TURNER INVESTMENT PARTNERS, INC.
PERSONAL TRADING POLICY/CODE OF ETHICS
February 17, 2000
A. Personal investments: An employee should consider himself the
beneficial owner of those securities held by him, his spouse, his minor
children, a relative who shares his house, or persons by reason of any
contract, arrangement, understanding or relationship that provides him
with sole or shared voting or investment power.
B. Employees are barred from purchasing any securities (to include Common
Stock and related Options, Convertible securities, OPTIONS, OR FUTURES
ON INDEXES) in which the firm has either a long or short position. If
an employee owns a position in any security, he must get written
pre-clearance from the Chairman or President to add to or sell the
position. ALL SECURITY TRANSACTIONS (BUY OR SELL) REQUIRE WRITTEN
CLEARANCE IN ADVANCE. Approval is good for 48 hours; if a trade has not
been executed, subsequent approvals are necessary until the trade is
executed. The Exception Committee (the Chairman, Vice Chairman,
President, and Director of Compliance) must approve any exceptions to
this rule.
C. Employees may not purchase initial public offerings. Private
placements/Limited partnerships require written pre-clearance. Mutual
Fund holdings are excluded from pre-clearance and reporting. IRA's, and
Rollover IRA's that are self-directed (i.e. stocks or bonds, not mutual
funds), and ESOP's (Employee stock ownership plans) require
pre-clearance.
D. Blackout Restrictions: Employees are subject to the following
restrictions when their purchases and sales of securities coincide with
trades of Turner Clients (including investment companies):
1. Purchases and sales within three days following a client trade.
Employees are prohibited from purchasing or selling any security
within three calendar days after a client transaction in the same
(or a related) security. The Exception Committee must approve
exceptions. If an employee makes a prohibited transaction without
an exception the employee must unwind the transaction and
relinquish any gain from the transaction to charity.
2. Purchases within seven days before a client purchase. An employee
who purchases a security within seven calendar days before a
client purchases the same (or a related) security is prohibited
from selling the security of a period of six months following the
client's trade. The Exception Committee must approve exceptions.
If an employee makes a prohibited sale without an exception within
the six month period, the employee must relinquish any gain from
the transaction to charity.
3. Sales within seven days before a client sale. An employee who
sells a security within seven days before a client sells the same
(or a related) security must relinquish to charity the difference
between the employee's sale price and the client's sale price
(assuming the employee's sale price is higher).
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PERSONAL TRADING POLICY/CODE OF ETHICS
February 17, 2000
Page 2
4. These restrictions do not apply to proprietary investment
partnerships for which the firm acts as an adviser in which the
officers and employees of the adviser have an equity interest of
less than 50%. These accounts may purchase the same or similar
securities within the black out period, if the partnership trades
with the block or after other clients. Where it is beneficial to
client accounts and it is possible to do so, they should be
blocked with the partnership account.
E. Short Term Trading Rule - Employees may not take profits in any
security in less than 60 days (includes Options, Convertibles and
Futures). If an individual must trade with in this period, the
Exception Committee must grant approval or the employee must relinquish
such profits to charity. The closing of positions at a loss is not
prohibited. Options that are out of the money may be exercised in less
than 60 days. The proprietary partnerships may take profits in less
than 60 days.
F. Reporting: Consistent with the requirements of the Investment Advisers
Act of 1940 Rule 204-2 (a)(2) and (a)(3) and with the provisions of
Rule 17j-1 of the Investment Company Act of 1940 all employees must
submit duplicate statements/disclosures within 10 days following the
calendar quarter. Statements are reviewed by one of the firms Series 24
principals. Brokerage, IRA's, Rollover IRA's (which are self-directed),
ESOP's, private placement and limited partnerships must all be reported
as personal trading. New employees are required to file initial
holdings within 10 days of hire.
G. Violation of the Personal Investments/Code of Ethics policy may result
in disciplinary action, up to and including termination of employment.
<PAGE>
POLICY AND PROCEDURES OF TURNER INVESTMENT PARTNERS, INC.
FOR THE PREVENTION, DETECTION, AND/OR CORRECTION OF
TRADING ERRORS
1. Product trade tickets are differentiated by color.
2. Daily monitoring of the account is performed by the portfolio manager(s)
using Portia and MacGregor, automated portfolio management and trading
systems, which have simplified the monitoring process, including helping to
identify recommendations in violation of specific restrictions prior to
trade execution.
3. The Compliance department also uses these internal systems to conduct
oversight review of the activities of the portfolio manager(s).
4. The Operations Department is responsible for affirming all trades on a
real-time basis.
5. The Trading Department is responsible for reviewing all trade details.
6. All custodian statements are reconciled monthly.
7. If and when a trading error is discovered, Compliance is notified
immediately.
8. If the erroneous trade has not settled, it will be reversed prior to
settlement, and clients will not be charged for any transaction costs
associated with the reversal.
9. If the erroneous trade has settled, prompt corrective action will be taken
which is appropriate to the circumstances, including but not limited to
correcting the trade at no cost to the client and/or reimbursing the client
to make them whole for any and all losses sustained.
10. Any profits resulting from the trading error shall be retained by the
client.
11. Turner Investment Partners, Inc. shall not enter into any arrangements with
broker-dealers to compensate or cover for trading errors, including the use
of soft dollars.
12. A trading error file is maintained for erroneous trades, which will include
all relevant documentation such as order tickets, confirmations, client
correspondence, etc. An internal memo will be prepared describing the trade
error and how it was resolved, which will also be placed in this file.
13. Special corrective action may be taken in special circumstances.
<PAGE>
POLICY AND PROCEDURES OF TURNER INVESTMENT PARTNERS, INC.
FOR THE PREVENTION OF INSIDER TRADING
SECTION I. POLICY STATEMENT ON INSIDER TRADING
Turner Investment Partners, Inc. forbids any officer or employee from
trading, either personally or on behalf of others, including mutual
funds and private accounts managed by Turner Investment Partners, Inc.
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 term "insider trading" is not defined in 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 communicating 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 such material non-public information to others.
1. Who is an Insider?
The concept of "insider" is broad. It includes directors, officers 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,
investment bankers, consultants, commercial bankers, and the employees
of such organizations. 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.
<PAGE>
2. 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 a company's securities.
There are at least three different types of material information that
may come into the possession of an investment advisory organization.
The first type of information is trading information generated within
the firm, i.e., buy and sell recommendations made by analysts and
portfolio managers. Turner's rules with respect to trading on this type
of information are set forth in the Standard V, Item A. of the AIMR
Code of Ethics, a copy of which is included in our employee manual.
Each employee must sign an acknowledgment form that they read and
understand the information in the manual.
The second type of material information is that which comes to an
officer and employee of an advisory organization through fiduciary
relationships such as directorships, consulting arrangements or other
business relationships.
The third type of material information is that which flows to an
officer or employee of an advisory organization from the outside world
through non-fiduciary relationships.
Information about an issuer that officers and employees of Turner's
should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings
estimates, significant expansion or curtailment of operations,
significant merger or acquisition proposals, hostile takeover bids,
agreements or negotiations, significant new products or discoveries,
acquisition or loss of a significant contract, significant financing
developments, liquidity problems, major personnel changes or other
extraordinary management developments, major litigation, and the status
of labor negotiations.
3. 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 SEC, or appearing in Dow Jones, Reuters
Economic Services, The Wall Street Journal or other publications of
general circulation would be considered public.
<PAGE>
4. Basis for Liability
The use of material non-public information by an investment advisory
firm for the benefit of its clients is not necessarily illegal in every
situation. In general, insider trading liability is predicated on the
existence of a breach of a fiduciary obligation in connection with the
use of inside information, the unlawful misappropriation of inside
information, or knowledge thereof (in the case of tippee liability).
Whether the use of material non-public information by an officer or
employee of an advisory firm is illegal in any given situation,
therefore, depends upon the circumstances under which the insider
information was received, including whether there exists any
relationship between the recipient and the "insider" who provided the
information and other factors. Given the complexity of issues in this
area, Turner has adopted a procedure of "ask first" (see paragraphs 1
and 4 of Section II).
5. Penalties for Insider Trading
Penalties for trading on or communicating material non-public
information in violation of the law are severe, both for individuals
involved in such unlawful conduct and their employees. 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 disgorgement of profits
o jail sentences
o fines for person who committed the violation of up to three
times the profit gained or loss avoided, whether or not the
person actually benefitted, 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 be expected to
result in serious sanctions by Turner Investment Partners, Inc. up to
and including dismissal of the persons involved.
<PAGE>
SECTION II. PROCEDURES TO IMPLEMENT TURNER INVESTMENT PARTNERS, INC.
POLICY
The following procedures have been established to aid the directors,
officers and employees of Turner Investment Partners, Inc. in
preventing, detecting, imposing sanctions against insider trading.
Every officer and employee of Turner Investment Partners, Inc. must
follow these procedures or risk serious sanctions, including dismissal,
substantial personal liability and criminal penalties. If you have any
questions about these procedures you should consult the Chairman,
President or a designated officer.
1. Identifying Inside Information
Before trading for clients in the securities of a company about which
you may have received inside information other than information
originating with Turner, ask yourself the following questions:
a. Is the information material? Is this information that an
investor might reasonably consider important in making his or
her investment decisions? Is this information that would have
a reasonable likelihood of affecting the market price of the
securities if generally disclosed?
b. Is the information non-public? To whom has this information
been provided? Has the information been effectively
communicated to the marketplace by being published in Reuters,
The Wall Street Journal or other publications of general
circulation.
If, after consideration of the above, you believe that the information
is or may be material and non-public, you should take the following
steps:
a. Report the matter immediately to the Chairman, President or a
designated officer.
b. Do not communicate the information to any person inside or
outside Turner Investment Partners, Inc. other than to the
Chairman, President or a designated officer, until you have
been advised that communication is appropriate.
c. Do not purchase or sell the securities on behalf of any
clients of Turner Investment Partners, Inc. or for yourself,
until the Chairman, President or designated officer instruct
you that such trading is appropriate.
<PAGE>
2. Personal Securities Trading
In addition to complying with Turner's policy against trading
securities while in possession of material non-public information as
described in paragraph 1 above, each employee should comply with Turner
policies concerning the reporting of personal securities trading which
are set forth in the Personal Trading Policy/Code of Ethics.
3. Information in your possession that you identify as material and
non-public (other than information originating with Turner) may not be
communicated to anyone, including persons within Turner Investment
Partners, Inc., except as provided in paragraph 1 above. In addition,
care should be taken so that such information is secure.
Information concerning Turner's investment activities, should not be
disclosed to any person not employed by Turner Investment Partner, Inc.
including without limitation any member of your immediate family,
except as required in the performance of your regular duties.
4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraph 1, doubt
remains as to whether information is material or non-public, or if
there is any unresolved question as to the propriety of any action, it
must be discussed with the Chairman, President or a designated officer
before trading or communicating the information to anyone.
5. Receiving Gifts
Turner Investment Partners, Inc. prohibits all employees from accepting
any gift with a value grater than $50 from any person associated with a
publicly-traded issuer, a securities or financial organization, a
commodities firm, or the news media. All gifts must be reported on the
Gift Disclosure form and submitted to the Director of Compliance.
6. Acknowledgement
I have read and understand the foregoing procedures and will comply in
all respects with such procedures.
-------------------------------- -------------------
Signature Date
Employee Name
<PAGE>
EMPLOYEE GIFT & ENTERTAINMENT POLICY
NOVEMBER 30, 1999
EMPLOYEES AT TURNER INVESTMENT PARTNERS ARE PROHIBITED FROM ACCEPTING GIFTS
GREATER THAN $50. ALL GIFTS (regardless of their value) must be reported
promptly (no more than five working days from the receipt of the gift) on a Gift
form to the Director of Compliance. An occasional dinner, tickets to sporting
events or the theater, rounds of golf or comparable entertainment are not
considered gifts IF they are not conditioned on sales of shares of our mutual
funds, AND if they are neither frequent nor so extensive as to raise any
question of propriety. Dinners, tickets or comparable entertainment should be
reported on a Broker Contact form and returned to the Director of Compliance. If
a broker is in Turner=s office and offers to buy lunch, only those individuals
who are meeting with the broker should be included when ordering this lunch/gift
and this does not need to be reported. The brokers we deal with have been
notified about our policy, although some gifts over $50 may still arrive in our
office. Please see the Director of Compliance or the President if this occurs.
Our semiannual broker survey allows Turner to objectively evaluate brokerage
firm contributions to our investment process. Expensive gifts and lavish or
extensive entertainment do not play a role in this process. While Turner
recognizes that the value of some gifts (e.g., a gift basket) cannot be valued
precisely, employees should err on the conservative side when reporting such
gifts.
