to carry out their
responsibilities to Mellon's fiduciary customers.
Associates managing the work of consultants and temporary
employees who have access to the types of confidential
information described in this Policy are responsible for
ensuring that consultants and temporary employees are aware
of Mellon's policy and the consequences of noncompliance.
Questions regarding Mellon's policy on material nonpublic
information, or specific information that might be subject
to it, should be referred to the General Counsel.
6
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 140
SECTION THREE
RESTRICTIONS ON THE FLOW OF
INFORMATION WITHIN MELLON
(THE "CHINESE WALL")
As a diversified financial services organization, Mellon
faces unique challenges in complying with the prohibitions
on insider trading and tipping of material nonpublic
information and misuse of confidential information. This is
because one Mellon unit might have material nonpublic
information about a company while other Mellon units may
have a desire, or even a fiduciary duty, to buy or sell that
company's securities or recommend such purchases or sales to
customers. To engage in such broad-ranging financial
services activities without violating laws or breaching
Mellon's fiduciary duties, Mellon has established a "Chinese
Wall" policy applicable to all associates. The "Chinese
Wall" separates the Mellon units or individuals that are
likely to receive material nonpublic information (Potential
Insider Functions) from the Mellon units or individuals that
either trade in securities - for Mellon's account or for the
accounts of others - or provide investment advice
(Investment Functions).
Examples of Potential Insider Functions - Potential Insider
Functions include, among others, certain commercial lending,
corporate finance, and credit policy areas. Insider Risk
Associates (see Section Six, "Insider Risk Associates")
should consider themselves to be in Potential Insider
Functions unless their particular job responsibilities
clearly indicate otherwise.
Examples of Investment Functions - Investment Functions
include, among others, securities sales and trading,
investment management and advisory services, investment
research and various trust or fiduciary functions.
RULES FOR MAINTAINING THE "CHINESE WALL" - Without the prior
approval of the General Counsel, material nonpublic
information obtained by anyone in a Potential Insider
Function should not be communicated to anyone in an
Investment Function. To reduce the risk of material
nonpublic information being communicated, communications
between these associates in these functions must be limited
to the maximum extent consistent with valid business needs.
Particular rules -
o File Restrictions - Associates in Investment Functions must
not have access to commercial credit files, corporate
finance files, or any other Potential Insider Function files
that might contain material nonpublic information. All such
files that contain material nonpublic information should be
marked as "Confidential" and, if feasible, segregated from
nonconfidential files.
o Electronic Data - Associates in Investment Functions must
not have access to personal computer or word processing
files of associates in Potential Insider Functions.
o Meetings - Associates in Investment Functions must not
attend meetings between customers and associates in
Potential Insider Functions unless appropriate steps have
been taken to ensure that material nonpublic information
will not be disclosed or discussed.
o Committee Service - Without the prior approval of the
General Counsel, associates other than those "Above the
Wall" (see page 9) must not serve simultaneously on a
committee having responsibility for any Investment Function
and a committee having responsibility for any Potential
Insider Function.
7
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 141
o Information Requests - Requests for nonmaterial information
or public information across the "Chinese Wall" should be
made in writing to an appropriate associate in the
applicable area. Associates sending or receiving such a
request should resolve any questions regarding the
materiality or nonpublic nature of the requested information
by consulting their department head, who will contact the
General Counsel, as appropriate.
o Information Backflow - Associates should take care to avoid
inadvertent backflow of information that may be interpreted
as the prohibited communication of material nonpublic
information. For example, the mere fact that someone in a
Potential Insider Function, such as a mergers and
acquisitions specialist, requests information from an
associate in an Investment Function could give the latter
person a clue as to possible material developments affecting
a customer.
o Customers - Associates in Investment Functions must not
state or imply to customers that associates making decisions
or recommendations will have the benefit of information from
Mellon's Potential Insider Functions. When appropriate,
associates should inform customers of Mellon's "Chinese
Wall" policy.
o Conflicts of Interest - Associates should not receive or
pass on any information that would create an undue risk of
Mellon or any associate having a conflict of interest or
breaching a fiduciary obligation.
REPORTING RECEIPT OF MATERIAL NONPUBLIC INFORMATION -
Associates in Investment Functions who receive any suspected
material nonpublic information must report such receipt
promptly to their department or entity head. A department or
entity head who receives information believed to be material
and nonpublic should report the matter promptly to the
General Counsel. If the General Counsel determines that the
information is material and nonpublic, the affected
department or entity will:
o immediately suspend all trading in the securities of the
issuer to which the information applies, as well as all
recommendations with respect to such securities. The
suspension will remain in effect as long as the information
remains both material and nonpublic.
o notify the General Counsel before resuming transactions or
recommendations in the affected securities. The General
Counsel will advise as to possible further steps, including
ascertaining the validity and nonpublic nature of the
information with the issuer of the securities; requesting
the issuer of the securities, or other appropriate parties,
to disseminate the information promptly to the public if the
information is valid and nonpublic; and publishing the
information.
In certain circumstances, the department or entity head may
be able to demonstrate conclusively that the receipt of the
material nonpublic information has been confined to an
individual or small group of individuals and that measures
other than those described above will comparably reduce the
likelihood of trading on the basis of the information. These
measures might include temporarily relieving individuals of
responsibility for any Investment Functions and preventing
any contact between those individuals and associates in
Investment Functions. In these circumstances, the department
head, with the approval of the General Counsel, may take
those measures rather than the measures described above.
8
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 142
FUNCTIONS "ABOVE THE WALL" - Some functions at Mellon are
deemed to be "Above the Wall." For example, members of
senior management, Auditing, Risk Management and Compliance,
and the Legal Department will typically need to have access
to information on both sides of the "Chinese Wall" to carry
out their job responsibilities. These individuals cannot
rely on the procedural safeguards of the "Chinese Wall" and,
therefore, need to be particularly careful to avoid any
improper use or dissemination of material nonpublic
information.
SUPPLEMENTAL PROCEDURES - As appropriate, certain Mellon
departments or areas, such as Mellon Trust, should establish
their own procedures to reduce the possibility of
information being communicated to associates who should not
have access to that information.
9
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 143
SECTION FOUR
RESTRICTIONS ON TRANSACTIONS
IN MELLON SECURITIES
Associates who engage in transactions involving Mellon
securities should be aware of their unique responsibilities
with respect to such transactions arising from the
employment relationship and should be sensitive to even the
appearance of impropriety.
The following restrictions apply to all transactions in
Mellon's publicly traded securities occurring in the
associate's own account and in all other accounts over which
the associate could be expected to exercise influence or
control (see provisions under "Beneficial Ownership" below
for a more complete discussion of the accounts to which
these restrictions apply). These restrictions are to be
followed in addition to any restrictions that apply to
particular officers or directors (such as restrictions under
Section 16 of the Securities Exchange Act of 1934).
o Short Sales - Short sales of Mellon securities by associates
are prohibited.
o Sales Within 60 Days of Purchase - Sales of Mellon
securities within 60 days of acquisition are prohibited. For
purposes of the 60-day holding period, securities will be
deemed to be equivalent if one is convertible into the
other, if one entails a right to purchase or sell the other,
or if the value of one is expressly dependent on the value
of the other (e.g., derivative securities).
In cases of extreme hardship, associates (other than senior
management) may obtain permission to dispose of Mellon
securities acquired within 60 days of the proposed
transaction, provided the transaction is pre-cleared with
the Manager of Corporate Compliance and any profits earned
are disgorged in accordance with procedures established by
senior management. The Manager of Corporate Compliance
reserves the right to suspend the 60-day holding period
restriction in the event of severe market disruption.
o Margin Transactions - Purchases on margin of Mellon's
publicly traded securities by associates is prohibited.
Margining Mellon securities in connection with a cashless
exercise of an employee stock option through the Human
Resources Department is exempt from this restriction.
Further, Mellon securities may be used to collateralize
loans or the acquisition of securities other than those
issued by Mellon.
o Option Transactions - Option transactions involving Mellon's
publicly traded securities are prohibited. Transactions
under Mellon's Long-Term Incentive Plan or other associate
option plans are exempt from this restriction.
o Major Mellon Events - Associates who have knowledge of major
Mellon events that have not yet been announced are
prohibited from buying and selling Mellon's publicly traded
securities before such public announcements, even if the
associate believes the event does not constitute material
nonpublic information.
o Mellon Blackout Period - Associates are prohibited from
buying or selling Mellon's publicly traded securities during
a blackout period, which begins the 16th day of the last
month of each calendar quarter and ends three business days
after Mellon publicly announces the financial results for
that quarter. In cases of extreme hardship, associates
(other than senior management) may request permission from
the Manager of Corporate Compliance to dispose of Mellon
securities during the blackout period.
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BENEFICIAL OWNERSHIP - The provisions discussed above apply
to transactions in the associate's own name and to all other
accounts over which the associate could be expected to
exercise influence or control, including:
o accounts of a spouse, minor children or relatives to whom
substantial support is contributed;
o accounts of any other member of the associate's household
(e.g., a relative living in the same home);
o trust accounts for which the associate acts as trustee or
otherwise exercises any type of guidance or influence;
o Corporate accounts controlled, directly or indirectly, by
the associate;
o arrangements similar to trust accounts that are established
for bona fide financial purposes and benefit the associate;
and
o any other account for which the associate is the beneficial
owner (see Glossary for a more complete legal definition of
"beneficial owner").
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SECTION FIVE
RESTRICTIONS ON TRANSACTIONS
IN OTHER SECURITIES
Purchases or sales by an associate of the securities of
issuers with which Mellon does business, or other third
party issuers, could result in liability on the part of such
associate. Associates should be sensitive to even the
appearance of impropriety in connection with their personal
securities transactions. Associates should refer to the
provisions under "Beneficial Ownership" (Section Four,
"Restrictions on Transactions in Mellon Securities"), which
are equally applicable to the following provisions.
The Mellon Code of Conduct contains certain restrictions on
investments in parties that do business with Mellon.
Associates should refer to the Code of Conduct and comply
with such restrictions in addition to the restrictions and
reporting requirements set forth below.
The following restrictions apply to all securities
transactions by associates:
o Credit or Advisory Relationship - Associate may not buy or
sell securities of a company if they are considering
granting, renewing or denying any credit facility to that
company or acting as an adviser to that company with respect
to its securities. In addition, lending associates who have
assigned responsibilities in a specific industry group are
not permitted to trade securities in that industry. This
prohibition does not apply to transactions in securities
issued by open-end investment companies.
o Customer Transactions - Trading for customers and Mellon
accounts should always take precedence over associates'
transactions for their own or related accounts.
o Front Running - Associates may not engage in "front
running," that is, the purchase or sale of securities for
their own accounts on the basis of their knowledge of
Mellon's trading positions or plans.
o Initial Public Offerings - Mellon prohibits its associates
from acquiring any securities in an initial public offering
("IPO").
o Margin Transactions - Margin trading is a highly leveraged
and relatively risky method of investing that can create
particular problems for financial services employees. For
this reason, all associates are urged to avoid margin
trading.
Prior to establishing a margin account, the associate must
obtain the written permission of the Manager of Corporate
Compliance. Any associate having a margin account prior to
the effective date of this Policy must notify the Manager of
Corporate Compliance of the existence of such account.
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All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance as
an interested party on that account. Associates must ensure
that the Manager of Corporate Compliance promptly receives
copies of all trade confirmations and statements relating to
the account directly from the broker. If requested by a
brokerage firm, please contact the Manager of Corporate
Compliance to obtain a letter (sometimes referred to as a
"407 letter") granting permission to maintain a margin
account. Trade confirmations and statements are not required
on margin accounts established at Dreyfus Investment
Services Corporation for the sole purpose of cashless
exercises of employee stock options. In addition, products
may be offered by a broker/dealer that, because of their
characteristics, are considered margin accounts but have
been determined by the Manager of Corporate Compliance to be
outside the scope of this Policy (e.g., a Cash Management
Account which provides overdraft protection for the
customer). Any questions regarding the establishment, use
and reporting of margin accounts should be directed to the
Manager of Corporate Compliance. Examples of an instruction
letter to a broker are shown in Exhibits B1 and B2.
o Material Nonpublic Information - Associates possessing
material nonpublic information regarding any issuer of
securities must refrain from purchasing or selling
securities of that issuer until the information becomes
public or is no longer considered material.
o Naked Options, Excessive Trading - Mellon discourages all
associates from engaging in short-term or speculative
trading, in trading naked options, in trading that could be
deemed excessive or in trading that could interfere with an
associate's job responsibilities.
o Private Placements - Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Preclearance
Compliance Officer (applicable only to Investment
Associates), the Manager of Corporate Compliance and the
associate's department head. Approval must be given by all
appropriate aforementioned persons for the acquisition to be
considered approved. After receipt of the necessary
approvals and the acquisition, associates are required to
disclose that investment when they participate in any
subsequent consideration of an investment in the issuer for
an advised account. Final decision to acquire such
securities for an advised account will be subject to
independent review.
o Scalping - Associates may not engage in "scalping," that is,
the purchase or sale of securities for their own or Mellon's
accounts on the basis of knowledge of customers' trading
positions or plans or Mellon's forthcoming investment
recommendations.
o Short-Term Trading - Associates are discouraged from
purchasing and selling, or from selling and purchasing, the
same (or equivalent) securities within 60 calendar days.
With respect to Investment Associates only, any profits
realized on such short-term trades must be disgorged in
accordance with procedures established by senior management.
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SECTION SIX
CLASSIFICATION OF ASSOCIATES
Associates are engaged in a wide variety of activities for
Mellon. In light of the nature of their activities and the
impact of federal and state laws and the regulations
thereunder, the Policy imposes different requirements and
limitations on associates based on the nature of their
activities for Mellon. To assist the associates in complying
with the requirements and limitations imposed on them in
light of their activities, associates are classified into
one of three categories: Insider Risk Associate, Investment
Associate and Other Associate. Appropriate requirements and
limitations are specified in the Policy based upon the
associate's classification.
INSIDER RISK ASSOCIATE -
You are considered to be an Insider Risk Associate if you
are:
o employed in any of the following departments or functional
areas, however named, of a Mellon entity other than Dreyfus
(see Glossary for definition of "Dreyfus"):
<TABLE>
<S> <C> <C>
- Auditing - International
- Capital Markets - Leasing
- Corporate Affairs - Legal
- Credit Policy - Mellon Business Credit
- Credit Recovery - Middle Market
- Credit Review - Portfolio and Funds Management
- Domestic Corporate Banking - Risk Management and Compliance
- Finance - Strategic Planning
- Institutional Banking - Wholesale, Administration and Operations
</TABLE>
o a member of the Mellon Senior Management Committee, provided
that those members of the Mellon Senior Management Committee
who have management responsibility for fiduciary activities
or who routinely have access to information about customers'
securities transactions are considered to be Investment
Associates and are subject to those provisions of the Policy
pertaining to Investment Associates;
o employed by a broker/dealer subsidiary of a Mellon entity
other than Dreyfus;
o an associate in the Stock Transfer business unit and have
been specifically designated as an Insider Risk Associate by
the Manager of Corporate Compliance; or
o an associate specifically designated as an Insider Risk
Associate by the Manager of Corporate Compliance.
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INVESTMENT ASSOCIATE -
You are considered to be an Investment Associate if you are:
o a member of Mellon's Senior Management Committee who, as
part of his/her usual duties, has management responsibility
for fiduciary activities or routinely has access to
information about customers' securities transactions;
o a Dreyfus associate;
o an associate of a Mellon entity registered under the
Investment Advisers Act of 1940;
o employed in the trust area of Mellon and:
- have the title of Vice President, First Vice President
or Senior Vice President; or
- have access to material, confidential information
regarding securities transactions by or on behalf of
Mellon customers; or
o an associate specifically designated as an Investment
Associate by the Manager of Corporate Compliance.
OTHER ASSOCIATE -
You are considered to be an Other Associate if you are an
associate of Mellon Bank Corporation or any of its direct or
indirect subsidiaries who is not either an Insider Risk
Associate or an Investment Associate.
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PART II - APPLICABLE TO INSIDER
RISK ASSOCIATES ONLY
PROHIBITION ON INVESTMENTS IN SECURITIES OF FINANCIAL
SERVICES ORGANIZATIONS
You are prohibited from acquiring any security issued by a
financial services organization if you are:
o a member of the Mellon Senior Management Committee. For
purposes of this restriction only, this prohibition also
applies to those members of the Mellon Senior Management
Committee who are considered Investment Associates.
o employed in any of the following departments of a Mellon
entity other than Dreyfus (see Glossary for definition of
"Dreyfus"):
- Strategic Planning - Finance
- Institutional Banking - Legal
o an associate specifically designated by the Manager of
Corporate Compliance and informed that this prohibition is
applicable to you.
Financial Services Organizations - The term "security issued
by a financial services organization" includes any security
issued by:
<TABLE>
<S> <C>
- Commercial Banks - Bank Holding Companies
(other than Mellon) (other than Mellon)
- Thrifts - Savings and Loan Associations
- Insurance Companies - Broker/Dealers
- Investment Advisory Companies - Transfer Agents
- Shareholder Servicing Companies - Other Depository Institutions
</TABLE>
The term "securities issued by a financial services
organization" DOES NOT INCLUDE securities issued by mutual
funds, variable annuities or insurance policies. Further,
for purposes of determining whether a company is a financial
services organization, subsidiaries and parent companies are
treated as separate issuers.
Effective Date - The foregoing restrictions will be
effective upon adoption of this Policy. Securities of
financial services organizations properly acquired before
the later of the effective date of this Policy or the date
of hire may be maintained or disposed of at the owner's
discretion.
Additional securities of a financial services organization
acquired through the reinvestment of the dividends paid by
such financial services organization through a dividend
reinvestment program (DRIP) are not subject to this
prohibition, provided your election to participate in the
DRIP predates the later of the effective date of this Policy
or date of hire. Optional cash purchases through a DRIP are
subject to this prohibition.
Within 30 days of the later of the effective date of this
Policy or date of becoming subject to this prohibition, all
holdings of securities of financial services organizations
must be disclosed in writing to the Manager of Corporate
Compliance. Periodically, you will be asked to file an
updated disclosure of all your holdings of securities of
financial services organizations.
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CONFLICT OF INTEREST - No Insider Risk Associate may engage
in or recommend any securities transaction that places, or
appears to place, his or her own interests above those of
any customer to whom investment services are rendered,
including mutual funds and managed accounts, or above the
interests of Mellon.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Insider Risk Associates must notify the Manager of Corporate
Compliance in writing and receive preclearance before they
engage in any purchase or sale of a security. Insider Risk
Associates should refer to the provisions under "Beneficial
Ownership" (Section Four, "Restrictions on Transactions in
Mellon Securities"), which are equally applicable to these
provisions.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
o purchases or sales of Exempt Securities (see Glossary);
o purchases or sales of municipal bonds;
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (e.g., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Manager of Corporate Compliance, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
o transactions that are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an associate
stock option if the sale is part of a "netting of shares" or
"cashless exercise" administered by the Human Resources
Department (for which the Human Resources Department will
forward information to the Manager of Corporate Compliance);
o the automatic reinvestment of dividends under a DRIP
(preclearance is required for optional cash purchases under
a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described above;
and/or
o those situations where the Manager of Corporate Compliance
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Manager of Corporate Compliance by completing a Preclearance
Request Form (see Exhibit C1).
The Manager of Corporate Compliance will notify the Insider
Risk Associate whether the request is approved or denied,
without disclosing the reason for such approval or denial.
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Notifications may be given in writing or verbally by the
Manager of Corporate Compliance to the Insider Risk
Associate. A record of such notification will be maintained
by the Manager of Corporate Compliance. However, it shall be
the responsibility of the Insider Risk Associate to obtain a
written record of the Manager of Corporate Compliance's
notification within 24 hours of such notification. The
Insider Risk Associate should retain a copy of this written
record.
As there could be many reasons for preclearance being
granted or denied, Insider Risk Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Insider Risk Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
o preclearance requests should not be made for a transaction
that the Insider Risk Associate does not intend to make; and
o Insider Risk Associates should not discuss with anyone else,
inside or outside Mellon, the response they received to a
preclearance request.