Violations of this policy may lead to disciplinary action, up to and including
immediate termination of employment. Again, there is nothing improper about
modest gifts from service providers -- Turner is monitoring this activity by
having all gifts reported. Employees with questions regarding this policy should
speak with either the President or Director of Compliance directly.
<PAGE>
GIFT DISCLOSURE
ON _____________________, 200 ____, I received __________________________ from
(date) (gift)
_____________________________________________________ valued at $____________.
(source)
Signed: ________________________
Date: __________________________
<PAGE>
POLICY AND PROCEDURES OF TURNER INVESTMENT PARTNERS, INC.
REGARDING EMPLOYEES WHO SERVE ON THE BOARD OF A PUBLICLY
TRADED COMPANY
A. For purposes of this policy, a publicly traded company is any
organization or entity which makes available to the public for purchase
either through an exchange or other instrumentality a stake or share in
the organization or entity.
B. Employees who wish to serve on the Board of Directors of a publicly
traded company must prepare a written memorandum setting forth a
description of the publicly traded company and the reasons why they wish
to act in this capacity. This written memorandum is to be submitted to
the Exception Committee (comprised of the Chairman, Vice Chairman,
President, and Director of Compliance) for consideration.
C. Employees who wish to serve on the Board of Directors of a publicly
traded company must obtain written pre-approval from the Exception
Committee, which will either approve or disapprove of the employee's
request upon due consideration of the employee's written memorandum.
D. Factors to be considered by the Exception Committee in granting approval
or disapproval include, but are not limited to, whether the stock of the
publicly traded company is one which Turner Investment Partners, Inc.
would own.
E. If approval is granted by the Exception Committee, the employee has an
ongoing obligation to notify the Exception Committee of any potential
conflicts of interest which may arise during the course of participating
as a member of the Board of Directors. If there is any question whether a
conflict of interest exists or may exist, the Exception Committee shall
be notified.
F. Violation of this policy may result in disciplinary action, up to and
including termination of employment.
<PAGE>
POLICY AND PROCEDURES OF TURNER INVESTMENT PARTNERS, INC.
REGARDING EMPLOYEES WHO SERVE IN PUBLIC OFFICE
A. Employees who wish to serve in public office must prepare a written
memorandum setting forth a description of the capacity in which they seek
to serve and the reasons why they wish to act in this capacity. This
written memorandum is to be submitted to the Exception Committee
(comprised of the Chairman, Vice Chairman, President, and Director of
Compliance) for consideration.
B. Employees who wish to serve in public office must obtain written
pre-approval from the Exception Committee, which will either approve or
disapprove of the employee's request upon due consideration of the
employee's written memorandum.
C. Factors to be considered by the Exception Committee in granting approval
or disapproval include, but are not limited to, whether serving in such
capacity will give the employee access to entities, individuals, or
information pertaining to stocks that Turner would own.
D. If approval is granted by the Exception Committee, the employee has an
ongoing obligation to notify the Exception Committee of any potential
conflicts of interest which may arise during the course of serving in
public office. If there is any question whether a conflict of interest
exists or may exist, the Exception Committee shall be notified.
E. Violation of this policy may result in disciplinary action, up to and
including termination of employment.
<PAGE>
NEWELL ASSOCIATES
INSIDER TRADING PREVENTION POLICY AND PROCEDURES
AND CODE OF ETHICS
(REVISED MAY 18, 1999)
Newell Associates (the "Firm") is an investment adviser to, among
others, registered investment companies. As such, the Firm and its employees are
fiduciaries, and must place the interests of the clients first. Accordingly, you
must scrupulously avoid serving your own personal interests ahead of the
interests of the clients. This Insider Trading Prevention Policy and Code of
Ethics (the "Statement of Policy") addresses the potential conflict that may
exist between the interests of the Firm's employees and the Firm's clients.
Significantly, a breach of fiduciary duty will be treated as a breach of this
code whether or not the conduct in question is specifically listed among the
prohibitions.
I. INSIDER TRADING.
It is the Firm's policy that no officer, director or employee may (i)
trade in a security, either personally or on behalf of others, while in the
possession of material non-public information related to that security, or (ii)
communicate material non-public information to others in violation of the law.
This policy applies to every officer, director, and employee of the Firm and
extends to activities both within and outside of their duties at the Firm. Every
officer, director, and employee must read and acknowledge his or her
understanding of this Statement of Policy and Procedures. Any questions
regarding the Firm's policy and procedures should be directed to Roger Newell,
the Director of Compliance.
A. INSIDER TRADING.
In general, the law prohibits trading in securities while in possession
of material non-public information, "tipping" such information to others who may
trade, or recommending the purchase or sale of securities to which that
information relates.
INSIDERS AND NON-INSIDERS
Federal securities laws specifically prohibit trading by an "insider",
whether for his or her personal benefit or for the benefit of others, while in
possession of material non-public information. The concept of "insider"
encompasses a wide group of individuals. In addition to officers, directors, and
employees of a company, it includes persons who enter into special confidential
relationships with a company in which they are given access to confidential
information solely for the company's purposes. Such temporary insiders can
include investment advisers and their employees. Before a person will be
considered an "insider", though, the company involved must expect that person to
keep confidential any non-public information, and the relationship between that
person and the company must imply such a duty.
Federal securities laws also govern conduct of "non-insiders".
Generally, a "non-insider" may not trade while in possession of material
non-public information. It is also against the law to communicate material
non-public information to others in violation of one's duty to keep such
information confidential.
Under current law, a person who trades while in possession of material
non-public information violates the law if the transaction would breach a
fiduciary duty or the person knows (or is reckless in not
<PAGE>
knowing) that the information has been provided to him or her in a breach of a
duty. Examples of these breaches of duty are (i) when an insider, agent, or one
in whom a company has placed its trust and confidence trades in that company's
securities while in possession of material non-public information or (ii) when
an insider improperly discloses material non-public information to a third
person who then trades on the information, knowing that the insider improperly
disclosed the information. Non-insiders will also be liable if they (or the
person informing them) have misappropriated material, non-public information.
Employees who have questions about whether information has been improperly
disclosed to them should consult Mr. Newell.
MATERIAL AND NON-PUBLIC INFORMATION
Trading while in possession of information is not a basis for liability
unless the information is "material" and "non-public". Information about a
security is material if a reasonable investor would consider it important in
making an investment decision. If the disclosure of information would affect the
market price of a security, that information is likely to be material. Examples
of information likely to be material include: mergers and acquisition
negotiations; significant changes in management; changes in debt ratings;
significant litigation or governmental investigation; changes in earnings
estimates or actual earnings; changes in dividend policies; labor negotiations;
and preliminary indication of a new product or other major development. In
addition, special caution must be exercised before trading in or making
recommendations about securities that are or may be the subject of a tender
offer. Because tender offers have a significant impact on the price of a target
company's securities, any information indicating that there is a possibility
that a tender offer will be made is likely to be material.
Information need not relate specifically to the ISSUER of securities
(e.g., earnings news) in order to be material. Information about the MARKET for
a security could also be material. For example, knowledge that a client intends
to buy or sell a large amount of a security, or knowledge that the Firm intends
to recommend buying or selling a security could easily be material if it can be
expected to affect the market for the security.
Information is "non-public" if it has not been disseminated in a manner
making it available to investors generally, such as publication through Dow
Jones, the Associated Press, THE NEW YORK TIMES, THE WALL STREET JOURNAL,
another publication of general circulation, or the local news media if the
company's operations or stockholders are geographically localized. Disclosure to
a small group of people, such as brokerage firm research analysts or
institutional investors, does not make information public. Even after
information has been released to the public, at least twenty-four hours (or such
other period as the Compliance Director determines) must elapse to give the
market time to absorb the previously non-public information.
B. PENALTIES FOR INSIDER TRADING.
Penalties for trading while in the possession of material non-public
information or communicating such information are severe. A person can be
subject to some or all of the following penalties even if he or she does not
personally benefit from the violation:
o civil injunctions
o treble damages
o disgorgement of profits
o jail sentences
<PAGE>
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
o fines for the Firm and/or controlling persons of the Firm 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 statement of policy and procedures
can be expected to result in serious sanctions by the Firm, including dismissal
of the person or persons involved.
II. PROCEDURES FOR PREVENTING VIOLATIONS OF THE POLICY
The following procedures have been established to aid the officers,
directors, and employees of the Firm in avoiding insider trading and to avoid
breaches of the Firm's Statement of Policy. Every officer, director, and
employee of the Firm must follow these procedures or risk serious sanctions,
including dismissal, substantial personal liability and criminal penalties. If
you have any questions about these procedures you should consult Mr. Newell.
A. IDENTIFYING MATERIAL NON-PUBLIC INFORMATION
Before trading for yourself or others, including accounts managed
and/or advised by the Firm, in the securities of a company about which you may
have potential inside information, ask yourself the following questions:
(i) Is the information material? That is, is this information that
an investor would consider important in making his OR HER
investment decisions? Generally, if the information is a
factor in YOUR decision making, it is material.
(ii) Is the information non-public? Is this information generally
available to the public? Has the information been effectively
communicated to the marketplace by being published in
publications of general circulation?
If you believe that the information is material and non-public, or if
you are uncertain whether the information is material and non-public, you should
take the following steps:
(i) Report the matter immediately to the Compliance Director;
(ii) Do not trade the securities on behalf of yourself or others;
AND
(iii) Do not communicate the information inside or outside the Firm,
other than to the Compliance Director.
B. RESTRICTING ACCESS.
Except as provided in paragraph A above, information in your possession
that you identify as material and non-public may not be communicated to anyone,
including Firm personnel, outside of your normal job-related duties. Care should
be taken so that such information is secure. For example, files containing
material non-public information must be protected, and access to computer files
containing material non-public information must be restricted. Sensitive
documents shall be copy-restricted and not removed from the office without
permission of the Compliance Director.
<PAGE>
Do not discuss material non-public information or confidential matters
in public places, such as elevators, restaurants, lavatories, trains, or
airplanes, where conversations may be overheard.
C. TRADING RESTRICTIONS.
In the course of providing investment management and investment
advisory services, the Firm determines that it will purchase particular
securities for the accounts it manages (including the mutual funds the Firm
advises). These determinations, and any research that could be expected to give
rise to such determinations, are referred to as "Recommendation Information".
Recommendation Information could, upon public disclosure, significantly affect
the market for a security and may therefore be considered "material non-public
information". Buying or selling securities with knowledge of Recommendation
Information before it has been acted upon by or on behalf of the Firm's clients
or while investment management activities are being carried on for such clients
may constitute illegal "insider trading" as well as a breach of the Firm's and
its employees' fiduciary obligations to the Firm's clients. The following
prohibitions are intended to restrict the use of Recommendation Information.
The prohibitions and reporting requirements set forth below apply to
employees, officers, and directors whether such persons purchase or sell for
their own account or for an account in which a member of such person's immediate
family has a beneficial interest. Notably, the prohibitions and the reporting
requirements set forth below do not apply to transactions which are
non-volitional. That is, they do not apply to transactions in which the
individual subject to the restriction does not direct the decision to effect the
transaction. Such exempt transactions include purchases and sales by an
automatic dividend reinvestment plan, and purchases effected in an account over
which the person has no control.
1. RESTRICTED LIST. The Firm shall maintain a list of securities in
which trading activities shall be restricted (the "Restricted List"). Prior to
making any purchase or sale of any security, whether, on their own or others'
behalf, all employees, officers and directors must first check to see whether
such security appears on the Restricted List. IF THE SECURITY IS INCLUDED IN THE
RESTRICTED LIST, THEN THE EMPLOYEE, OFFICER OR DIRECTOR MAY NOT PURCHASE SUCH
SECURITY. IF THE EMPLOYEE, OFFICER OR DIRECTOR ALREADY OWNS THE SECURITY, HE OR
SHE MAY NOT SELL IT WITHOUT THE PRIOR APPROVAL OF THE COMPLIANCE DIRECTOR.
Securities will be placed on the Restricted List when the Firm (i)
receives material non-public information regarding those securities or (ii) is
monitoring such securities in connection with considering such securities for
purchase or sale on behalf of the Firm's clients. All employees will be
responsible for notifying the Compliance Director about securities that should
be placed on the Restricted list. Securities will be removed from the Restricted
List when (i) material information relating to the securities is public and (ii)
the Firm is not monitoring such securities in connection with considering them
for purchase or sale on behalf of the Firm's clients. The Compliance Director
will monitor the Restricted List for completeness.