Every Insider Risk Associate must follow these procedures or
risk serious sanctions, including dismissal. If you have any
questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
Restricted List - The Manager of Corporate Compliance will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Insider Risk Associates. Restricted
List(s) will not be distributed outside of the Risk
Management and Compliance Department. From time to time,
such trading restrictions may be appropriate to protect
Mellon and its Insider Risk Associates from potential
violations, or the appearance of violations, of securities
laws. The inclusion of a company on the Restricted List
provides no indication of the advisability of an investment
in the company's securities or the existence of material
nonpublic information on the company. Nevertheless, the
contents of the Restricted List will be treated as
confidential information to avoid unwarranted inferences.
To assist the Manager of Corporate Compliance in identifying
companies that may be appropriate for inclusion on the
Restricted List, the department heads of sections in which
Insider Risk Associates are employed will inform the Manager
of Corporate Compliance in writing of any companies they
believe should be included on the Restricted List, based
upon facts known or readily available to such department
heads. Although the reasons for inclusion on the Restricted
List may vary, they could typically include the following:
o Mellon is involved as a lender, investor or adviser in a
merger, acquisition or financial restructuring involving the
company;
o Mellon is involved as a selling shareholder in a public
distribution of the company's securities;
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o Mellon is involved as an agent in the distribution of the
company's securities;
o Mellon has received material nonpublic information on the
company;
o Mellon is considering the exercise of significant creditors'
rights against the company; or
o The company is a Mellon borrower in Credit Recovery.
Department heads of sections in which Insider Risk
Associates are employed are also responsible for notifying
the Manager of Corporate Compliance in writing of any change
in circumstances making it appropriate to remove a company
from the Restricted List.
PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Insider Risk Associates are
required to instruct their brokers to submit directly to the
Manager of Corporate Compliance copies of all trade
confirmations and statements relating to their account. An
example of an instruction letter to a broker is contained in
Exhibit B1.
o Report of Transactions in Mellon Securities - Insider Risk
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases under
Mellon's Dividend Reinvestment and Common Stock Purchase
Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the exercise
of an associate stock option unless the sale is part of a
"netting of shares" or "cashless exercise" administered by
the Human Resources Department (for which the Human
Resources Department will forward information to the Manager
of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's Restricted
Stock Award Plan and the receipt or exercise of options
under Mellon's Long-Term Profit Incentive Plan are not
considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER BEST
EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE, ALL
PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS OF
SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE FOR
INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND BY OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
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PART III - APPLICABLE TO
INVESTMENT ASSOCIATES ONLY
Because of their particular responsibilities, Investment
Associates are subject to different preclearance and
personal securities reporting requirements as discussed
below.
SPECIAL STANDARDS OF CONDUCT FOR INVESTMENT ASSOCIATES
Conflict of Interest - No Investment Associate may recommend
a securities transaction for a Mellon customer to whom a
fiduciary duty is owed, or for Mellon, without disclosing
any interest he or she has in such securities or issuer
(other than an interest in publicly traded securities where
the total investment is equal to or less than $25,000),
including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Investment Associate in
such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Investment Associate or any
party in which the Investment Associate has a beneficial
ownership interest (see "Beneficial Ownership" in Section
Four, "Restrictions On Transactions in Mellon Securities").
Portfolio Information - No Investment Associate may divulge
the current portfolio positions, or current or anticipated
portfolio transactions, programs or studies, of Mellon or
any Mellon customer to anyone unless it is properly within
his or her job responsibilities to do so.
Material Nonpublic Information - No Investment Associate may
engage in or recommend a securities transaction, for his or
her own benefit or for the benefit of others, including
Mellon or its customers, while in possession of material
nonpublic information regarding such securities. No
Investment Associate may communicate material nonpublic
information to others unless it is properly within his or
her job responsibilities to do so.
Short-Term Trading - Any Investment Associate who purchases
and sells, or sells and purchases, the same (or equivalent)
securities within any 60-calendar-day period is required to
disgorge all profits realized on such transaction in
accordance with procedures established by senior management.
For this purpose, securities will be deemed to be equivalent
if one is convertible into the other, if one entails a right
to purchase or sell the other, or if the value of one is
expressly dependent on the value of the other (e.g.,
derivative securities).
Additional Restrictions For Dreyfus Associates and
Associates of Mellon Entities Registered Under The
Investment Advisers Act of 1940 ONLY ("40 Act Associates")
o Outside Activities - No 40 Act associate may serve on the
board of directors/trustees or as a general partner of any
publicly traded company (other than Mellon) without the
prior approval of the Manager of Corporate Compliance.
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o Gifts - All 40 Act associates are prohibited from accepting
gifts from outside companies, or their representatives, with
an exception for gifts of (1) a de minimis value and (2) an
occasional meal, a ticket to a sporting event or the
theater, or comparable entertainment for the 40 Act
associate and, if appropriate, a guest, which is neither so
frequent nor extensive as to raise any question of
impropriety. A gift shall be considered de minimis if it
does not exceed an annual amount per person fixed
periodically by the National Association of Securities
Dealers, which is currently $100 per person.
o Blackout Period - 40 Act associates will not be given
clearance to execute a transaction in any security that is
being considered for purchase or sale by an affiliated
investment company, managed account or trust, for which a
pending buy or sell order for such affiliated account is
pending, and for two business days after the transaction in
such security for such affiliated account has been effected.
This provision does not apply to transactions effected or
contemplated by index funds.
In addition, portfolio managers for the investment companies
are prohibited from buying or selling a security within
seven calendar days before and after such investment company
trades in that security. Any violation of the foregoing will
require the violator to disgorge all profit realized with
respect to such transaction.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - All
Investment Associates must notify the Preclearance
Compliance Officer (see Glossary) in writing and receive
preclearance before they engage in any purchase or sale of a
security.
Exemptions from Requirement to Preclear - Preclearance is
not required for the following transactions:
o purchases or sales of "Exempt Securities" (see Glossary);
o purchases or sales effected in any account over which an
associate has no direct or indirect control over the
investment decision-making process (i.e., nondiscretionary
trading accounts). Nondiscretionary trading accounts may
only be maintained, without being subject to preclearance
procedures, when the Preclearance Compliance Officer, after
a thorough review, is satisfied that the account is truly
nondiscretionary;
o transactions which are non-volitional on the part of an
associate (such as stock dividends);
o the sale of stock received upon the exercise of an associate
stock option if the sale is part of a "netting of shares" or
"cashless exercise" administered by the Human Resources
Department (for which the Human Resources Department will
forward information to the manager of Corporate Compliance);
o purchases which are part of an automatic reinvestment of
dividends under a DRIP (Preclearance is required for
optional cash purchases under a DRIP);
o purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of securities, to
the extent such rights were acquired from such issuer;
o sales of rights acquired from an issuer, as described above;
and/or
o those situations where the Preclearance Compliance Officer
determines, after taking into consideration the particular
facts and circumstances, that prior approval is not
necessary.
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Requests for Preclearance - All requests for preclearance
for a securities transaction shall be submitted to the
Preclearance Compliance Officer by completing a Preclearance
Request Form. (Investment Associates other than Dreyfus
associates are to use the Preclearance Request Form shown as
Exhibit C1. Dreyfus associates are to use the Preclearance
Request Form shown as Exhibit C2.)
The Preclearance Compliance Officer will notify the
Investment Associate whether the request is approved or
denied without disclosing the reason for such approval or
denial.
Notifications may be given in writing or verbally by the
Preclearance Compliance Officer to the Investment Associate.
A record of such notification will be maintained by the
Preclearance Compliance Officer. However, it shall be the
responsibility of the Investment Associate to obtain a
written record of the Preclearance Compliance Officer's
notification within 24 hours of such notification. The
Investment Associate should retain a copy of this written
record.
As there could be many reasons for preclearance being
granted or denied, Investment Associates should not infer
from the preclearance response anything regarding the
security for which preclearance was requested.
Although making a preclearance request does not obligate an
Investment Associate to do the transaction, it should be
noted that:
o preclearance authorization will expire at the end of the day
on which preclearance is given;
o preclearance requests should not be made for a transaction
that the Investment Associate does not intend to make; and
o Investment Associates should not discuss with anyone else,
inside or outside Mellon, the response the Investment
Associate received to a preclearance request.
Every Investment Associate must follow these procedures or
risk serious sanctions, including dismissal. If you have any
questions about these procedures, consult the Preclearance
Compliance Officer. Interpretive issues that arise under
these procedures shall be decided by, and are subject to the
discretion of, the Manager of Corporate Compliance.
Restricted List - Each Preclearance Compliance Officer will
maintain a list (the "Restricted List") of companies whose
securities are deemed appropriate for implementation of
trading restrictions for Investment Associates in their
area. From time to time, such trading restrictions may be
appropriate to protect Mellon and its Investment Associates
from potential violations, or the appearance of violations,
of securities laws. The inclusion of a company on the
Restricted List provides no indication of the advisability
of an investment in the company's securities or the
existence of material nonpublic information on the company.
Nevertheless, the contents of the Restricted List will be
treated as confidential information in order to avoid
unwarranted inferences.
In order to assist the Preclearance Compliance Officer in
identifying companies that may be appropriate for inclusion
on the Restricted List, the head of the
entity/department/area in which Investment Associates are
employed will inform the appropriate Preclearance Compliance
Officer in writing of any companies that they believe should
be included on the Restricted List based upon facts known or
readily available to such department heads.
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PERSONAL SECURITIES TRANSACTIONS REPORTS
o Brokerage Accounts - All Investment Associates are required
to instruct their brokers to submit directly to the Manager
of Corporate Compliance copies of all trade confirmations
and statements relating to their account. Examples of
instruction letters to a broker are contained in Exhibits B1
and B2.
o Report of Transactions in Mellon Securities - Investment
Associates must also report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities if the transaction was
not through a brokerage account as described above.
Purchases and sales of Mellon securities include the
following:
DRIP Optional Cash Purchases - Optional cash purchases under
Mellon's Dividend Reinvestment and Common Stock Purchase
Plan (the "Mellon DRIP").