The Restricted List is confidential. The Restricted List will be made
available to all employees, officers and directors. No information about the
Firm's Restricted List may be disclosed to anyone outside of the Firm.
2. OTHER PROHIBITIONS. In addition to the above restrictions,
employees, officers and directors of the Firm are prohibited from engaging in
activities and transactions as set forth below:
<PAGE>
(i) INITIAL PUBLIC OFFERINGS. No employee, officer or director
may acquire securities in any initial public offering of securities.
(ii) PRIVATE PLACEMENTS. No employee, officer or director may
acquire securities in a private placement of securities, unless such investment
is authorized in advance by the Compliance Director.
(iii) OPTIONS. No employee, officer or director may acquire or
sell any option on any security.
(iv) SHORT-SELLING. No employee, officer or director may sell
any security that they do not own or otherwise engage in "short-selling"
activities.
(v) SHORT-TERM TRADES. No employee, officer or director may
purchase and sell the same or equivalent securities within a 60-day period. In
the case of purchases and sales made in the portion of the Vanguard Equity
Income Fund managed by Newell Associates and the Vanguard Variable Insurance
Fund- Equity Income Portfolio, all profits derived in violation of this
provision will be subject to disgorgement to Vanguard.
(vi) PURCHASES AND SALES WITHIN THREE DAYS FOLLOWING A FUND
TRADE. No employee, officer or director may purchase or sell securities
purchased or sold by the portion of the Vanguard Equity Income Fund managed by
Newell Associates or by the Vanguard Variable Insurance Fund - Equity Income
Portfolio at the recommendation of the Firm within three calendar days after
such securities (or related securities) are purchased or sold by such Vanguard
Portfolios. All profits derived in violation of this prohibition will be subject
to disgorgement to Vanguard.
(vii) PURCHASES WITHIN SEVEN DAYS BEFORE A FUND PURCHASE. An
employee, officer or director who purchases securities (or related securities)
within seven calendar days before the same (or related) securities are purchased
by the portion of the Vanguard Equity Income Fund managed by Newell Associates
or by the Vanguard Variable Insurance Fund - Equity Income Portfolio at the
recommendation of the Firm, is prohibited from selling such securities for a
period of six months following the trade in the Vanguard Portfolios. In the case
of sales made in the portion of the Vanguard Equity Income Fund managed by
Newell Associates and the Vanguard Variable Insurance Fund - Equity Income
Portfolio, all profits derived in violation of this provision will be subject to
disgorgement to Vanguard.
(viii) SALES WITHIN SEVEN DAYS BEFORE A FUND SALE. An
employee, officer or director who sells securities within seven days before a
sale of the same (or related) securities are made in the portion of the Vanguard
Equity Income Fund managed by Newell Associates or by the Vanguard Variable
Insurance Fund - Equity Income Portfolio at the recommendation of the Firm must
relinquish to Vanguard the difference between the person's sale price and that
of the Vanguard Portfolio's sale price (assuming the person's sale price is
higher).
(ix) DIRECTOR OF OTHER COMPANIES. No employee or officer may
become a director of another company, the shares of which are publicly traded,
without prior authorization of The Vanguard Group.
(x) CONFLICTS OF INTEREST. Every employee, officer and
director shall notify the Compliance Director of any personal conflict of
interest relationship which may involve Vanguard, such
<PAGE>
as the existence of any economic relationship between their transactions and
securities held or to be acquired by the portion of the Vanguard Equity Income
Fund managed by Newell Associates or by the Vanguard Variable Insurance Fund -
Equity Income Portfolio. Such notification shall occur PRIOR to the consummation
of any transaction involving a conflict of interest.
(xi) PROHIBITED TRANSACTIONS BY THE FIRM. As a general matter,
the Firm shall not purchase for Vanguard any security of an issuer with which
any of the Firm's employees, officers or directors are affiliated, unless the
person directing such purchase does not communicate with the affiliated director
or officer concerning that purchase, either before or after the purchase.
(xii) RECEIPT OF GIFTS. No director, officer or employee of the
Firm shall accept anything of value from broker-dealers or other persons
providing services to the Firm which are given because of such person's
association with the Firm; provided however, that employees may accept a gift of
de minimis value (generally less than $50), such as an occasional meal or a
holiday gift of food if such gift is made available to all employees of the Firm
and is approved by Roger Newell or Jennifer Newell.
D. REPORTING AND PRECLEARANCE REQUIREMENTS
In order to monitor compliance with this policy, employees officers and
directors must report certain information to the Compliance Director and obtain
the clearance of the Compliance Director before executing certain transactions.
Prior to purchasing or selling any security, employees and officers must
disclose and receive clearance from the Compliance Director to make such
purchases or sales. Prior to selling any security on the Restricted List, any
director who is not an officer or an employee must disclose and receive
clearance from the Compliance Director to make such sale. Every employee,
officer and director shall report all of their transactions in securities within
10 days from the end of a calendar quarter in which such transactions occur.
Reports shall include the following information with respect to
transactions in any security in which the employee, officer or director has, or
by reason of the reporting transaction acquires, any direct or indirect
beneficial ownership in the security:
(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 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.
Every employee and officer must disclose to the Compliance Director all
individual securities holdings as of December 31, 1995, or upon commencement of
employment, if at a later date. Thereafter such holdings shall be updated at the
end of each calendar year.
Every employee and officer shall direct their brokers to supply to the
Compliance Director, on a timely basis, duplicate copies of the confirmation of
all personal securities transactions and copies of all periodic statements for
all securities accounts.
<PAGE>
NO REPORTS ARE REQUIRED WITH RESPECT TO SECURITIES ISSUED BY THE
FEDERAL, STATE OR LOCAL GOVERNMENT, SHARES OF MUTUAL FUNDS, CERTIFICATES OF
DEPOSIT, AND COMMERCIAL PAPER. AS NOTED ABOVE, NO REPORTS ARE REQUIRED FOR
ACCOUNTS OR TRANSACTIONS OVER WHICH THE REPORTING PERSON HAS NO CONTROL.
The Compliance Director will review all trading activity reports filed
by each employee, officer and director within seven days of their submission.
The Compliance Director shall conduct periodic reviews of trading activity in
the Firm's own account and in accounts managed or advised by the Firm. Promptly
upon learning of a potential violation of the Firm's policy and procedures, the
Compliance Director will prepare a written report to management providing full
details and recommendations for further action.
Every employee, officer and director shall certify annually that (i)
they have read and understand this statement of Policy and recognize that they
are subject thereto; (ii) they have complied with the requirements of this
Statement of Policy; and (iii) they have reported all personal securities
transactions required to be reported pursuant to the requirements of this
Statement of Policy.
III. SUPERVISORY PROCEDURES.
The Firm will take steps to prevent and detect insider trading and to
prevent violations of the Statement of Policy, including the following:
(i) familiarize employees, officers and directors with the
Firm's Statement of Policy;
(ii) make the Compliance Director available to answer
questions regarding the Firm's Statement of Policy;
(iii) resolve issues of whether information received by an
employee, officer, or director of the Firm is material and
non-public;
(iv) review on a regular basis and update as necessary the
Firm's Statement of Policy and procedures; and
(v) when it has been determined that an employee, officer or
director of the Firm has material non-public information:
1. place such security on the Restricted List;
2. implement measures to prevent dissemination of such
information; and
3. promptly review, and either approve or disapprove,
in writing, each request of an employee, officer or
director for clearance to trade in securities not o
the Restricted List.
<PAGE>
IV. DISCLAIMER AS TO CREATION OF NEW LEGAL LIABILITIES.
The purpose of this statement of Policy is to comply with Rule 17j-1 of
the Investment Company Act and Section 204A of the Investment Advisers Act of
1940. This expression of the Firm's policy and procedures is not intended to
result in the imposition of liability that would not exist in the absence of
this statement.
V. DESIGNATION OF COMPLIANCE DIRECTOR.
Roger Newell is designated as Compliance Director. Jennifer Newell is
designated to act as Compliance Director when Roger Newell is unavailable and to
review Roger Newell's trading activity and compliance with this Statement of
Policy.
ACKNOWLEDGMENT:
I have read and understand this Statement of Policy, have complied with its
requirements during 1999, and have reported all personal securities transactions
required to be reported pursuant to it.
--------------------------------- -------------------
Name Date
<PAGE>
WELLINGTON MANAGEMENT COMPANY, LLP
WELLINGTON TRUST COMPANY, NA
WELLINGTON MANAGEMENT INTERNATIONAL
WELLINGTON INTERNATIONAL MANAGEMENT COMPANY PTE LTD.
CODE OF ETHICS
--------------------------------------------------------------------------------
Summary
Wellington Management Company, llp and its affiliates have a fiduciary duty to
investment company and investment counseling clients which requires each
employee to act solely for the benefit of clients. Also, each employee has a
duty to act in the best interest of the firm. In addition to the various laws
and regulations covering the firm's activities, it is clearly in the firm's best
interest as a professional investment advisory organization to avoid potential
conflicts of interest or even the appearance of such conflicts with respect to
the conduct of the firm's employees. Wellington Management's personal trading
and conduct must recognize that the firm's clients always come first, that the
firm must avoid any actual or potential abuse of our positions of trust and
responsibility, and that the firm must never take inappropriate advantage of its
positions. While it is not possible to anticipate all instances of potential
conflict, the standard is clear.
In light of the firm's professional and legal responsibilities, we believe it is
appropriate to restate and periodically distribute the firm's Code of Ethics to
all employees. It is Wellington Management's aim to be as flexible as possible
in its internal procedures, while simultaneously protecting the organization and
its clients from the damage that could arise from a situation involving a real
or apparent conflict of interest. While it is not possible to specifically
define and prescribe rules regarding all possible cases in which conflicts might
arise, this Code of Ethics is designed to set forth the policy regarding
employee conduct in those situations in which conflicts are most likely to
develop. If an employee has any doubt as to the propriety of any activity, he or
she should consult the President or Regulatory Affairs Department.
The Code reflects the requirements of United States law, Rule 17j-1 of the
Investment Company Act of 1940, as amended on October 29, 1999, as well as the
recommendations issued by an industry study group in 1994, which were strongly
supported by the SEC. The term "Employee" includes all employees and Partners.
--------------------------------------------------------------------------------
Policy on Personal
Securities
Transactions
Essentially, this policy requires that all personal securities transactions
(including acquisitions or dispositions other than through a purchase or sale)
by all Employees must be cleared prior to execution. The only exceptions to this
policy of prior clearance are noted below.
--------------------------------------------------------------------------------
Definition of
"Personal Securities
Transactions"
The following transactions by Employees are considered "personal" under
applicable SEC rules and therefore subject to this statement of policy:
1. Transactions for an Employee's own account, including IRA's.
2. Transactions for an account in which an Employee has indirect beneficial
ownership, unless the Employee has no direct or indirect influence or
control over the account. Accounts involving family (including husband,
wife, minor children or other dependent relatives), or accounts in which an
Employee has a beneficial interest (such as a trust of which the Employee
is an income or principal beneficiary) are included within the meaning of
"indirect beneficial interest".
If an Employee has a substantial measure of influence or control over an
account, but neither the Employee nor the Employee's family has any direct or
indirect beneficial interest (e.g., a trust for which the Employee is a trustee
but not a direct or indirect beneficiary), the rules relating to personal
securities transactions are not considered to be directly applicable. Therefore,
prior clearance and subsequent reporting of such transactions are not required.
In all transactions involving such an account an Employee should, however,
conform to the spirit of these rules and avoid any activity which might appear
to conflict with the investment company or counseling clients or with respect to
the Employee's position within Wellington Management. In this regard, please
note "Other Conflicts of Interest", found later in this Code of Ethics, which
does apply to such situations.
--------------------------------------------------------------------------------
<PAGE>
Preclearance
Required
EXCEPT AS SPECIFICALLY EXEMPTED IN THIS SECTION, ALL EMPLOYEES MUST CLEAR
PERSONAL SECURITIES TRANSACTIONS PRIOR TO EXECUTION. This includes bonds, stocks
(including closed end funds), convertibles, preferreds, options on securities,
warrants, rights, etc. for domestic and foreign securities, whether publicly
traded or privately placed. The only exceptions to this requirement are
automatic dividend reinvestment and stock purchase plan acquisitions,
broad-based stock index and U.S. government securities futures and options on
such futures, transactions in open-end mutual funds, U.S. Government securities,
commercial paper, or non-volitional transactions. Non-volitional transactions
include gifts to an Employee over which the Employee has no control of the
timing or transactions which result from corporate action applicable to all
similar security holders (such as splits, tender offers, mergers, stock
dividends, etc.). Please note, however, that most of these transactions must be
reported even though they do not have to be precleared. See the following
section on reporting obligations.