Stock Options - The sale of stock received upon the exercise
of an associate stock option unless the sale is part of a
"netting of shares" or "cashless exercise" administered by
the Human Resources Department (for which the Human
Resources Department will forward information to the Manager
of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's Restricted
Stock Award Plan, and the receipt or exercise of options
under Mellon's Long-Term Profit Incentive Plan are not
considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
o Statement of Securities Holdings - Within ten days of
receiving this Policy and on an annual basis thereafter, all
Investment Associates must submit to the Manager of
Corporate Compliance a statement of all securities in which
they presently have any direct or indirect beneficial
ownership other than Exempt Securities, as defined in the
Glossary. Investment Associates should refer to "Beneficial
Ownership" in Section Four, "Restrictions on Transactions in
Mellon Securities," which is also applicable to Investment
Associates. Such statements should be in the format shown in
Exhibit D. The annual report must be submitted by January 31
and must report all securities holdings other than Exempt
Securities. The annual statement of securities holdings
contains an acknowledgment that the Investment Associate has
read and complied with this Policy.
o Special Requirement with Respect to Affiliated Investment
Companies - The portfolio managers, research analysts and
other Investment Associates specifically designated by the
Manager of Corporate Compliance are required within ten
calendar days of receiving this Policy (and by no later than
ten calendar days after the end of each calendar quarter) to
report every transaction in the securities issued by an
affiliated investment company occurring in an account in
which the Investment Associate has a beneficial ownership
interest. The quarterly reporting requirement may be
satisfied by notifying the Manager of Corporate Compliance
of the name of the investment company, account name and
account number for which such quarterly reports must be
submitted.
23
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 157
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER BEST
EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE, ALL
PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS OF
SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE FOR
INSPECTION BY APPROPRIATE REGULATORY AGENCIES, AND BY OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
DOCUMENTS RECEIVED FROM DREYFUS ASSOCIATES ARE ALSO
AVAILABLE FOR INSPECTION BY THE BOARDS OF DIRECTORS OF
DREYFUS AND BY THE BOARDS OF DIRECTORS (OR TRUSTEES OR
MANAGING GENERAL PARTNERS, AS APPLICABLE) OF THE INVESTMENT
COMPANIES MANAGED OR ADMINISTERED BY DREYFUS.
24
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 158
PART IV - APPLICABLE TO
OTHER ASSOCIATES ONLY
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS - Except
for private placements, Other Associates are permitted to
engage in personal securities transactions without obtaining
prior approval from the Manager of Corporate Compliance (for
preclearance of private placements, use the Preclearance
Request Form shown as Exhibit C1.)
PERSONAL SECURITIES TRANSACTIONS REPORTS - Other Associates
are not required to report their personal securities
transactions other than margin transactions and transactions
involving Mellon securities as discussed below. Other
Associates are required to instruct their brokers to submit
directly to the Manager of Corporate Compliance copies of
all confirmations and statements pertaining to margin
accounts. Examples of an instruction letter to a broker are
shown in Exhibit B1.
Report of Transactions in Mellon Securities - Other
Associates must report in writing to the Manager of
Corporate Compliance within ten calendar days whenever they
purchase or sell Mellon securities. Purchases and sales of
Mellon securities include the following:
o DRIP Optional Cash Purchases - Optional cash purchases under
Mellon's Dividend Reinvestment and Common Stock Purchase
Plan (the "Mellon DRIP").
o Stock Options - The sale of stock received upon the exercise
of an associate stock option unless the sale is part of a
"netting of shares" or "cashless exercise" administered by
the Human Resources Department (for which the Human
Resources Department will forward information to the Manager
of Corporate Compliance).
It should be noted that the reinvestment of dividends under
the DRIP, changes in elections under Mellon's Retirement
Savings Plan, the receipt of stock under Mellon's Restricted
Stock Award Plan and the receipt or exercise of options
under Mellon's Long-Term Profit Incentive Plan are not
considered purchases or sales for the purpose of this
reporting requirement.
An example of a written report to the Manager of Corporate
Compliance is contained in Exhibit A.
RESTRICTIONS ON TRANSACTIONS IN OTHER SECURITIES
Margin Transactions - Prior to establishing a margin
account, Other Associates must obtain the written permission
of the Manager of Corporate Compliance. Other Associates
having a margin account prior to the effective date of this
Policy must notify the Manager of Corporate Compliance of
the existence of such account.
25
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 159
All associates having margin accounts, other than described
below, must designate the Manager of Corporate Compliance as
an interested party on each account. Associates must ensure
that the Manager of Corporate Compliance promptly receives
copies of all trade confirmations and statements relating to
the accounts directly from the broker. If requested by a
brokerage firm, please contact the Manager of Corporate
Compliance to obtain a letter (sometimes referred to as a
"407 letter") granting permission to maintain a margin
account. Trade confirmations and statements are not required
on margin accounts established at Dreyfus Investment
Services Corporation for the sole purpose of cashless
exercises of Mellon employee stock options. In addition,
products may be offered by a broker/dealer that, because of
their characteristics, are considered margin accounts but
have been determined by the Manager of Corporate Compliance
to be outside the scope of this Policy (e.g., a Cash
Management account which provides overdraft protection for
the customer). Any questions regarding the establishment,
use and reporting of margin accounts should be directed to
the Manager of Corporate Compliance. An example of an
instruction letter to a broker is shown in Exhibit B1.
Private Placements - Other Associates are prohibited from
acquiring any security in a private placement unless they
obtain the prior written approval of the Manager of
Corporate Compliance and the Associate's department head.
Approval must be given by both of the aforementioned persons
for the acquisition to be considered approved.
As there could be many reasons for preclearance being
granted or denied, Other Associates should not infer from
the preclearance response anything regarding the security
for which preclearance was requested.
Although making a preclearance request does not obligate an
Other Associate to do the transaction, it should be noted
that:
o preclearance authorization will expire at the end of the
third business day after it is received (the day
authorization is granted is considered the first business
day);
o preclearance requests should not be made for a transaction
that the Other Associate does not intend to make; and
o Other Associates should not discuss with anyone else, inside
or outside Mellon, the response they received to a
preclearance request.
Every Other Associate must follow these procedures or risk
serious sanctions, including dismissal. If you have any
questions about these procedures you should consult the
Manager of Corporate Compliance. Interpretive issues that
arise under these procedures shall be decided by, and are
subject to the discretion of, the Manager of Corporate
Compliance.
CONFIDENTIAL TREATMENT
THE MANAGER OF CORPORATE COMPLIANCE WILL USE HIS OR HER BEST
EFFORTS TO ASSURE THAT ALL REQUESTS FOR PRECLEARANCE, ALL
PERSONAL SECURITIES TRANSACTION REPORTS AND ALL REPORTS OF
SECURITIES HOLDINGS ARE TREATED AS "PERSONAL AND
CONFIDENTIAL." HOWEVER, SUCH DOCUMENTS WILL BE AVAILABLE FOR
INSPECTION BY APPROPRIATE REGULATORY AGENCIES AND OTHER
PARTIES WITHIN AND OUTSIDE MELLON AS ARE NECESSARY TO
EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER THIS POLICY.
26
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 160
PART V - APPLICABLE TO
NONMANAGEMENT BOARD MEMBER
NONMANAGEMENT BOARD MEMBER -
You are considered to be a Nonmanagement Board Member if you
are:
o a director of Dreyfus who is not also an officer or employee
of Dreyfus ("Dreyfus Board Member"); or
o a director, trustee or managing general partner of any
investment company who is not also an officer or employee of
Dreyfus ("Mutual Fund Board Member").
The term "Independent" Mutual Fund Board Member means those
Mutual Fund Board Members who are not deemed "interested
persons" of an investment company, as defined by the
Investment Company Act of 1940, as amended.
STANDARDS OF CONDUCT FOR NONMANAGEMENT BOARD MEMBER
Outside Activities - Nonmanagement Board Members are
prohibited from:
o accepting nomination or serving as a director, trustee or
managing general partner of an investment company not
advised by Dreyfus, without the express prior approval of
the board of directors of Dreyfus and the board of
directors/trustees or managing general partners of the
pertinent Dreyfus-managed fund(s) for which a Nonmanagement
Board Member serves as a director, trustee or managing
general partner;
o accepting employment with or acting as a consultant to any
person acting as a registered investment adviser to an
investment company without the express prior approval of the
board of directors of Dreyfus;
o owning Mellon securities if the Nonmanagement Board Member
is an "Independent" Mutual Fund Board Member, (since that
would destroy his or her "independent" status); and/or
o buying or selling Mellon's publicly traded securities during
a blackout period, which begins the 16th day of the last
month of each calendar quarter and ends three business days
after Mellon publicly announces the financial results for
that quarter.
Insider Trading and Tipping - The provisions set forth in
Section Two, "Insider Trading and Tipping," are applicable
to Nonmanagement Board Members.
27
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 161
Conflict of Interest - No Nonmanagement Board Member may
recommend a securities transaction for Mellon, Dreyfus or
any Dreyfus-managed fund without disclosing any interest he
or she has in such securities or issuer thereof (other than
an interest in publicly traded securities where the total
investment is less than or equal to $25,000), including:
o any direct or indirect beneficial ownership of any
securities of such issuer;
o any contemplated transaction by the Nonmanagement Board
Member in such securities;
o any position with such issuer or its affiliates; and
o any present or proposed business relationship between such
issuer or its affiliates and the Nonmanagement Board Member
or any party in which the Nonmanagement Board Member has a
beneficial ownership interest (see "Beneficial Ownership",
Section Four, "Restrictions on Transaction in Mellon
Securities").
Portfolio Information - No Nonmanagement Board Member may
divulge the current portfolio positions, or current or
anticipated portfolio transactions, programs or studies, of
Mellon, Dreyfus or any Dreyfus-managed fund, to anyone
unless it is properly within his or her responsibilities as
a Nonmanagement Board Member to do so.
Material Nonpublic Information - No Nonmanagement Board
Member may engage in or recommend any securities
transaction, for his or her own benefit or for the benefit
of others, including Mellon, Dreyfus or any Dreyfus-managed
fund, while in possession of material nonpublic information.
No Nonmanagement Board Member may communicate material
nonpublic information to others unless it is properly within
his or her responsibilities as a Nonmanagement Board Member
to do so.
PRECLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS -
Nonmanagement Board Members are permitted to engage in
personal securities transactions without obtaining prior
approval from the Preclearance Compliance Officer.