Clearance for transactions must be obtained by contacting the Director of Global
Equity Trading or those personnel designated by him for this purpose. Requests
for clearance and approval for transactions may be communicated orally or via
email. The Trading Department will maintain a log of all requests for approval
as coded confidential records of the firm. Private placements (including both
securities and partnership interests) are subject to special clearance by the
Director of Regulatory Affairs, Director of Enterprise Risk Management or the
General Counsel, and the clearance will remain in effect for a reasonable period
thereafter, not to exceed 90 days.
CLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS FOR PUBLICLY TRADED SECURITIES
WILL BE IN EFFECT FOR ONE TRADING DAY ONLY. THIS "ONE TRADING DAY" POLICY IS
INTERPRETED AS FOLLOWS:
O IF CLEARANCE IS GRANTED AT A TIME WHEN THE PRINCIPAL MARKET IN WHICH THE
SECURITY TRADES IS OPEN, CLEARANCE IS EFFECTIVE FOR THE REMAINDER OF THAT
TRADING DAY UNTIL THE OPENING OF THAT MARKET ON THE FOLLOWING DAY.
O IF CLEARANCE IS GRANTED AT A TIME WHEN THE PRINCIPAL MARKET IN WHICH THE
SECURITY TRADES IS CLOSED, CLEARANCE IS EFFECTIVE FOR THE NEXT TRADING DAY
UNTIL THE OPENING OF THAT MARKET ON THE FOLLOWING DAY.
--------------------------------------------------------------------------------
Filing of Reports
Records of personal securities transactions by Employees will be maintained. All
Employees are subject to the following reporting requirements:
1
Duplicate Brokerage
Confirmations
All Employees must require their securities brokers to send duplicate
confirmations of their securities transactions to the Regulatory Affairs
Department. Brokerage firms are accustomed to providing this service. Please
contact Regulatory Affairs to obtain a form letter to request this service. Each
employee must return to the Regulatory Affairs Department a completed form for
each brokerage account that is used for PERSONAL SECURITIES TRANSACTIONS OF THE
EMPLOYEE. EMPLOYEES SHOULD NOT send the completed forms to their brokers
directly. The form must be completed and returned to the Regulatory Affairs
Department prior to any transactions being placed with the broker. The
Regulatory Affairs Department will process the request in order to assure
delivery of the confirms directly to the Department and to preserve the
confidentiality of this information. When possible, the transaction confirmation
filing requirement will be satisfied by electronic filings from securities
depositories.
2
Filing of Quarterly
Report of all
"Personal Securities
Transactions"
SEC rules require that a quarterly record of all personal securities
transactions submitted by each person subject to the Code's requirements and
that this record be available for inspection. To comply with these rules, every
Employee must file a quarterly personal securities transaction report within 10
calendar days after the end of each calendar quarter. Reports are filed
electronically utilizing the firm's proprietary Personal Securities Transaction
Reporting System (PSTRS) accessible to all Employees via the Wellington
Management Intranet.
At the end of each calendar quarter, Employees will be notified of the filing
requirement. Employees are responsible for submitting the quarterly report
within the deadline established in the notice.
Transactions during the quarter indicated on brokerage confirmations or
electronic filings are displayed on the Employee's reporting screen and must be
affirmed if they are accurate. Holdings not acquired through a broker submitting
confirmations must be entered manually. All Employees are required to submit a
quarterly report, even if there were no reportable transactions during the
quarter.
Employees must also provide information on any new brokerage account established
during the quarter including the name of the broker, dealer or bank and the date
the account was established.
IMPORTANT NOTE: The quarterly report must include the required information for
all "personal securities transactions" as defined above, except transactions in
open-end mutual funds, money market securities, U.S. Government securities, and
futures and options on futures on U.S. government securities. Non-volitional
transactions and those resulting from corporate actions must also be reported
even though preclearance is not required and the nature of the transaction must
be clearly specified in the report.
3
Certification of Compliance
As part of the quarterly reporting process on PSTRS, Employees are required to
confirm their compliance with the provisions of this Code of Ethics.
4
Filing of Personal
Annually, all Employees must file a schedule indicating their personal
securities holdings as of December 31 of each year by the following January 30.
SEC Rules require that this report include the title, number of shares and
principal amount of each security held in an Employee's personal account, and
the name of any broker, dealer or bank with whom the Employee maintains an
account. "Securities" for purposes of this report are those which must be
reported as indicated in the prior paragraph. Newly hired Employees are required
to file a holding report within ten (10) days of joining the firm. Employees may
indicate securities held in a brokerage account by attaching an account
statement, but are not required to do so, since these statements contain
additional information not required by the holding report.
5
Review of Reports
All reports filed in accordance with this section will be maintained and kept
confidential by the Regulatory Affairs Department. Reports will be reviewed by
the Director of Regulatory Affairs or personnel designated by her for this
purpose.
--------------------------------------------------------------------------------
Restrictions on
"Personal Securities
Transactions"
While all personal securities transactions must be cleared prior to execution,
the following guidelines indicate which transactions will be prohibited,
discouraged, or subject to nearly automatic clearance. The clearance of personal
securities transactions may also depend upon other circumstances, including the
timing of the proposed transaction relative to transactions by our investment
counseling or investment company clients; the nature of the securities and the
parties involved in the transaction; and the percentage of securities involved
in the transaction relative to ownership by clients. The word "clients" refers
collectively to investment company clients and counseling clients. Employees are
expected to be particularly sensitive to meeting the spirit as well as the
letter of these restrictions.
Please note that these restrictions apply in the case of debt securities to the
specific issue and in the case of common stock, not only to the common stock,
but to any equity-related security of the same issuer including preferred stock,
options, warrants, and convertible bonds. Also, a gift or transfer from you (an
Employee) to a third party shall be subject to these restrictions, unless the
donee or transferee represents that he or she has no present intention of
selling the donated security.
1
No Employee may engage in personal transactions involving any securities which
are:
o being bought or sold on behalf of clients until one trading day after such
buying or selling is completed or canceled. In addition, no Portfolio
Manager may engage in a personal transaction involving any security for 7
days prior to, and 7 days following, a transaction in the same security for
a client account managed by that Portfolio Manager without a special
exemption. See "Exemptive Procedures" below. Portfolio Managers include all
designated portfolio managers and others who have direct authority to make
investment decisions to buy or sell securities, such as investment team
members and analysts involved in Research Equity portfolios. All Employees
who are considered Portfolio Managers will be so notified by the Regulatory
Affairs Department.
o the subject of a new or changed action recommendation from a research
analyst until 10 business days following the issuance of such
recommendation;
o the subject of a reiterated but unchanged recommendation from a research
analyst until 2 business days following reissuance of the recommendation
o actively contemplated for transactions on behalf of clients, even though no
buy or sell orders have been placed. This restriction applies from the
moment that an Employee has been informed in any fashion that any Portfolio
Manager intends to purchase or sell a specific security. This is a
particularly sensitive area and one in which each Employee must exercise
caution to avoid actions which, to his or her knowledge, are in conflict or
in competition with the interests of clients.
2
The Code of Ethics strongly discourages short term trading by Employees. In
addition, no Employee may take a "short term trading" profit in a security,
which means the sale of a security at a gain (or closing of a short position at
a gain) within 60 days of its purchase, without a special exemption. See
"Exemptive Procedures". The 60 day prohibition does not apply to transactions
resulting in a loss, nor to futures or options on futures on broad-based
securities indexes or U.S. government securities.
3
No Employee engaged in equity or bond trading may engage in personal
transactions involving any equity securities of any company whose primary
business is that of a broker/dealer.
4
Subject to preclearance, Employees may engage in short sales, options, and
margin transactions, but such transactions are strongly discouraged,
particularly due to the 60 day short term profit-taking prohibition. Any
Employee engaging in such transactions should also recognize the danger of being
"frozen" or subject to a forced close out because of the general restrictions
which apply to personal transactions as noted above. In specific case of
hardship an exception may be granted by the Director of Regulatory Affairs or
her designee upon approval of the Ethics Committee with respect to an otherwise
"frozen" transaction.
5
No Employee may engage in personal transactions involving the purchase of any
security on an initial public offering. This restriction also includes new
issues resulting from spin-offs, municipal securities and thrift conversions,
although in limited cases the purchase of such securities in an offering may be
approved by the Director of Regulatory Affairs or her designee upon determining
that approval would not violate any policy reflected in this Code. This
restriction does not apply to open-end mutual funds, U. S. government issues or
money market investments.
6
EMPLOYEES MAY NOT PURCHASE SECURITIES IN PRIVATE PLACEMENTS UNLESS APPROVAL OF
THE DIRECTOR OF REGULATORY AFFAIRS, DIRECTOR OF ENTERPRISE RISK MANAGEMENT OR
THE GENERAL COUNSEL HAS BEEN OBTAINED. This approval will be based upon a
determination that the investment opportunity need not be reserved for clients,
that the Employee is not being offered the investment opportunity due to his or
her employment with Wellington Management and other relevant factors on a
case-by-case basis. If the Employee has portfolio management or securities
analysis responsibilities and is granted approval to purchase a private
placement, he or she must disclose the privately placed holding later if asked
to evaluate the issuer of the security. An independent review of the Employee's
analytical work or decision to purchase the security for a client account will
then be performed by another investment professional with no personal interest
in the transaction.
Gifts and Other
Sensitive Payments
Employees should not seek, accept or offer any gifts or favors of more than
minimal value or any preferential treatment in dealings with any client,
broker/dealer, portfolio company, financial institution or any other
organization WITH WHOM THE FIRM TRANSACTS business. Occasional participation in
lunches, dinners, cocktail parties, sporting activities or similar gatherings
conducted for business purposes are not prohibited. However, for both the
Employee's protection and that of the firm it is extremely important that even
the appearance of a possible conflict of interest be avoided. Extreme caution is
to be exercised in any instance in which business related travel and lodgings
are paid for other than by Wellington Management, and prior approval must be
obtained from the Regulatory Affairs Department.
Any question as to the propriety of such situations should be discussed with the
Regulatory Affairs Department and any incident in which an Employee is
encouraged to violate these provisions should be reported immediately. An
explanation of all extraordinary travel, lodging and related meals and
entertainment is to be reported in a brief memorandum to the Director of
Regulatory Affairs.
Employees must not participate individually or on behalf of the firm, a
subsidiary, or any client, directly or indirectly, in any of the following
transactions:
1
Use of the firm's funds for political purposes.
2
Payment or receipt of bribes, kickbacks, or payment or receipt of any other
amount with an understanding that part or all of such amount will be refunded or
delivered to a third party in violation of any law applicable to the
transaction.
3
Payments to government officials or employees (other than disbursements in the
ordinary course of business for such legal purposes as payment of taxes).
4
Payment of compensation or fees in a manner the purpose of which is to assist
the recipient to evade taxes, federal or state law, or other valid charges or
restrictions applicable to such payment.
5
Use of the funds or assets of the firm or any subsidiary for any other unlawful
or improper purpose.
--------------------------------------------------------------------------------
Other Conflicts of
Interest
Employees should also be aware that areas other than personal securities
transactions or gifts and sensitive payments may involve conflicts of interest.
The following should be regarded as examples of situations involving real or
potential conflicts rather than a complete list of situations to avoid.
"Inside Information"
Specific reference is made to the firm's policy on the use of "inside
information" which applies to personal securities transactions as well as to
client transactions.
Use of Information
Information acquired in connection with employment by the organization may not
be used in any way which might be contrary to or in competition with the
interests of clients. Employees are reminded that certain clients have
specifically required their relationship with us to be treated confidentially.
Disclosure of
Information
Information regarding actual or contemplated investment decisions, research
priorities or client interests should not be disclosed to persons outside our
organization and in no way can be used for personal gain.
Outside
Activities
All outside relationships such as directorships or trusteeships of any kind or
membership in investment organizations (e.g., an investment club) must be
cleared by the Director of Regulatory Affairs prior to the acceptance of such a
position. As a general matter, directorships in unaffiliated public companies or
companies which may reasonably be expected to become public companies will not
be authorized because of the potential for conflicts which may impede our
freedom to act in the best interests of clients. Service with charitable
organizations generally will be authorized, subject to considerations related to
time required during working hours and use of proprietary information.
Exemptive Procedure
The Director of Regulatory Affairs, the Director of Enterprise Risk Management,
the General Counsel or the Ethics Committee can grant exemptions from the
personal trading restrictions in this Code upon determining that the transaction
for which an exemption is requested would not result in a conflict of interest
or violate any other policy embodied in this Code. Factors to be considered may
include: the size and holding period of the Employee's position in the security,
the market capitalization of the issuer, the liquidity of the security, the
reason for the Employee's requested transaction, the amount and timing of client
trading in the same or a related security, and other relevant factors.
Any Employee wishing an exemption should submit a written request to the
Director of Regulatory Affairs setting forth the pertinent facts and reasons why
the employee believes that the exemption should be granted. Employees are
cautioned that exemptions are intended to be exceptions, and repetitive
exemptive applications by an Employee will not be well received.
Records of the approval of exemptions and the reasons for granting exemptions
will be maintained by the Regulatory Affairs Department.
--------------------------------------------------------------------------------
Compliance with
The Code of Ethics
Adherence to the Code of Ethics is considered a basic condition of employment
with our organization. The Ethics Committee monitors compliance with the Code
and reviews violations of the Code to determine what action or sanctions are
appropriate.
Violations of the provisions regarding personal trading will presumptively be
subject to being reversed in the case of a violative purchase, and to
disgorgement of any profit realized from the position (net of transaction costs
and capital gains taxes payable with respect to the transaction) by payment of
the profit to any client disadvantaged by the transaction, or to a charitable
organization, as determined by the Ethics Committee, unless the Employee
establishes to the satisfaction of the Ethics Committee that under the
particular circumstances disgorgement would be an unreasonable remedy for the
violation.
Violations of the Code of Ethics may also adversely affect an Employee's career
with Wellington Management with respect to such matters as compensation and
advancement.
Employees must recognize that a serious violation of the Code of Ethics or
related policies may result, at a minimum, in immediate dismissal. Since many
provisions of the Code of Ethics also reflect provisions of the U.S. securities
laws, Employees should be aware that violations could also lead to regulatory
enforcement action resulting in suspension or expulsion from the securities
business, fines and penalties, and imprisonment.
Again, Wellington Management would like to emphasize the importance of obtaining
prior clearance of all personal securities transactions, avoiding prohibited
transactions, filing all required reports promptly and avoiding other situations
which might involve even an apparent conflict of interest. Questions regarding
interpretation of this policy or questions related to specific situations should
be directed to the Regulatory Affairs Department or Ethics Committee.
Revised: March 1, 2000
<PAGE>
BKF CAPITAL GROUP, INC.
JOHN A. LEVIN & CO., INC.
ONE ROCKEFELLER PLAZA
NEW YORK NEW YORK 10020
CODE OF ETHICS
APRIL 18, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION................................................................1
PART I TRADING RESTRICTIONS................................................3
1.1. Statement of General Principles................................3
1.2. Insider Trading and Manipulative Practices.....................3
1.3. Initial Public Offerings.......................................4
1.4. Private Placements.............................................4
1.5. Restricted List................................................5
1.6. Transactions in BKF Shares.....................................5
1.7. Restriction on Trading by Investment Professionals
During a Black Out Period; Other Restrictions
on Investment Professionals....................................5
1.8. Required Personal Trading Approvals............................6
1.9. Restriction on Short Term Trading..............................6
1.10. Certain Exempt Transactions....................................7
PART II EMPLOYEE CONDUCT...................................................7
2.1. Personal Trading Accounts and Reports.....................7
2.2. Conflicts of Interest.....................................8
2.3. Service as a Director.....................................9
2.4. Annual Acknowledgment.....................................9
PART III COMPLIANCE........................................................9
3.1. Compliance Officers and Supervisory Procedures............9
3.2. Recordkeeping............................................10
3.3. Review by Board..........................................10
Annex A POLICIES AND PROCEDURES DESIGNED TO DETECT AND PREVENT
INSIDER TRADING
Exhibit A PERSONAL SECURITIES TRADING REQUEST FORM
Exhibit B PROPRIETARY AND EMPOYEE RELATED ACCOUNTS
Exhibit C EMPLOYEE ANNUAL ACKNOWLEDGMENT FORM
Exhibit D LIST OF APPROVED COMPLIANCE PERSONNEL
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INTRODUCTION
This Code of Ethics has been prepared for persons associated
with BKF Capital Group, Inc. ("BKF"), including persons associated with its
subsidiary, John A. Levin & Co., Inc. ("LEVCO").
This Code of Ethics is written so as to be read and understood
by each Employee with respect to such Employee's activities an behalf of the
Firm and personally.
In order to make it easier to review and understand this Code
of Ethics, a few terms as commonly used throughout the Code of Ethics are
defined below:
"Client Account" means any client or investment fund as to
which or for whom the Firm provides investment advisory or management services,
along with accounts for persons related to Employees or trusts established for
such persons so long as Employees do not have a direct beneficial interest in
such accounts.
"Compliance Officer" means Norris Nissim or such other person
as may be designated from time to time.
"Employee" means each officer, director, principal or employee
of the Firm, other than (i) a member of the board of directors of BKF who is not
an officer or employee of the Firm or (ii) a member of the board of directors of
any BKF subsidiary who is not an officer or employee of LEVCO or its affiliates.
"Firm" means LEVCO, BKF and each other affiliate entity under
common control which is engaged in the business of providing investment advisory
or management services. The term shall not include registered investment funds
advised by the Firm.
"Head Trader" means Daniel E. Aron or, in his absence, such
other person as may be designated from time to time.
"Investment Professional" means an Employee who, in connection
with his or her regular functions or duties, makes or participates in making
recommendations regarding purchases or sales for Client Accounts.
"Municipal Employee" means an Employee who does not work in
the Firm's New York City office and who solely provides municipal security
investment advisory or management services to Client Accounts.
"Proprietary Account" means an account in which an Employee
has a "beneficial interest" or a proprietary investment or trading account
maintained for the Firm or its Employees. A "beneficial interest" in an account
includes the opportunity, directly or indirectly, to profit or share in any
profit in a securities transaction taking place in the account, and an Employee
shall be deemed to have a beneficial interest in accounts in which the
Employee's spouse, children and other dependents living in the Employee's
household have a beneficial interest, in securities held by a partnership in
which the Employee is a general partner and, in certain cases, in trusts of
which the Employee is a trustee or beneficiary. The rules promulgated under
Section 16 of the Security Exchange Act of 1934 shall generally be used to
determine whether an Employee has a beneficial interest in an account,
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"Security" shall mean all investment instruments commonly
viewed as securities, whether registered or not, including any option to
purchase or sell, and any security that is exchangeable for or convertible into,
any such security, private placements, commodity futures contracts and commodity
options, swaps and other derivative instruments, but shall not include shares of
registered OPEN-END INVESTMENT COMPANIES (I.E., mutual funds), direct
obligations of the Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper, foreign exchange "spot" or "forward"
contracts, short-term, high quality debt securities, including repurchase
agreements, and such other money market or investment instruments as may be
authorized by the Compliance Officer from time to time. Additional investment
instruments may be included in the definition of Securities by a notice from the
Compliance Officer delivered to all Employees. The Compliance Officer shall
deliver such notice within two business days of being notified by an authorized
officer of the Firm that the Firm has purchased or intends to purchase
securities of that type for one or more Client Accounts.
PERSONS WITH QUESTIONS NOT ANSWERED BY THIS CODE OF ETHICS
SHOULD CONTACT THE COMPLIANCE OFFICER.
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PART I
TRADING RESTRICTIONS
1.1. STATEMENT OF GENERAL PRINCIPLES.
All Employees owe a fiduciary duty to, among others, the
Firm's clients. The interests of clients must always be recognized, be respected
and come before those of Employees. In any decision relating to personal
investments or other matters, Employees must assiduously avoid serving their own
personal interests ahead of any client's interests or taking inappropriate
advantage of their position with or on behalf of the Firm. It is critical that
Employees avoid any situation that might compromise -- or appear to compromise
-- their exercise of fully independent judgment in the interests of the Firm's
clients. All personal investment and other activities of Employees must not only
comport with the Code of Ethics and avoid any actual or potential conflicts of
interest, but must also abide by the spirit of the Code of Ethics and the
principles articulated herein, Furthermore, Employees may not use their position
with the Firm to favor family and related accounts, and accounts with respect to
which Employees have fiduciary responsibilities, over other Client Accounts.
1.2. INSIDER TRADING AND MANIPULATIVE PRACTICES.
(a) INSIDER TRADING.
Federal and state securities laws prohibit any purchase or
sale of securities while in possession of material non-public information which
was improperly obtained, or was obtained under circumstances contemplating that
it would not be used for personal gain, and in certain other circumstances. In
addition, "tipping" of others about such information is prohibited. The persons
covered by these restrictions are not only "insiders" of publicly traded
companies, but also any other persons who, under certain circumstances, learn of
material, non-public information about a company, such as Employees, as well as
outside attorneys, accountants, consultants or bank lending officers.
Violation of these restrictions can have severe consequences
for both the Firm and its Employees. Trading on insider information or
communicating insider information to others it may result in civil and criminal
penalties, including imprisonment of up to ten years and a criminal fine of up
to $1,000,000. In addition, the Firm may be subject to liability for insider
trading or tipping by Employees. The Firm may also be held liable for failing to
take measures to deter securities laws violations where such failure is found to
have contributed to or permitted a violation.
In view of these requirements, the Firm has adopted the
general policy that an Employee may not trade for either a Client Account or a
Proprietary Account in securities of any company about which the Employee
possesses, or is aware that the Firm possesses, material, non-public information
nor "tip" others about such information. All Employees should exercise care to
adhere to this policy and to take reasonable steps to ensure that the Firm and
other Employees adhere to the policy. any employee who believes that he or she
may be in possession of material non-public information should: report the
matter immediately to the Compliance Officer; not purchase or sell the
securities on behalf of yourself or others, including investment partnerships
affiliated with the Firm or private accounts managed by the Firm; and not
communicate the information to anyone inside or outside of the firm, other than
the Compliance Officer. In addition, Employees should
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immediately inform the Compliance Officer if they become aware of any actual or
potential violation of this policy by an Employee.
Recognizing that this is a complicated subject which is not
easily reduced to a few general principles, the Firm has prepared and adopted a
statement of Policies and Procedures Designed to Detect and Prevent Insider
Trading which is attached as Annex A of this Code of Ethics. All Employees must
read and adhere to the restrictions outlined in Annex A.
(b) MANIPULATIVE PRACTICES.
The Investment Company Act and the rules promulgated
thereunder make it illegal for any person covered by the Code of Ethics,
indirectly, in connection with the purchase or sale of a security held or to be
acquired by LEVCO on behalf of or any entity registered under the Investment
Company Act (such registered entities, the "Funds") to:
a. employ any device, scheme or artifice to defraud the
Fund,
b. 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 circumstances under which they are made, not
misleading;
c. engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit
upon the Fund, or
d. engage in any manipulative practice with respect to
the Fund.
1.3. INITIAL PUBLIC OFFERINGS.
No Employee may acquire any Securities for his or her
Proprietary Account in an initial public offering; provided, however, that an
Employee may purchase a security issued in a thrift conversion where the
Employee is a depositor, if the Employee has received the prior approval of the
Compliance Officer.
1.4. PRIVATE PLACEMENTS.
No Investment Professional shall acquire any Security in a
private placement without the prior approval of the Compliance Officer. The
factors to be taken into account in this prior approval include, among other
considerations, whether the private placement should be acquired for the Firm's
Client Accounts, whether the private placement is being offered to the
Investment Professional because of his or her position with the Firm and whether
notice to Clients is appropriate. If an Investment Professional has acquired
Securities in a private placement before becoming an Investment Professional,
the Investment Professional must disclose that investment to the Compliance
Officer.
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1.5. RESTRICTED LIST.
Certain transactions in which the Firm engages may require,
for either business or legal reasons, that any Client Accounts or Proprietary
Accounts do not trade in the subject Securities for specified time periods. In
addition, if the Firm acquires material, non-public information regarding an
issuer, it will be restricted from trading in the securities of such issuer. A
Security will be designated as "restricted" if the Firm is involved in a
transaction which places limits on the aggregate position held by the accounts
in that Security. Restricted securities will appear on a restricted list
("Restricted List") maintained by the Head Trader, which Employees should
consult before placing any order for purchase or sale. No Employee may engage in
any trading activity with respect to a Security while it is on the Restricted
List, except with approval of the Head Trader. Restrictions with regard to
Securities on the Restricted List extend to options, rights or warrants relating
to those Securities and any Securities convertible into those Securities.
1.6. TRANSACTIONS IN BKF SHARES.
Transactions by BKF's directors, officers and certain
stockholders in BKF shares are subject to the restrictions and limitations
discussed in BKF's Federal Securities Law Guide for Directors, Officers, 10%
Stockholders and Certain Other Persons. As a general matter, approval to
transact in BKF shares will not be granted pursuant to Section 1.8 of this Code
of Ethics during the 14-day period prior to the release of earnings information
relating to the Firm.