28
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 162
PERSONAL SECURITY TRANSACTIONS REPORTS -
o "Independent" Mutual Fund Board Members - Any "Independent"
Mutual Fund Board Members, as defined above, who effects a
securities transaction where he or she knew, or in the
ordinary course of fulfilling his or her official duties
should have known, that during the 15-day period immediately
preceding or after the date of such transaction, the same
security was purchased or sold, or was being considered for
purchase or sale by Dreyfus (including any investment
company or other account managed by Dreyfus), are required
to report such personal securities transaction. In the event
a personal securities transaction report is required, it
must be submitted to the Preclearance Compliance Officer not
later than ten days after the end of the calendar quarter in
which the transaction to which the report relates was
effected. The report must include the date of the
transaction, the title and number of shares or principal
amount of the security, the nature of the transaction (e.g.,
purchase, sale or any other type of acquisition or
disposition), the price at which the transaction was
effected and the name of the broker or other entity with or
through whom the transaction was effected. This reporting
requirement can be satisfied by sending a copy of the
confirmation statement regarding such transactions to the
Preclearance Compliance Officer within the time period
specified. Notwithstanding the foregoing, personal
securities transaction reports are not required with respect
to any securities transaction described in "Exemption from
the Requirement to Preclear" in Part III.
o Dreyfus Board Members and "Interested" Mutual Fund Board
Members - Dreyfus Board Members and Mutual Fund Board
Members who are "interested persons" of an investment
company, as defined by the Investment Company Act of 1940,
are required to report their personal securities
transactions. Personal securities transaction reports are
required with respect to any securities transaction other
than those described in "Exemptions from Requirement to
Preclear" on Page 21. Personal securities transaction
reports are required to be submitted to the Preclearance
Compliance Officer not later than ten days after the end of
the calendar quarter in which the transaction to which the
report relates was effected. The report must include the
date of the transaction, the title and number of shares or
principal amount of the security, the nature of the
transaction (e.g., purchase, sale or any other type of
acquisition or disposition), the price at which the
transaction was effected and the name of the broker or other
entity with or through whom the transaction was effected.
This reporting requirement can be satisfied by sending a
copy of the confirmation statement regarding such
transactions to the Preclearance Compliance Officer within
the time period specified.
CONFIDENTIAL TREATMENT
THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER BEST
EFFORTS TO ASSURE THAT ALL PERSONAL SECURITIES TRANSACTION
REPORTS ARE TREATED AS "PERSONAL AND CONFIDENTIAL." HOWEVER,
SUCH DOCUMENTS WILL BE AVAILABLE FOR INSPECTION BY
APPROPRIATE REGULATORY AGENCIES AND OTHER PARTIES WITHIN AND
OUTSIDE MELLON AS ARE NECESSARY TO EVALUATE COMPLIANCE WITH
OR SANCTIONS UNDER THIS POLICY.
29
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 163
GLOSSARY
DEFINITIONS
o APPROVAL - written consent or written notice of
nonobjection.
o ASSOCIATE - any employee of Mellon Bank Corporation or its
direct or indirect subsidiaries; does not include outside
consultants or temporary help.
o BENEFICIAL OWNERSHIP - securities owned of record or held in
the associate's name are generally considered to be
beneficially owned by the associate.
Securities held in the name of any other person are deemed
to be beneficially owned by the associate if by reason of
any contract, understanding, relationship, agreement or
other arrangement, the associate obtains therefrom benefits
substantially equivalent to those of ownership, including
the power to vote, or to direct the disposition of, such
securities. Beneficial ownership includes securities held by
others for the associate's benefit (regardless of record
ownership), e.g. securities held for the associate or
members of the associate's immediate family, defined below,
by agents, custodians, brokers, trustees, executors or other
administrators; securities owned by the associate, but which
have not been transferred into the associate's name on the
books of the company; securities which the associate has
pledged; or securities owned by a corporation that should be
regarded as the associate's personal holding corporation. As
a natural person, beneficial ownership is deemed to include
securities held in the name or for the benefit of the
associate's immediate family, which includes the associate's
spouse, the associate's minor children and stepchildren and
the associate's relatives or the relatives of the
associate's spouse who are sharing the associate's home,
unless because of countervailing circumstances, the
associate does not enjoy benefits substantially equivalent
to those of ownership. Benefits substantially equivalent to
ownership include, for example, application of the income
derived from such securities to maintain a common home,
meeting expenses that such person otherwise would meet from
other sources, and the ability to exercise a controlling
influence over the purchase, sale or voting of such
securities. An associate is also deemed the beneficial owner
of securities held in the name of some other person, even
though the associate does not obtain benefits of ownership,
if the associate can vest or revest title in himself at
once, or at some future time.
In addition, a person will be deemed the beneficial owner of
a security if he has the right to acquire beneficial
ownership of such security at any time (within 60 days)
including but not limited to any right to acquire: (1)
through the exercise of any option, warrant or right; (2)
through the conversion of a security; or (3) pursuant to the
power to revoke a trust, nondiscretionary account or similar
arrangement.
30
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 164
With respect to ownership of securities held in trust,
beneficial ownership includes ownership of securities as a
trustee in instances where either the associate as trustee
or a member of the associate's "immediate family" has a
vested interest in the income or corpus of the trust, the
ownership by the associate of a vested beneficial interest
in the trust and the ownership of securities as a settlor of
a trust in which the associate as the settlor has the power
to revoke the trust without obtaining the consent of the
beneficiaries. Certain exemptions to these trust beneficial
ownership rules exist, including an exemption for instances
where beneficial ownership is imposed solely by reason of
the associate being settlor or beneficiary of the securities
held in trust and the ownership, acquisition and disposition
of such securities by the trust is made without the
associate's prior approval as settlor or beneficiary.
"Immediate family" of an associate as trustee means the
associate's son or daughter (including any legally adopted
children) or any descendant of either, the associate's
stepson or stepdaughter, the associate's father or mother or
any ancestor of either, the associate's stepfather or
stepmother and his spouse.
To the extent that stockholders of a company use it as a
personal trading or investment medium and the company has no
other substantial business, stockholders are regarded as
beneficial owners, to the extent of their respective
interests, of the stock thus invested or traded in. A
general partner in a partnership is considered to have
indirect beneficial ownership in the securities held by the
partnership to the extent of his pro rata interest in the
partnership. Indirect beneficial ownership is not, however,
considered to exist solely by reason of an indirect interest
in portfolio securities held by any holding company
registered under the Public Utility Holding Company Act of
1935, a pension or retirement plan holding securities of an
issuer whose employees generally are beneficiaries of the
plan and a business trust with over 25 beneficiaries.
Any person who, directly or indirectly, creates or uses a
trust, proxy, power of attorney, pooling arrangement or any
other contract, arrangement or device with the purpose or
effect of divesting such person of beneficial ownership as
part of a plan or scheme to evade the reporting requirements
of the Securities Exchange Act of 1934 shall be deemed the
beneficial owner of such security.
The final determination of beneficial ownership is a
question to be determined in light of the facts of a
particular case. Thus, while the associate may include
security holdings of other members of his family, the
associate may nonetheless disclaim beneficial ownership of
such securities.
o "CHINESE WALL" POLICY - procedures designed to restrict the
flow of information within Mellon from units or individuals
who are likely to receive material nonpublic information to
units or individuals who trade in securities or provide
investment advice. (see pages 12-14).
o CORPORATION - Mellon Bank Corporation.
o DREYFUS - The Dreyfus Corporation and its subsidiaries.
o DREYFUS ASSOCIATE - any employee of Dreyfus; does not
include outside consultants or temporary help.
31
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 165
o EXEMPT SECURITIES - Exempt Securities are defined as:
- securities issued or guaranteed by the United States
government or agencies or instrumentalities;
- bankers' acceptances;
- bank certificates of deposit and time deposits;
- commercial paper;
- repurchase agreements; and
- securities issued by open-end investment companies.
o GENERAL COUNSEL - General Counsel of Mellon Bank Corporation
or any person to whom relevant authority is delegated by the
General Counsel.
o INDEX FUND - an investment company which seeks to mirror the
performance of the general market by investing in the same
stocks (and in the same proportion) as a broad-based market
index.
o INITIAL PUBLIC OFFERING (IPO) - the first offering of a
company's securities to the public.
o INVESTMENT COMPANY - a company that issues securities that
represent an undivided interest in the net assets held by
the company. Mutual funds are investment companies that
issue and sell redeemable securities representing an
undivided interest in the net assets of the company.
o MANAGER OF CORPORATE COMPLIANCE - - the associate within the
Risk Management and Compliance Department of Mellon Bank
Corporation who is responsible for administering the
Confidential Information and Securities Trading Policy, or
any person to whom relevant authority is delegated by the
Manager of Corporate Compliance.
o MELLON - Mellon Bank Corporation and all of its direct and
indirect subsidiaries.
o NAKED OPTION - an option sold by the investor which
obligates him or her to sell a security which he or she does
not own.
o NONDISCRETIONARY TRADING ACCOUNT - an account over which the
associated person has no direct or indirect control over the
investment decision-making process.
o OPTION - a security which gives the investor the right but
not the obligation to buy or sell a specific security at a
specified price within a specified time.
o PRECLEARANCE COMPLIANCE OFFICER - a person designated by the
Manager of Corporate Compliance, to administer, among other
things, associates' preclearance request for a specific
business unit.
o PRIVATE PLACEMENT - an offering of securities that is exempt
from registration under the Securities Act of 1933 because
it does not constitute a public offering.
o SENIOR MANAGEMENT COMMITTEE - the Senior Management
Committee of Mellon Bank Corporation.
o SHORT SALE - the sale of a security that is not owned by the
seller at the time of the trade.
32
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 166
INDEX OF EXHIBITS
EXHIBIT A SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
EXHIBIT B SAMPLE INSTRUCTION LETTER TO BROKER
EXHIBIT C PRECLEARANCE REQUEST FORM
EXHIBIT D PERSONAL SECURITIES HOLDINGS FORM
33
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 167
EXHIBIT A
SAMPLE REPORT TO MANAGER OF CORPORATE COMPLIANCE
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------------------------------
MELLON INTEROFFICE
MEMORANDUM
Date: From: Associate
To: Manager, Corporate Compliance Dept:
Aim #:
Aim #: 151-4342 Phone:
Fax:
-----------------------------------------------------------------------------------------------------------------------------
RE: REPORT OF SECURITIES TRADE
Type of Associate: Insider Risk
------------------
Investment
------------------
Other
------------------
Type of Security: Mellon Bank Corporation
------------------
Mellon Bank Corporation - optional cash
------------------ purchases under Dividend Reinvestment
and Common Stock Purchase Plan
Mellon Bank Corporation - exercise of an
------------------ employee stock option
Attached is a copy of the confirmation slip for a securities trade I engaged in on
_____________________, 19xx.
or
On _____________________, 19xx, I (purchased/sold) _______________________ shares of
___________________________ through (broker). I will arrange to have a copy of the
confirmation slip for this trade delivered to you as soon as possible.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 168
EXHIBIT B1
FOR NON-DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm noted above,
please be advised that the Risk Management and Compliance Department of
Mellon Bank should be noted as an "Interested Party" with respect to my
accounts. They should, therefore, be sent copies of all trade confirmations
and account statements relating to my account.