1.7. RESTRICTION ON TRADING BY INVESTMENT PROFESSIONALS
DURING A BLACK OUT PERIOD; OTHER RESTRICTIONS ON
INVESTMENT PROFESSIONALS.
No Investment Professional shall purchase or sell a Security
within seven days before or three days after (the "Black Out Period") a
transaction in the same Security by the Firm on behalf of a Client Account. If
an Investment Professional executes a trade in a Proprietary Account during the
Black Out Period at a price superior to the price received by the Client
Account, the Investment Professional shall disgorge an amount equal to the
difference between the price per share received by the Investment Professional
and the average price per share received by Client Accounts during the Black Out
Period, multiplied by the number of shares purchased or sold by the Investment
Professional, and shall contribute such amount to a charitable organization
chosen by the Investment Professional and approved by the Compliance Officer.
Notwithstanding the preceding sentences, an Investment
Professional may trade a Security during a Black Out Period applicable to that
Security if (i) the Firm had sold the Security to liquidate a Client Account (as
a result of a withdrawal or termination), or the Firm had purchased the Security
for a Client Account(s) that the Firm manages for a broker-sponsored wrap-fee
program; (ii) the Compliance Officer pre-approves the trade; and (iii) the
Investment Professional transacts in the Security following completion of all
trades for Client Accounts on that day. In addition, an Investment Professional
may seek approval from the Compliance Officer to sell a Security during a Black
Out Period to protect the capital of the Investment Professional, and if
approval is granted, the Investment Professional may sell its Securities in the
same proportion that the Firm sold that Security on behalf of Client Accounts
and subject to such restrictions as the Compliance Officer may deem appropriate
to protect the interests of Client Accounts.
When an Investment Professional recommends that a Security be
bought or sold for a Client Account, such Investment Professional must disclose
to the Compliance Officer whether a
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position in that Security is currently held in a Proprietary Account of such
Investment Professional. The Compliance Officer may restrict such Investment
Professional from buying or selling the position from any Proprietary Account
until a specified period of time after the orders for Client Accounts have been
filled and there is no buying or selling program in progress.
1.8. REQUIRED PERSONAL TRADING APPROVALS.
All transactions for Proprietary Accounts must have the prior
written approval of the Head Trader or Compliance Officer. Notwithstanding the
preceding sentence, Municipal Employees are not required to seek such approval
for transactions in equity securities (or their equivalent) that they would like
to effect in their Proprietary Account. Subject to the discretion of the
Compliance Officer, this prior approval may be withheld on any day during which
the Firm has, or is actually intending, a "buy" or "sell" order in that same
Security for Client Accounts. If an Employee has knowledge that the Firm has, or
is actually intending, a "buy" or "sell" order in a specific Security for Client
Accounts, the Employee must inform the Head Trader or Compliance Officer of such
knowledge in seeking approval to trade in that Security. Any transaction for
which approval has been granted may be cancelled at the end of the day by the
Head Trader or Compliance Officer and the trade allocated to Client Accounts if
determined by the Head Trader or Compliance Officer to be required, and any
profits realized on proscribed trades must be disgorged and contributed by the
Employee to a charitable organization chosen by the Employee and approved by the
Compliance Officer.
A Personal Securities Trading Request Form should be submitted
to the Head Trader or Compliance Officer to obtain approval for a transaction
for an Employee's Proprietary Account and the Form is attached hereto as Exhibit
A. The Head Trader or Compliance Officer shall promptly notify the Employee of
approval or denial of clearance to trade by indicating such action on the
Personal Securities Trading Request Form. Notification of approval or denial to
trade may be verbally given; however, it shall be confirmed in writing by
indicating such action on the Personal Securities Trading Request Form within 24
hours of the verbal notification.
On a quarterly basis, or at any other time as may be prudent,
the Compliance Officer shall review all personal trading activity of all
Employees. If the Compliance Officer identifies any trading pattern or personal
trading that presents an actual or potential conflict of interest, the
Compliance Officer will recommend to senior management of the Firm that remedial
action be taken. Such remedial action may include restrictions on personal
trading by the Employee, disgorgement of profits, Employee reprimand and/or
Employee dismissal.
1.9. RESTRICTION ON SHORT TERM TRADING.
No Investment Professional shall profit from the purchase and
sale, or sale and purchase, of the same (or equivalent) Security within 60
calendar days (a "Short Term Trade"). Any Short Term Trade made in violation of
this paragraph shall be unwound or, if that is not practicable, all profits from
the Short Term Trade shall be disgorged by the Investment Professional to a
charitable organization chosen by the Investment Professional and approved by
the Compliance Officer; provided, however, that the Compliance Officer may
exempt the transaction from this prohibition, in whole or part, if the
Compliance Officer concludes that no harm resulted (or would result) to a Client
Account from the transaction and that to unwind the transaction or require
disgorgement would be inequitable or result in undue hardship to the Investment
Professional.
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1.10. CERTAIN EXEMPT TRANSACTIONS.
The restrictions of this Code of Ethics shall not apply to
purchases or sales in any Proprietary Account managed by a third party over
which an Employee or has no direct or indirect influence or control, purchases
that are part of any automatic dividend reinvestment plan, odd-lot purchase or
sale programs, 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, sales of such rights, and any other
purchases or sales receiving the prior approval of the Compliance Officer
because they are not inconsistent with this Code of Ethics or the provisions of
Rule 17j-l(b) under the Investment Company Act.
PART II
EMPLOYEE CONDUCT
2.1. PERSONAL TRADING ACCOUNTS AND REPORTS.
A. EMPLOYEES. Each Employee is required to identify to the
Compliance Officer no later than 10 days from the date of his/her hire, and
thereafter at least monthly, all brokerage and commodities trading accounts
(including the date of establishment of such accounts) which constitute a
Proprietary Account with respect to such Employee, all Securities which the
Employee owns or in which the Employee has a beneficial interest and all
brokerage and commodities trading accounts of persons supported by or living in
the same household as such Employees and trusts established for the Employee or
for such persons (see Exhibit B). In addition, on an annual basis, each Employee
is required to identify to the Compliance Officer the title, number of shares
and principal amount of the Securities which the Employee owned, or in which the
Employee had a beneficial interest, during the preceding year, as well as all
brokerage and commodities trading accounts which constitute a Proprietary
Account for the Employee and all brokerage and commodities trading accounts of
persons supported by or living in the same household as such Employee. The
information provided in this annual report must be current as of a date no more
than 30 days before the annual report is submitted. All such Proprietary and
Employee related Accounts are requested to be maintained at LEVCO Securities,
Inc. and such Proprietary and Employee related Accounts maintained with other
broker-dealers must be approved by the Compliance Officer. Duplicate copies of
all trade confirmations and all brokerage statements relating to such
Proprietary and Employee related Accounts must be sent to the Compliance Officer
promptly, and at least once each month; provided, however, that in lieu of
providing such duplicate confirmations, the Compliance Officer may permit an
Employee to provide a report of all personal securities transactions within 10
days after the end of the quarter during which the transactions occurred.
Each Employee must report to the Compliance Officer any
Proprietary Accounts managed on a discretionary basis by a third party. Each
Employee must also report to the Compliance Officer any private securities
transactions for any account for which records should be provided as set forth
above which are not carried out through brokerage accounts. Prior to arranging a
personal loan with a financial institution which will be collateralized by
Securities, an Employee must obtain the approval of the Compliance Officer.
Annually, each Employee is also required to certify to the Compliance Officer,
among other things, that he has reported all transactions in all such
Proprietary Accounts on the form attached hereto as Exhibit C.
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B. OUTSIDE BOARD MEMBERS.
A director of LEVCO who is not an officer or employee of LEVCO
(an "Outside Board Member") must (i) report, at the time the director becomes an
Outside Board Member, all securities in which the person had any direct or
indirect beneficial interest no later than ten days from the time when the
person becomes an Outside Board Member; (ii) report all personal securities
transactions within 10 days after the end of the quarter during which the
transactions occurred; and (iii) file with the Compliance Officer an annual
report that identifies the title, number of shares and principal amount of the
Securities which the Outside Board Member owned, or in which the Outside Board
Member had a beneficial interest, during the preceding year, as well as all
brokerage and commodities trading accounts which constitute a Proprietary
Account for the Outside Board Member and all brokerage and commodities trading
accounts of persons supported by or living in the same household as such Outside
Board Member. The information provided in this annual report must be current as
of a date no more than 30 days before the annual report is submitted.
An Outside Board Member may not purchase or otherwise acquire
direct or indirect beneficial ownership of any Security, and may not sell or
otherwise dispose of any Security in which he or she has direct or indirect
beneficial ownership, if he or she has actual knowledge at the time of entering
into the transaction that: (1) a Fund, pursuant to the advice of LEVCO, has
purchased or sold the Security within the last 15 calendar days, or is
purchasing or selling or intends to purchase or sell the Security in the next 15
calendar days; or (2) LEVCO has within the last 15 calendar days considered
purchasing or selling the Security for a Fund or is considering purchasing or
selling the Security for LEVCO Series Trust or within the next 15 calendar days
is going to consider purchasing or selling the Security for a Fund, unless such
Outside Board Member:
(i) obtains advance clearance of such transaction from
the Compliance Officer; and
(ii) reports to the Compliance Officer such transaction.
2.2. CONFLICTS OF INTEREST.
It is a violation of an Employee's duty of loyalty to the Firm
for any Employee, without the prior written consent of the applicable Compliance
Officer, to:
(a) rebate, directly or indirectly, to any person, firm
or corporation any part of the compensation received
from the Firm as an Employee;
(b) accept, directly or indirectly, from any person,
firm, corporation or association, other than the
Firm, compensation of any nature as a bonus,
commission, fee, gratuity or other consideration in
connection with any transaction on behalf of the Firm
or a Client Account,
(c) accept, directly or indirectly, from any person,
firm, corporation, association or other entity that
does business with or on behalf of the firm, any gift
or other thing of more than de minimis value;
(d) participate in entertainment with clients, brokers
and other counterparties unless reasonably related to
legitimate business purposes of the Firm; or
(e) own any stock or have, directly or indirectly, any
financial interest in any other organization engaged
in any securities, financial or related business,
except for a minority stock ownership or other
financial interest in any business which is publicly
owned.
In addition, no Employee, without the prior written consent of
the Compliance Officer, may provide directly or indirectly any person, firm,
corporation, association or other entity that does business with or on behalf of
the Firm with any gift or other item.
2.3. SERVICE AS A DIRECTOR.
No Employee may serve as a member of the board of directors or
trustees of any business organization, other than a civic or charitable
organization, without the prior written approval of the Compliance Officer. The
determination of an Employee's eligibility to serve in such a position shall be
based on whether such service would be consistent with the interests of the Firm
and its clients, and no person employed by LEVCO or any other member of the Firm
shall be allowed to serve in such a position unless authorization has been
obtained from any clients of the Firm which have notified the Firm of any
criteria they may have with respect to such service. If such service is
authorized, certain safeguards may be implemented in the discretion of the
Compliance Officer including, but not limited to, investment restrictions and/or
isolating the Employee serving from those making investment decisions through
"Chinese Wall" or other procedures. See also Annex A - Policies and Procedures
Designed to Detect and Prevent Insider Trading.
2.4. ANNUAL ACKNOWLEDGMENT.
Each Employee shall at least annually sign a written statement
in the form of Exhibit B attached hereto acknowledging his or her receipt and
understanding of, and agreement to abide by, the policies described in this Code
of Ethics, and certifying that he or she has reported all personal securities
transactions. In addition, each Outside Board Member is required to certify
annually that he or she has read and understands the provisions of this Code
applicable to him or her and recognizes that he or she is subject to certain
provisions of the Code.
PART III
COMPLIANCE
3.1. COMPLIANCE OFFICERS AND SUPERVISORY PROCEDURES.
LEVCO shall designate from time to time a Compliance Officer
and a Head Trader and their substitutes, and the names of such persons shall be
listed on Exhibit C attached hereto. The Compliance Officer shall be responsible
for general administration of the policies and procedures set forth in this Code
of Ethics other than those specifically designated for the Head Trader and the
Compliance Officer. The Compliance Officer shall be required to identify each
Employee subject to this Code and to inform such Employees of his/her reporting
obligations hereunder. The Compliance Officer shall review all reports submitted
pursuant to this Code of Ethics, answer questions regarding the policies and
procedures set forth in the Code of Ethics, update this Code of Ethics as
required from time to time, and arrange for appropriate records to be
maintained, including copies of all reports submitted under this Code of Ethics.