Please send the requested documentation ensuring the account holder's name
appears on all correspondence to:
Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Manager, Corporate Compliance (151-4342)
35
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 169
EXHIBIT B2
FOR DREYFUS ASSOCIATES
Date
Broker ABC
Street Address
City, State ZIP
Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxxx
In connection with my existing brokerage accounts at your firm noted above,
please be advised that the Risk Management and Compliance Department of
Dreyfus Corporation should be noted as an "Interested Party" with respect
to my accounts. They should, therefore, be sent copies of all trade
confirmations and account statements relating to my account.
Please send the requested documentation ensuring the account holder's name
appears on all correspondence to:
Compliance Officer at The Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
Thank you for your cooperation in this request.
Sincerely yours,
Associate
cc: Dreyfus Compliance
36
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 170
EXHIBIT C1
<TABLE>
<S> <C>
PRECLEARANCE REQUEST FORM Non Dreyfus Associates
================================================================================================================
To: Manager, Corporate Compliance 151-4342 (All Insider and Other Associates)
Designated Preclearance Compliance Officer (All Investment Associates excluding Dreyfus)
----------------------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
----------------------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
----------------------------------------------------------------------------------------------------------------
================================================================================================================
ACCOUNT INFORMATION
----------------------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
----------------------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
----------------------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
================================================================================================================
TRANSACTION DETAIL
----------------------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: No. of Shares:
----------------------------------------------------------------------------------------------------------------
If sale, date acquired: Margin Transaction: Initial Public Offering: Private Placement:
[ ]Yes [ ]Yes [ ]Yes
----------------------------------------------------------------------------------------------------------------
================================================================================================================
DISCLOSURE STATEMENT
----------------------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is (1)
attempting to benefit personally from any existing business relationship between the issuer and Mellon or any
Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive trading activity; (3) in
possession of any material non-public information concerning the security to which is request relates.
----------------------------------------------------------------------------------------------------------------
Associate Signature: Date:
----------------------------------------------------------------------------------------------------------------
================================================================================================================
COMPLIANCE OFFICER USE ONLY
----------------------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
----------------------------------------------------------------------------------------------------------------
Comments:
----------------------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on , 19 .
------------------- ----
If you decide not to effect the trade, please notify me.
----------------------------------------------------------------------------------------------------------------
Date: By:
----------------------------------------------------------------------------------------------------------------
</TABLE>
37
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 171
EXHIBIT C2
<TABLE>
<S> <C>
PRECLEARANCE REQUEST FORM Dreyfus Associates Only
================================================================================================================
To: Dreyfus Compliance Officer
----------------------------------------------------------------------------------------------------------------
Associate Name: Title: Date:
----------------------------------------------------------------------------------------------------------------
Phone #: AIM #: Social Security #: Department:
----------------------------------------------------------------------------------------------------------------
================================================================================================================
ACCOUNT INFORMATION
----------------------------------------------------------------------------------------------------------------
Account Name: Account Number: Name of Broker/Bank:
----------------------------------------------------------------------------------------------------------------
Relationship to registered owner(s) (if other than associate)
----------------------------------------------------------------------------------------------------------------
I hereby request approval to execute the following trade in the above account:
================================================================================================================
TRANSACTION DETAIL
----------------------------------------------------------------------------------------------------------------
Buy: Sell: Security/Contract: Symbol:
----------------------------------------------------------------------------------------------------------------
Amount: Current Market Price: If sale, date acquired: Margin Transaction:
----------------------------------------------------------------------------------------------------------------
Is this a New Issue? Is this a Private Placement?
[ ]Yes [ ]No [ ]Yes [ ]No
----------------------------------------------------------------------------------------------------------------
Reason for Transaction, identify source:
----------------------------------------------------------------------------------------------------------------
================================================================================================================
DISCLOSURE STATEMENT
----------------------------------------------------------------------------------------------------------------
I hereby represent that, to the best of my knowledge, neither I nor the registered account holder is (1)
attempting to benefit personally from any existing business relationship between the issuer and Mellon or any
Mellon-related fund or affiliate; (2) engaging in any manipulative or deceptive trading activity; (3) in
possession of any material non-public information concerning the security to which is request relates.
----------------------------------------------------------------------------------------------------------------
Associate Signature: Date:
----------------------------------------------------------------------------------------------------------------
================================================================================================================
COMPLIANCE OFFICER USE ONLY
----------------------------------------------------------------------------------------------------------------
Approved: Disapproved: Authorized Signatory: Date:
----------------------------------------------------------------------------------------------------------------
Comments:
----------------------------------------------------------------------------------------------------------------
Note: This preclearance will lapse at the end of the day on , 19 .
------------------- ----
If you decide not to effect the trade, please notify me.
----------------------------------------------------------------------------------------------------------------
Date: By:
----------------------------------------------------------------------------------------------------------------
</TABLE>
38
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 172
EXHIBIT D1
Return to: Manager, Corporate Compliance
Mellon Bank
P.O. Box 3130
Pittsburgh, PA 15230-3130
STATEMENT OF SECURITY HOLDINGS
As of
-------------------------------------
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you or
your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a beneficial
ownership - (see Glossary in Policy). If none, write NONE. Securities
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, bankers' acceptances, bank certificates of deposit and
time deposits, commercial paper, repurchase agreements and shares of
registered investment companies need not be listed. IF YOUR LIST IS
EXTENSIVE, PLEASE ATTACH A COPY OF THE MOST RECENT STATEMENT FROM YOUR
BROKER(S), RATHER THAN LIST THEM ON THIS FORM.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your registered
representative (if applicable), the account registration and the relevant
account numbers. If none, write NONE.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
--------------------------------------------------------------------------------
Date: Printed Name:
--------------------------------------------------------------------------------
Signature:
--------------------------------------------------------------------------------
39
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 173
EXHIBIT D2
Return to: Compliance Officer at the Dreyfus Corporation
200 Park Avenue
Legal Department
New York, NY 10166
STATEMENT OF SECURITY HOLDINGS
As of
-------------------------
1. List of all securities in which you, your immediate family, any other
member of your immediate household, or any trust or estate of which you or
your spouse is a trustee or fiduciary or beneficiary, or of which your
minor child is a beneficiary, or any person for whom you direct or effect
transactions under a power of attorney or otherwise, maintain a beneficial
interest. If none, write NONE. Securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities, bankers' acceptances, bank
certificates of deposit and time deposits, commercial paper, repurchase
agreements and shares of registered investment companies need not be
listed. IF YOUR LIST IS EXTENSIVE, PLEASE ATTACH A COPY OF THE MOST RECENT
STATEMENT FROM YOUR BROKER(S), RATHER THAN LIST THEM ON THIS FORM.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
NAME OF SECURITY TYPE OF SECURITY AMOUNT OF SHARES
------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
2. List the names and addresses of any broker/dealers holding accounts in
which you have a beneficial interest, including the name of your registered
representative (if applicable), the account registration and the relevant
account numbers. If none, write NONE.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
BROKER/ ADDRESS NAME OF ACCOUNT ACCOUNT
DEALER REGISTERED REGISTRATION NUMBER(S)
REPRESENTATIVE
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief, and are made in good faith. I
acknowledge I have read, understood and complied with the Confidential
Information and Securities Trading Policy.
--------------------------------------------------------------------------------
Date: Printed Name:
--------------------------------------------------------------------------------
Signature:
--------------------------------------------------------------------------------
40
CONFIDENTIAL INFORMATION AND SECURITIES TRADING POLICY-019
<PAGE> 174
CODE OF ETHICS
OF
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
PREAMBLE
This Code of Ethics ("Code") is being adopted in compliance with the
requirements of Sections 204A and 206 of the Investment Advisers Act of 1940
(the "Advisers Act") and Rule 204-2 thereunder and Section 17j of the Investment
Company Act of 1940 (the "40 Act") and Rule 17j-1 thereunder, to effectuate the
purposes and objectives of those provisions. Section 204A of the Advisers Act
requires the establishment and enforcement of policies and procedures reasonably
designed to prevent the misuse of material, nonpublic information by investment
advisers. Rule 204-2 imposes recordkeeping requirements with respect to personal
securities transactions of access persons (defined below). Section 206 of the
Advisers Act and Rule 17j-1 of the 40 Act make it unlawful for certain persons,
including
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. (the "Firm"):
(1) To employ a device, scheme or artifice to defraud any client or
prospective client, or any mutual fund portfolio managed by the
Firm (the "Fund");
(2) To engage in any transaction, practice or course of business
which operates or would operate as a fraud or deceit upon any
client or prospective client, or the Fund;
(3) Acting as principal for his own account, knowingly to sell any
security to or purchase any security from a client, or acting as
broker for a person other than such client, knowingly to effect
any sale or purchase of any security for the account of such
client, without disclosing to such client in writing before the
completion of such transaction the capacity in which he is acting
and obtaining the consent of the client to such transaction. The
prohibitions of this paragraph (3) shall not apply to any
transaction with a customer of a broker or dealer if such broker
or dealer is not acting as an investment adviser in relation to
such transaction;
(4) To engage in any act, practice, or course of business which is
fraudulent, deceptive or manipulative; or
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<PAGE> 175
(5) To make to the Fund any untrue statement of a material fact or
omit to state to the Fund a material fact necessary in order to
make the statements made, in light of the circumstances in which
they are made, not misleading.
This Code contains provisions reasonably necessary to prevent persons
from engaging in acts in violation of the above standard and procedures
reasonably necessary to prevent violations of the Code.
This Code of Ethics is adopted by the Board of Directors of the Firm.