The Compliance Officer shall also arrange for
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appropriate briefing of Employees of the policies of the Firm reflected in the
Code of Ethics from time to time as determined to be appropriate by the
Compliance Officer.
The Compliance Officer may waive any requirement of this Code
of Ethics if the facts and circumstances warrant such waiver.
The Compliance Officer shall investigate any possible
violations of the policies and procedures set forth in this Code of Ethics to
determine whether sanctions should be imposed, which may include, inter alia, a
letter of censure or suspension or termination of employment, or such other
course of action as may be appropriate.
On an annual basis, the Compliance Officer will review and
consider the Firm's compliance procedures, the prior year's violations and
remedial actions taken, and any proposed updates or changes to the Firm's Code
of Ethics.
3.2. RECORDKEEPING.
The records listed below shall be maintained for a period of
five years in an easily accessible place:
o a list of all persons subject to the Code during the period;
o receipts signed by all persons subject to the Code acknowledging receipt of
copies of the Code and acknowledging that: they are subject to it;
o a copy of each Code of Ethics that has been in effect any time during the
period;
o a copy of each report filed pursuant to the Code and a record of any known
violations and actions taken as a result thereof during the period;
o a copy of a record of all persons who are deemed to be a compliance
officer; and
o a copy of a record of any decision to approve the acquisition of a private
placement or IPO.
3.3. REVIEW BY BOARD.
The officers of LEVCO Series Trust, with the assistance of the
Compliance Officer, shall prepare an annual report to the board of LEVCO Series
Trust that:
o summarizes existing procedures concerning personal investing and any
changes in those procedures during the past year;
o identifies any violations of the applicable relevant provisions of the Code
requiring significant remedial action during the past year;
o identifies any recommended changes in existing restrictions or procedures
based upon experience under the Code, evolving industry practices, or
developments in applicable laws or regulations; and
o certifies that LEVCO has adopted procedures reasonably necessary to prevent
Employees from violating the Code.
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ANNEX A
POLICIES AND PROCEDURES
DESIGNED TO DETECT AND PREVENT INSIDER TRADING
SECTION I. POLICY STATEMENT ON INSIDER TRADING.
A. The Firm forbids any of its Employees from trading, either
personally or on behalf of others, including private accounts managed by the
Firm, while in possession of 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 policies apply to
every Employee and extend to activities within and outside their duties at the
Firm. Every Employee must read and retain this policy statement. Any questions
regarding the Firm's policies and procedures should be referred to the
Compliance Officer, who is responsible for the monitoring and application of
such policies and procedures.
THIS POLICY STATEMENT APPLIES TO THE FIRM AND ITS AFFILIATED
ENTITIES, AS WELL AS TO THEIR RESPECTIVE EMPLOYEES.
The term "insider trading" is not defined in the federal
securities laws, but is generally used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communication of material nonpublic information to others.
While the law concerning insider trading is not static, it is
generally understood that the law prohibits:
(i) trading by an insider, while in possession
of material, nonpublic information;
(ii) 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
(iii) an insider or a non-insider described in
clause (ii) above from communicating
material nonpublic 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 Compliance Officer.
B. WHO IS AN INSIDER?
The concept of "insider" is broad. It includes all Employees
of the Firm. In addition a person can be a "temporary insider" if he or she
enters into a 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. The Firm may become a temporary insider of a company it advises or for
which it performs other services. Temporary insider also may include, among
others, a company's law firm, accounting firm, consulting firm, banks and the
employees of such organizations.
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C. WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability
unless the information is material. "Material information" is generally defined
as information that is likely to be considered important by a reasonable
investor in making his or her investment decisions. Information that affects the
price of a company's securities is likely to be deemed material. This might
include, without limitation, changes in dividend policies, earnings estimates,
changes in previously released earnings estimates, significant merger or
acquisition proposals or agreements, major litigation, liquidity problems and
significant new products, services or contracts.
Material information can also relate to events or
circumstances affecting the market for a company's securities. For example, in
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 NONPUBLIC INFORMATION?
"Nonpublic" information is any information that has not been
disclosed generally to the marketplace. Information received about another
company that is not yet in general circulation should be considered non-public.
As a general rule, 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, Wall
Street Journal or other publications of general circulation would be considered
public. In addition, if information is being widely disseminated to traders
generally by brokers or institutional analysts, such information would be
considered public unless there is a reasonable basis to believe that such
information is confidential and carne from a corporate insider.
E. BASES FOR LIABILITY
1. Fiduciary Duty Theory
In 1980, the Supreme Court found that there is no general duty
to disclose before trading on material, nonpublic information, but that such a
duty arises where there is a fiduciary relationship. A relationship must exist
between the parties to a transaction such that one party has a right to expect
that the other party will disclose any material nonpublic information or will
refrain from trading.
In 1983, the Supreme Court stated that outsiders can acquire
the fiduciary duties of insiders (i) by entering into a confidential
relationship with a company through which such outsiders will gain material
nonpublic information (e.g., attorneys, accountants, underwriters or
consultants), or (ii) by becoming "tippees" if the outsiders are aware or should
have been aware that they have been given confidential information by an insider
who has violated his or her 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
<PAGE>
pecuniary, but can be a gift, a reputational benefit that will translate into
future earning, 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," where liability is based on a fiduciary's
undisclosed, self-serving use of a principal's information to purchase or sell
securities in breach of a fiduciary duty, thereby defrauding the principal of
the exclusive use of that information. Liability is based on the fiduciary's
deception of those who entrusted the fiduciary with access to confidential
information. Under the theory as most recently articulated by the Supreme Court,
the element of deception may be established by an employee's breach of a
company's internal rules as contained, for example, in a company compliance
manual. The "misappropriation theory" can be the basis for both government
prosecution and civil actions brought by private parties. In addition, the
Supreme Court has also upheld the SEC's current rule with respect to tender
offers that does not require the breach of a fiduciary duty for liability when
trading on inside information regarding a tender offer.
F. PENALTIES FOR INSIDER TRADING.
Penalties for trading on or communicating material nonpublic
information are severe, both for individuals involved in such unlawful conduct
and their employer. 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
o fines for the person who committed the violation 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 be
expected to result in serious sanctions by the Firm including dismissal of the
persons involved.
SECTION II. PROCEDURES TO IMPLEMENT THE FIRM'S POLICIES AGAINST INSIDER TRADING.
The following procedures have been established to aid the
Employees of the Firm in avoiding insider trading, and to aid the Firm in
preventing, detecting and imposing sanctions against insider trading. Every
Employee of the Firm must follow these procedures or risk serious sanctions,
including dismissal, substantial personal liability and criminal penalties. If
you have any questions about the procedures you should consult the Compliance
Officer.
<PAGE>
A. IDENTIFY INSIDE INFORMATION.
Before tiding for yourself or others, including investment
partnerships affiliated with the Firm or private accounts managed by the Firm,
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 affect the market price of the
securities if generally disclosed? Is this information which would cause
insiders to change their trading habits?
(ii) Is the information nonpublic? To whom has this
information been provided? Has the information been filed with the SEC, or been
effectively communicated to the marketplace by being published in Reuters
Economic Services, The Wall Street Journal or other publications of general
circulation or appearing on the wire services?
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 Compliance Officer;
(ii) Do not purchase or sell the securities on behalf of
yourself or others, including investment partnerships
affiliated with the Firm or private accounts managed
by the Firm; and
(iii) Do not communicate the information inside or outside
the Firm, other than to the Compliance Officer.
After the 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.
B. PERSONAL SECURITIES TRADING.
The Employees of the Firm and their family members and trusts
of which such persons are trustees or in which such persons have a beneficial
interest must execute all of their equity and corporate debt securities
transactions with their broker of choice. Transactions in U.S. Government or
municipal bonds are not subject to this policy. Duplicate confirmation of trades
must be forwarded to the Compliance Officer by each Employee's broker. Such
confirmations shall include, for each transaction, the date of the transaction,
the name, the quantity and the price of the security. For purposes of this
policy statement "family members" includes any relative, spouse, or relative of
the spouse of an Employee and any other adults living in the same household as
the Employee.
Personal trading should be undertaken for investment purposes
only, in amounts consistent with the normal investment practice of the person
investing, and short term trading or speculation is prohibited.
<PAGE>
When material nonpublic information of which the Employee is
aware become public, a reasonable period (at least 24 hours) must pass for the
marketplace to have an opportunity to evaluate and respond to the news before
personal trading is permitted.
C. RESTRICTING ACCESS TO MATERIAL NONPUBLIC 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 in paragraph 1 of this Section II. The Firm is
establishing this policy to help avoid conflicts, appearances of impropriety and
the misuse of confidential, proprietary information. In addition, care should be
taken so that all material and nonpublic information is secure. For example,
files containing material nonpublic information should be sealed and access to
computer files containing material nonpublic should be restricted.
D. ARBITRAGE ACTIVITIES.
Arbitrage activities must be conducted with particular care.
Absent authorization or clearance from the Compliance Officer, initial arbitrage
positions should only be taken after a significant corporate event is announced
or information affecting the securities markets generally or a specific industry
segment thereto is disclosed. Arbitrage personnel should limit contacts with
bankers, lawyers and other advisers of parties involved in various transactions.
E. CONTACTS WITH THIRD PARTIES.
Requests of third parties such as the press and analysts
for information should be directed to the Compliance Officer,
F. RESOLVING ISSUES CONCERNING INSIDER TRADING.
If, after consideration of the items set forth in paragraph 1
of this Section II, doubt remains as to whether information is material or
nonpublic, or if there are any unresolved questions as to the applicability or
interpretation of the foregoing procedures, or as to the propriety of any
action, these matters must be discussed with the Compliance Officer before
trading or communicating the information to anyone.
Contacts with public companies will sometimes be a part of an
Employee's research efforts. Employees may make investment decisions on the
basis of conclusions formed through such contacts and analysis of publicly
available information. Difficult legal issues arise, however, when, in the
course of these contacts, an Employee becomes aware of material, non-public
information. This could happen, for example, if a company's chief financial
officer prematurely discloses quarterly results to an analyst, or an investor
relations representative makes selective disclosure of adverse news to a handful
of investors. In such situations, the Employee should contact the Compliance
Officer immediately if you believe that you may have received material,
non-public information.
Tender offers represent a particular concern of the law of
insider trading for two reasons. First, tender offer activity often produces
extraordinary gyrations in the price of the target company's securities. Trading
during this time period is more likely to attract regulatory attention (and
produces a disproportionate percentage or insider trading cases). Second, the
SEC has adopted
<PAGE>
a rule that expressly forbids trading and "tipping" while in possession of
material, non-public information regarding a tender offer received from the
tender offeror, the target company or anyone acting on behalf or either. The
rule does not require a breach of a fiduciary duty for liability. Employees
should exercise particular caution any time they become aware of non-public
information relating to a tender offer.
SECTION III. SUPERVISORY PROCEDURES
The role of the Compliance Officer is critical to the
implementation and maintenance of the Firm's policies and procedures against
insider trading. Supervisory procedures can be divided into two classifications:
prevention of insider trading and detection of insider trading.
A. PREVENTION OF INSIDER TRADING.
To Prevent insider trading, the Compliance Officer should:
(i) provide, on a regular basis, an education
program to familiarize Employees with the
Firm's policies and procedures.
(ii) answer questions regarding the Firm's
policies and procedures;
(iii) resolve issues of whether information
received by an Employee of the Firm is
material and nonpublic;
(iv) review on a regular basis and update
as necessary the Firm's policies and
procedures;
(v) when it has been determined that an
Employee of the Firm has material nonpublic
information:
(a) implement measures to prevent
dissemination of such information; and
(b) if necessary, restrict Employees from
trading in the securities; and
(vi) promptly review, and either approve or
disapprove, in writing, each request of an
Employee for clearance to trade in specified
equity securities or corporate debt
securities.
B. DETECTION OF INSIDER TRADING.
To detect insider trading, the Compliance Officer should:
(i) review the confirmations received from each
Employee;
(ii) review the trading activity of investment
partnerships affiliated with the Firm and
private accounts managed by the Firm; and
<PAGE>
(iii) coordinate the review of such reports
with other appropriate Employees of the Firm.
C. SPECIAL REPORTS.
Promptly upon learning of a potential violation of the Firm's
Policies and Procedures to Detect and Prevent Insider Trading the Compliance
Officer should prepare a written report to the Chief Executive Officer of the
Firm providing full details and recommendations for further action.