This Code is based upon the principle that the directors and officers of the
Firm, and certain affiliated persons of the Firm, owe a fiduciary duty to, among
others, the clients of the Firm and shareholders of the Fund to conduct their
affairs, including their personal securities transactions, in such manner to
avoid (i) serving their own personal interests ahead of clients or shareholders;
(ii) taking inappropriate advantage of their position with the Firm or the Fund;
and (iii) any actual or potential conflicts of interest or any abuse of their
position of trust and responsibility. This fiduciary duty includes the duty of
the Compliance Officer of the Firm to report violations of this Code of Ethics
to the Firm's Board of Directors and to the Fund's Compliance Officer.
POLICY STATEMENT ON INSIDER TRADING
The Firm forbids any officer, director or employee from trading, either
personally or on behalf of others, including accounts managed by the Firm, on
material nonpublic information or communicating material nonpublic information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." The Firm's policy applies to every officer, director and
employee and extends to activities within and outside their duties at the Firm.
Any questions regarding the Firm's policy and procedures should be referred to
the Firm's Compliance Officer.
The term "insider trading" is not defined in the federal securities
laws, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
1) trading by an insider, while in possession of material nonpublic
information, or
2) trading by a non-insider, while in possession of material
nonpublic information, where the information either was disclosed
to the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated, or
3) communicating material nonpublic information to others.
-2-
<PAGE> 176
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, the Firm may become a temporary insider of a
company it advises or for which it performs other services. For that to occur,
the company must expect the Firm to keep the disclosed nonpublic information
confidential and the relationship must at least imply such a duty before the
Firm will be considered an insider.
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Information is nonpublic until it has been effectively communicated to
the market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The
Wall Street Journal or other publications of general circulation would be
considered public. You should be particularly careful with information received
from client contacts at public companies.
Before trading for yourself or others in the securities of a company
about which you may have potential inside information, ask yourself the
following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment
decisions? Is this information that would substantially effect
the market price of the securities if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to
the marketplace?
If, after consideration of the above, you believe that the information
is material and nonpublic, or if you have questions as to whether the
information is material and nonpublic, you should take the following steps.
i. Report the matter immediately to the Firm's Compliance Officer.
ii. Do not purchase or sell the securities on behalf of yourself or
others.
-3-
<PAGE> 177
iii. Do not communicate the information inside or outside the Firm,
other than to the Firm's Compliance Officer.
iv. After the Firm's Compliance Officer has reviewed the issue, you
will be instructed to continue the prohibitions against trading
and communication, or you will be allowed to trade and
communicate the information.
Information in your possession that you identify as material and
nonpublic may not be communicated to anyone, including persons within the Firm,
except as provided above. In addition, care should be taken so that such
information is secure. For example, files containing material nonpublic
information should be sealed; access to computer files containing material
nonpublic information should be restricted.
The role of the Firm's Compliance Officer is critical to the
implementation and maintenance of the Firm's policy and procedures against
insider trading. The Firm's Supervisory Procedures can be divided into two
classifications - prevention of insider trading and detection of insider
trading.
To prevent insider trading, the Firm will:
i. provide, on a regular basis, an educational program to
familiarize officers, directors and employees with the Firm's
policy and procedures, and
ii. when it has been determined that an officer, director or employee
of the Firm has material nonpublic information,
1. implement measures to prevent dissemination of such
information, and
2. if necessary, restrict officers, directors and employees
from trading the securities.
To detect insider trading, the Firm's Compliance Officer will:
i. review the trading activity reports filed by each officer,
director and employee, and
ii. review the trading activity of accounts managed by the Firm.
-4-
<PAGE> 178
A. DEFINITIONS
(1) "ACCESS PERSON" means any director, officer, general partner, advisory
person, investment personnel, portfolio manager, or employee of the
firm.
(2) "ADVISORY PERSON" means any natural person in a control relationship
to the Firm who obtains information concerning recommendations made to
the Firm or the Fund with regard to the purchase or sale of a security
by the Firm or the Fund.
(3) "AFFILIATED COMPANY" means a company which is an affiliated person.
(4) "AFFILIATED PERSON" of another person means (a) any person directly or
indirectly owning, controlling, or holding with power to vote, 5 per
centum or more of the outstanding voting securities or such other
person; (b) and person 5 per centum or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held
with power to vote, by such other person; (c) any person directly or
indirectly controlling, controlled by, or under common control with,
such other person; (d) any officer, director, partner, copartner, or
employee of such other person; (e) if such other person is an
investment company, any investment adviser thereof or any member of an
advisor board thereof; and (f) if such other person is an
unincorporated investment company not having a board of directors, the
depositor thereof.
(5) A security is "BEING CONSIDERED FOR PURCHASE OR SALE" or is "BEING
PURCHASED OR SOLD" when a recommendation to purchase or sell the
security has been made and communicated, which includes when the Firm
or the Fund has a pending "buy" or "sell" order with respect to a
security, and, with respect to the person making the recommendation,
when such person seriously considers making such a recommendation.
"PURCHASE OR SALE OF A SECURITY" includes the writing of an option to
purchase or sell a security.
(6) "BENEFICIAL OWNERSHIP" shall be as defined in, and interpreted in the
same manner as it would be in determining whether a person is subject
to the provisions of, Section 16 of the Securities Exchange Act of
1934 and the rules and regulations thereunder which, generally
speaking, encompasses those situations where the beneficial owner has
the right to enjoy some economic benefit from the ownership of the
security. A person is normally regarded as the beneficial owner of
securities held in the name of his or her spouse or minor children
living in his or her household.
(7) "CONTROL" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
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<PAGE> 179
result of an official position with such company. Any person who owns
beneficially, either directly or through one or more controlled
companies, more than 25 per centum of the voting securities of a
company shall be presumed to control such company. Any person who does
not so own more than 25 per centum of the voting securities of any
company shall be presumed not to control such company. A natural
person shall be presumed not to be a controlled person.
(8) "INVESTMENT PERSONNEL" means (a) any portfolio manager of the Firm or
the Fund as defined in (10) below; and (b) securities analysts,
traders and other personnel who provide information and advice to the
portfolio manager or who help execute the portfolio manager's
decisions.
(9) "PERSON" means any natural person or a company.
(10) "PORTFOLIO MANAGER" means an employee of the Firm entrusted with the
direct responsibility and authority to make investment decisions.
(11) "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, 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), 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.
Security shall not include securities issued by the government of the
United States or by federal agencies and which are direct obligations
of the United States, bankers' acceptances, bank certificates of
deposit, commercial paper and shares of unaffiliated registered
open-end investment companies (mutual funds).
-6-
<PAGE> 180
B. TRADING RESTRICTIONS FOR ACCESS PERSONS
(1) GENERAL RESTRICTIONS FOR ACCESS PERSONS. Access persons are subject to
the following restrictions with respect to their securities
transactions:
(a) PROHIBITION ON ACCEPTING GIFTS OF MORE THAN DE MINIMIS VALUE.
Access persons are prohibited from accepting any gift or other
thing of more than de minimis value from any person or entity
that does business with or on behalf of the Firm or the Fund; for
the purpose of this Code de minimis shall be considered to be the
annual receipt of gifts from the same source valued at $250 or
less per individual recipient, when the gifts are in relation to
the conduct of the Firm's business;
(b) PROHIBITION ON SERVICE AS A DIRECTOR OR PUBLIC OFFICIAL.
Investment Personnel are prohibited from serving on the board of
directors of any publicly traded company without prior
authorization of the President or other duly authorized officer
of the Firm or the Fund. Any such authorization shall be based
upon a determination that the board service would be consistent
with the interests of the Firm's clients and the Fund's
shareholders. Authorization of board service shall be subject to
the implementation by the Firm of a "Chinese Wall" or other
procedures to isolate such investment personnel from making
decisions about trading in that company's securities.
(c) PROHIBITION ON INITIAL PUBLIC OFFERINGS. Access persons are
prohibited from acquiring securities in an initial public
offering.
(d) PROHIBITION ON PRIVATE PLACEMENTS. Access persons are prohibited
from acquiring securities in a private placement without prior
approval from the Firm's Compliance Officer. In the event an
access person receives approval to purchase securities in a
private placement, the access person must disclose that
investment if he or she plays any part in the Firm's later
consideration of an investment in the issuer.
(e) PROHIBITION ON OPTIONS. Access persons are prohibited from
acquiring or selling any option on any security.
(f) PROHIBITION ON SHORT-SELLING. Access persons are prohibited from
selling any security that the access person does not own or
otherwise engaging in "short-selling" activities.
(g) PROHIBITION ON SHORT-TERM TRADING PROFITS. Access persons are
prohibited from profiting in the purchase and sale, or sale and
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<PAGE> 181
purchase, of the same (or equivalent) securities within sixty
(60) calendar days. Trades made in violation of this prohibition
should be unwound, if possible. Otherwise, any profits realized
on such short-term trades shall be subject to disgorgement.
(2) BLACKOUT RESTRICTIONS FOR ACCESS PERSONS. All access persons are
subject to the following restrictions when their purchases and sales
of securities coincide with trades by any client of the Firm or by the
Fund:
(a) PURCHASES AND SALES WITHIN THREE DAYS FOLLOWING A TRADE BY A
CLIENT OR THE FUND. Access persons are prohibited from purchasing
or selling any security within three calendar days after any
client or the Fund has traded in the same (or a related)
security. In the event that an access person makes a prohibited
purchase or sale within the three-day period, the access person
must unwind the transaction and relinquish any gain from the
transaction to the appropriate client portfolio(s) or the Fund.
(b) PURCHASES WITHIN SEVEN DAYS BEFORE A PURCHASE BY A CLIENT OR THE
FUND. Any access person who purchases a security within seven
calendar days before any client or the Fund purchases the same
(or a related) security is prohibited from selling the security
for a period of six months following the client or the Fund's
trade. In the event that an access person makes a prohibited sale
within the six-month period, the access person must relinquish to
the appropriate client portfolio(s) or the Fund any gain from the
transaction.
(c) SALES WITHIN SEVEN DAYS BEFORE A SALE BY A CLIENT OR THE FUND.
Any access person who sells a security within seven days before
any client or the Fund sells the same (or a related) security
must relinquish to the appropriate client portfolio(s) or the
Fund the difference between the access person's sale price and
the client portfolio(s) or the Fund's sale price (assuming the
access person's sale price is higher).
-8-
<PAGE> 182
C. EXEMPTED TRANSACTIONS
The prohibitions of Sections B (1)(f)(g) and B (2)(a)(b)(c) shall not
apply to:
(1) purchases or sales effected in any account over which the access
person has no direct or indirect influence or control;
(2) purchases or sales which are non-volitional on the part of either
the access person or the Firm;
(3) purchases which are part of an automatic dividend reinvestment
plan; and
(4) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
D. COMPLIANCE PROCEDURES
(1) RECORDS OF SECURITIES TRANSACTIONS. All access persons must
notify the Firm's Compliance Officer if they have opened or
intend to open a brokerage account. Access persons must direct
their brokers to supply the Firm's Compliance officer with
duplicate confirmation statements of their securities
transactions and copies of all periodic statements for their
brokerage accounts.
(2) PRE-CLEARANCE OF SECURITIES TRANSACTIONS. All access persons
shall receive prior written approval from the Firm's Compliance
Officer, or other officer designated by the Board of Directors,
before purchasing or selling securities. The personal securities
transactions pre-clearance form is attached as Exhibit D.
(3) DISCLOSURE OF PERSONAL HOLDINGS. All access persons shall
disclose to the Firm's Compliance Officer all personal securities
holdings upon the later of commencement of employment or adoption
of this Code of Ethics and thereafter on an annual basis as of
December 31. This initial report shall be made on the form
attached as Exhibit A and shall be delivered to the Firm's
Compliance Officer.
(4) CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. Every access
person shall certify annually that:
(a) they have read and understand the Code of Ethics and
recognize that they are subject thereto;
(b) they have complied with the requirements of the Code of
Ethics; and
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<PAGE> 183
(c) they have reported all personal securities transactions
required to be reported pursuant to the requirements of the
Code of Ethics.
The annual report shall be made on the form attached as Exhibit B and
delivered to the Firm's Compliance Officer.
(5) REPORTING REQUIREMENTS
(a) Every access person shall report to the Compliance Officer
of the Firm the information described in, Sub-paragraph
(5)(b) of this Section with respect to transactions in any
security in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership in the security; provided, however, that an access
person shall not be required to make a report with respect
to transactions effected for any account over which such
person does not have any direct or indirect influence.
(b) Reports required to be made under this Paragraph (5) shall
be made not later than 10 days after the end of the calendar
quarter in which the transaction to which the report relates
was effected. Every access person shall be required to
submit a report for all periods, including those periods in
which no securities transactions were effected. A report
shall be made on the form attached hereto as Exhibit C or on
any other form containing the following information:
(i) the date of the transaction, the title and the number
of shares, and the principal amount of each security
involved;
(ii) the nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(iii) the price at which the transaction was effected; and
(iv) the name of the broker, dealer or bank with or through
whom the transaction was effected.
-10-
<PAGE> 184
Duplicate copies of the broker confirmation of all personal
transactions and copies of periodic statements for all
securities accounts may be appended to Exhibit C to fulfill
the reporting requirement.
(c) Any such report may contain a statement that the report
shall not be construed as an admission by the person making
such report that he or she has any direct or indirect
beneficial ownership in the security to which the report
relates.
(d) The Compliance Officer of the Firm shall notify each access
person that he or she is subject to these reporting
requirements, and shall deliver a copy of this Code of
Ethics to each such person upon request.
(e) Reports submitted to the Compliance Officer of the Firm
pursuant to this Code of Ethics shall be confidential and
shall be provided only to the officers and directors of the
Firm, Firm counsel or regulatory authorities upon
appropriate request.
(6) CONFLICT OF INTEREST
Every access person shall notify the Compliance Officer of the
Firm of any personal conflict of interest relationship which may
involve the Firm's clients (including the Fund), such as the
existence of any economic relationship between their transactions
and securities held or to be acquired by any portfolio of the
Firm. Such notification shall occur in the pre-clearance process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall promptly report to the Board
of Directors and to the Fund's Compliance Officer all apparent
violations of this Code of Ethics and the reporting requirements
thereunder.
(2) When the Firm's Compliance Officer finds that a transaction
otherwise reportable to the Board of Directors under Paragraph
(1) of this Section could not reasonably be found to have
resulted in a fraud, deceit or manipulative practice in violation
of Section 206 of the Advisers Act or Rule 17j-1 of the 40 Act,
he may, in his discretion, lodge a written memorandum of such
finding and the reasons therefor with the reports made pursuant
to this Code of Ethics, in lieu of reporting the transaction to
the Board of Directors.
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<PAGE> 185
(3) The Board of Directors, or a Committee of Directors created by
the Board of Directors for that purpose, shall consider reports
made to the Board of Directors hereunder and shall determine
whether or not this Code of Ethics has been violated and what
sanctions, if any, should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall prepare an annual report
relating to this Code of Ethics to the Board of Directors. Such
annual report shall:
(a) Summarize existing procedures concerning personal investing
and any changes in the procedures made during the past year;
(b) identify any violations requiring significant remedial
action during the past year; and
(c) identify any recommended changes in the existing
restrictions or procedures based upon the Firm's experience
under its Code of Ethics, evolving industry practices or
developments in applicable laws or regulations.
The Fund's Compliance Officer will prepare a similar report for the
Fund's Board of Directors.
G. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors may
impose such sanctions, as they deem appropriate, including, among other things,
a letter of censure or suspension or termination of the employment of the
violator.
H. RETENTION OF RECORDS
This Code of Ethics, a list of all persons required to make reports
hereunder from time to time, as shall be updated by the Firm's Compliance
Officer, a copy of each report made by an access person hereunder, each
memorandum made by the Firm's Compliance Officer hereunder and a record of any
violation hereof and any action taken as a result of such violation, shall be
maintained by the Firm.
Dated: January 3, 2000
-12-
<PAGE> 186
Exhibit A
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
CODE OF ETHICS
INITIAL REPORT OF ACCESS PERSONS
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
1. I hereby acknowledge receipt of a copy of the Code of Ethics for
Barrow, Hanley, Mewhinney & Strauss, Inc. (the "Firm").
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Access Persons."
3. Except as noted below, I hereby certify that I have no knowledge of
the existence of any personal conflict of interest relationship which may
involve the Firm or the Fund, such as any economic relationship between my
transactions and securities held or to be acquired by the Firm or any of its
portfolios, including the Fund.
4. As of the date below I had a direct or indirect beneficial ownership
in the following securities:
<TABLE>
<CAPTION>
======================================== ====================================== ======================================
TYPE OF INTEREST
NAME OF SECURITIES NUMBER OF SHARES (DIRECT OR INDIRECT)
---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
======================================== ====================================== ======================================
</TABLE>
NOTE: Do not report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<S> <C>
Date: Signature:
------------------------------------------- -----------------------------------------
(First date of investment personnel status) Print Name:
----------------------------------------
Title:
----------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
----------------------------------------
Date: Signature:
------------------------------------------- -----------------------------------------
Firm's Compliance Officer
</TABLE>
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<PAGE> 187
Exhibit B
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
CODE OF ETHICS
ANNUAL REPORT OF ACCESS PERSONS
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of an "Access Person."
2. I hereby certify that, during the year ended December 31, 20 ___, I
have complied with the requirements of the Code and I have reported all
securities transactions required to be reported pursuant to the Code.
3. I hereby certify that I have not disclosed pending "buy" or "sell"
orders for a portfolio of the Firm or the Fund to any employees of any other UAM
affiliate, except where the disclosure occurred subsequent to the execution of
withdrawal of an order.
4. Except as noted below, I hereby certify that I have no knowledge of
the existence of any personal conflict of interest relationship which may
involve the Firm or the Fund, such as any economic relationship between my
transactions and securities held or to be acquired by the Firm or any of its
portfolios, including the Fund.
4. As of December 31, 20___, I had a direct or indirect beneficial
ownership in the following securities:
<TABLE>
<CAPTION>
======================================== ====================================== ======================================
TYPE OF INTEREST
NAME OF SECURITIES NUMBER OF SHARES (DIRECT OR INDIRECT)
---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
======================================== ====================================== ======================================
</TABLE>
NOTE: Do not report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<S> <C>
Date: Signature:
------------------------------------------- -----------------------------------------
(First date of investment personnel status) Print Name:
----------------------------------------
Title:
----------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
----------------------------------------
Date: Signature:
------------------------------------------- -----------------------------------------
Firm's Compliance Officer
</TABLE>
-14-
<PAGE> 188
Exhibit C
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
ACCESS PERSONS
Securities Transactions Report For the Calendar Quarter Ended: _______________
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
During the quarter referred to above, the following transactions were effected
in securities of which I had, or by reason of such transaction acquired, direct
or indirect beneficial ownership, and which are required to be reported pursuant
to the Code of Ethics adopted by the Firm.
<TABLE>
<CAPTION>
=================== ================= ============ ================ ==================== ========== ======================
SECURITY DATE OF NO. OF DOLLAR AMOUNT NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES OF TRANSACTION TRANSACTION OR BANK THROUGH
(Purch., Sale, WHOM EFFECTED
Other)
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
=================== ================= ============ ================ ==================== ========== ======================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) excludes other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that I have
no knowledge of the existence of any personal conflict of interest relationship
which may involve the Firm or the Fund, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
Firm clients or any related portfolios, including the Fund.
NOTE: Do not report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<S> <C>
Date: Signature:
------------------------------------------- -----------------------------------------
(First date of investment personnel status) Print Name:
----------------------------------------
Title:
----------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
----------------------------------------
Date: Signature:
------------------------------------------- -----------------------------------------
Firm's Compliance Officer
</TABLE>
-15-
<PAGE> 189
Exhibit D
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
ACCESS PERSONS
Personal Securities Transactions Pre-clearance Form
(see Section D(2), Code of Ethics)
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
I hereby request pre-clearance of the following proposed transactions:
<TABLE>
<CAPTION>
=================== =========== =================== ==================== ============= ====================== ====================
SECURITY NO. OF DOLLAR AMOUNT OF NATURE OF PRICE BROKER/DEALER AUTHORIZED
SHARES TRANSACTION TRANSACTION (OR OR BANK THROUGH
(Purch., Sale, PROPOSED WHOM EFFECTED YES NO
Other) PRICE)
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
=================== =========== =================== ==================== ============= ====================== ========= ==========
</TABLE>
<TABLE>
<S> <C>
Date: Signature:
------------------------------------------- -----------------------------------------
(First date of investment personnel status) Print Name:
----------------------------------------
Title:
----------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
----------------------------------------
Date: Signature:
------------------------------------------- -----------------------------------------
Firm's Compliance Officer
</TABLE>
-16-