D. ANNUAL REPORTS.
On an annual basis, the Compliance Officer should prepare a
written report to the Chief Executive officer of the Firm setting forth the
following:
(i) summary of existing procedures to detect and
prevent insider trading;
(ii) full details of any investigation, either
internal or by a regulatory agency, of any
suspected insider trading and the results of
such investigation;
(iii) an evaluation of the current procedures and
any recommendations for improvement; and
(iv) a description of the Firm's continuing
educational program regarding insider
trading, including the dates of such
programs since the last report.
<PAGE>
EXHIBIT A
PERSONAL SECURITIES TRADING REQUEST FORM
NAME:___________________________________________
Details of Proposed Transaction
- circle PURCHASE or SALE
- On margin circle YES or NO
- Date of Transaction ________________________________
- indicate name of issuer ____________________________
- type of security (e.g., note, common stock,
preferred stock) ____________________
- quantity of shares or units ____________________
- price per share/units ____________________
- approximate dollar amount ____________________
- account for which transaction will be made ____________________
- name of broker ____________________
- transaction in same security within prior
60 days ____________________
DATE: ______________________________
________________________________________________________________________________
You may/may not execute the proposed transactions described above.
DATE:
________________________
Authorized Signature
<PAGE>
EXHIBIT B
PROPRIETARY AND EMPLOYEE RELATED ACCOUNTS
Please list all brokerage and commodity trading accounts which constitute a
Proprietary Account, all securities which you own and any trading accounts or
securities of persons supported by or living in the same household as yourself.
Also list any trusts that you have established or that have been established for
you.
NAME ON THE ACCOUNT INSTITUTION ACCOUNT #
DATE:______________________ SIGNATURE:_____________________________________
<PAGE>
EXHIBIT C
EMPLOYEE ANNUAL ACKNOWLEDGEMENT FORM
The undersigned employee (the "Employee") OF (the "Firm")
acknowledges having received and read a copy of the code of ethics along with
all Annexes and Exhibits thereto, dated , 200 (the "Code of Ethics"), and agrees
to abide by the provisions contained therein. The Employee understands that
observance of the policies and procedures contained in the Code of Ethics is a
material condition of the Employee's employment by the Firm and that any
violation of such policies and procedures by the Employee will be grounds for
immediate termination by the Firm as well as possible civil or criminal
penalties.
The Employee specifically agrees and acknowledges as follows:
a. The Employee will disclose to the Compliance Officer of the
Firm all accounts through which the Employee directly or indirectly conducts
securities or commodities trading activity of any sort, including all amounts in
which the Employee has a direct or indirect beneficial interest and all accounts
over which the Employee exercises any control.
b. The Employee will provide to the Compliance Officer, at
least monthly, copies of all trade confirmations and brokerage statements
relating to such accounts.
c. The Employee will not trade on the basis of, nor disclose
to any third party, material non-public information, nor confidential
information regarding the activities of any Client Account.
d. The Employee will not engage in transactions involving
securities appearing on a list of "Restricted Securities" that may be circulated
from time to time by the Compliance Officer and agrees to obtain the approval of
the Head Trader, or his authorized substitute, for any trade for a Proprietary
Account.
e. The Employee will not, without the permission of the
Compliance Officer, disclose to any third party any information that an Employee
obtains regarding advice furnished by the Firm to its Client Accounts,
non-public data furnished by any client, or the programs, analyses or other
proprietary data or information of the Firm.
f. The Employee has provided to the applicable Compliance
Officer an annual report indicating all transactions effected during the
preceding year in all accounts which the Employee owned or in which the Employee
has a beneficial interest and all private securities transactions which are not
carried out through brokerage accounts, with such information current as of a
date no more than 30 days before the Employee submitted such annual report.
g. The Employee has been given the opportunity to take part in
an educational Program in connection with the Firm's insider trading policies
and procedures.
<PAGE>
By the signature below, the Employee pledges to abide by the
policies and procedures described above and affirms that the Employee has not
previously violated such policies or procedures and has reported all securities
transactions for his Proprietary Accounts in the most recent calendar year as
required by the Code of Ethics.
____________________________ ______________________________
Date Name of Employee
______________________________
Signature of Employee
<PAGE>
EXHIBIT D
LIST OF APPROVED COMPLIANCE PERSONNEL
TITLE PERSON
Compliance Officer Norris Nissim
Daniel E. Aron (substitute)
Head Trader Daniel E. Aron
<PAGE>
THE VANGUARD GROUP, INC.
------------------------
CODE OF ETHICS
--------------
SECTION 1: BACKGROUND
This Code of Ethics has been approved and adopted by the Board of Directors of
The Vanguard Group, Inc. ("Vanguard") and the Boards of Trustees of each of the
Vanguard funds in compliance with Rule 17j-1 under the Investment Company Act of
1940. The Code has been amended and restated effective as of May 1, 1999. Except
as otherwise provided, the Code applies to all "Vanguard personnel," which term
includes all employees, officers, Directors and Trustees of Vanguard and the
Vanguard funds. The Code also contains provisions which apply to the investment
advisers to the Vanguard funds (see section 11).
SECTION 2: STATEMENT OF GENERAL FIDUCIARY STANDARDS
This Code of Ethics is based on the overriding principle that Vanguard personnel
act as fiduciaries for shareholders' investments in the Vanguard funds.
Accordingly, Vanguard personnel must conduct their activities at all times in
accordance with the following standards:
a) SHAREHOLDERS' INTERESTS COME FIRST. In the course of fulfilling their
duties and responsibilities to Vanguard fund shareholders, Vanguard personnel
must at all times place the interests of Vanguard fund shareholders first. In
particular, Vanguard personnel must avoid serving their own personal interests
ahead of the interests of Vanguard fund shareholders.
b) CONFLICTS OF INTEREST MUST BE AVOIDED. Vanguard personnel must avoid
any situation involving an actual or potential conflict of interest or possible
impropriety with respect to their duties and responsibilities to Vanguard fund
shareholders.
c) COMPROMISING SITUATIONS MUST BE AVOIDED. Vanguard personnel must not
take advantage of their position of trust and responsibility at Vanguard.
Vanguard personnel must avoid any situation that might compromise or call into
question their exercise of full independent judgment in the best interests of
Vanguard fund shareholders.
<PAGE>
All activities of Vanguard personnel should be guided by and adhere to these
fiduciary standards. The remainder of this Code sets forth specific rules and
procedures which are consistent with these fiduciary standards. However, all
activities by Vanguard personnel are required to conform with these fiduciary
standards regardless of whether the activity is specifically covered in this
Code.
SECTION 3: DUTY OF CONFIDENTIALITY
Vanguard personnel must keep confidential at all times any nonpublic information
they may obtain in the course of their employment at Vanguard. This information
includes but is not limited to:
1) information on the vanguard funds, including recent or impending
securities transactions by the funds, activities of the
funds' advisers, offerings of new funds, and closings of funds;
2) information on Vanguard fund shareholders and prospective
shareholders, including their identities, investments, and account
transactions;
3) information on other vanguard personnel, including their pay,
benefits, position level, and performance ratings; and
4) information on Vanguard business activities, including new services,
products, technologies, and business initiatives.
Vanguard personnel have the highest fiduciary obligation not to reveal
confidential Vanguard information to any party that does not have a clear and
compelling need to know such information.
SECTION 4: GIFT POLICY
Vanguard personnel are prohibited from seeking or accepting gifts of material
value from any person or entity, including any Vanguard fund shareholder or
Vanguard client, when such gift is in relation to doing business with Vanguard.
In certain cases, Vanguard PERSONNEL MAY ACCEPT GIFTS OF DE MINIMIS value (as
determined in accordance with guidelines set forth in Vanguard's Human Resources
Policy Manual) but only if they obtain the approval of a Vanguard officer.
<PAGE>
SECTION 5: OUTSIDE ACTIVITIES
a) PROHIBITIONS ON SECONDARY EMPLOYMENT. Vanguard employees are
prohibited from working for any business or enterprise in the financial services
industry that competes with Vanguard. In addition, Vanguard employees are
prohibited from working for any organization that could possibly benefit from
the employee's knowledge of confidential Vanguard information, such as new
Vanguard services and technologies. Beyond these prohibitions, Vanguard
employees may accept secondary employment, but only with prior approval from the
Vanguard Compliance Department. Vanguard officers are prohibited from accepting
or serving in any form of secondary employment unless they have received
approval from a Vanguard Managing Director or the Vanguard Chairman and Chief
Executive Officer.
b) PROHIBITION ON SERVICE AS DIRECTOR OR PUBLIC OFFICIAL. Vanguard
officers and employees are prohibited from serving on the board of directors of
any publicly traded company or in an official capacity for any federal, state,
or local government (or governmental agency or instrumentality) without prior
approval from the Vanguard Compliance Department.
c) PROHIBITION ON MISUSE OF VANGUARD TIME OR PROPERTY. Vanguard personnel
are prohibited from using Vanguard time, equipment, services, personnel or
property for any purposes other than the performance of their duties and
responsibilities at Vanguard.
SECTION 6: GENERAL PROHIBITIONS ON TRADING
a) TRADING ON KNOWLEDGE OF VANGUARD FUNDS ACTIVITIES. All Vanguard
personnel are prohibited from taking personal advantage of their knowledge of
recent or impending securities activities of the Vanguard funds or the funds'
investment advisers. In particular, Vanguard personnel are prohibited from
purchasing or selling, directly or indirectly, any security when they have
actual knowledge that the security is being purchased or sold, or considered for
purchase or sale, by a Vanguard fund. This prohibition applies to all securities
in which the person has acquired or will acquire "beneficial ownership." For
these purposes, a person is considered to have beneficial ownership in all
securities over which the person enjoys economic benefits substantially
equivalent to ownership (for example, securities held in trust for the person's
benefit), regardless of who is the registered owner. Under this Code of Ethics,
Vanguard personnel are considered to have beneficial ownership of all securities
owned by their spouse or minor children.
<PAGE>
b) VANGUARD INSIDER TRADING POLICY. All Vanguard personnel are subject
to Vanguard's Insider Trading Policy, which is considered an integral part of
this Code of Ethics. Vanguard's Insider Trading Policy prohibits Vanguard
personnel from buying or selling any security while in the possession of
material nonpublic information about the issuer of the security. The policy also
prohibits Vanguard personnel from communicating to third parties any material
nonpublic information about any security or issuer of securities. Any violation
of Vanguard's Insider Trading Policy may result in penalties which could include
termination of employment with Vanguard.
SECTION 7: ADDITIONAL TRADING RESTRICTIONS FOR ACCESS PERSONS
a) APPLICATION. The restrictions of this section 7 apply to all Vanguard
access persons. For purposes of the Code of Ethics, "access persons" include:
1) any Director or Trustee of Vanguard or a Vanguard fund, excluding
disinterested Directors and Trustees (i.e., any Director or Trustee
who is not an "interested person" of a Vanguard fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940);
2) any officer of Vanguard or a Vanguard fund; and
3) any employee of Vanguard or a Vanguard fund who in the course of his
or her regular duties participates in the selection of a Vanguard
fund's securities or who works in a Vanguard department or unit that
has access to information regarding a Vanguard fund's impending
purchases or sales of securities.
The Vanguard Compliance Department will notify all Vanguard personnel who
qualify as access persons of their duties and responsibilities under this Code
of Ethics. The restrictions of this section 7 apply to all transactions in which
a Vanguard access person has or will acquire beneficial ownership (see section
6a) of a security, including transactions by a spouse or minor child. However,
the restrictions do not apply to transactions involving: (i) direct obligations
of the Government of the United States; (ii) high quality short-term debt
instruments, including bankers' acceptances, bank certificates of deposit,
commercial paper, and repurchase agreements; and (iii) shares of registered
open-end investment companies (including shares of
<PAGE>
any Vanguard fund). In addition, the restrictions do not apply to transactions
in accounts over which the access person has no direct or indirect control or
influence.
b) GENERAL RESTRICTIONS FOR ACCESS PERSONS. Vanguard access persons are
subject to the following restrictions with respect to their securities
transactions:
1) PRE-CLEARANCE OF SECURITIES TRANSACTIONS. Vanguard access persons must
receive approval from the Vanguard Compliance Department before
purchasing or selling any securities. The Vanguard Compliance
Department will notify Vanguard access persons if their proposed
securities transactions are permitted under this Code of Ethics.
2) TRADING THROUGH VANGUARD BROKERAGE SERVICES. Vanguard access persons
must conduct all their securities transactions through Vanguard
Brokerage Services. Vanguard Brokerage Services will send a
confirmation notice of any purchase or sale of securities by a
Vanguard access person to the Vanguard Compliance Department.
3) PROHIBITION ON INITIAL PUBLIC OFFERINGS. Vanguard access persons are
prohibited from acquiring securities in an initial public offering.
4) PROHIBITION ON PRIVATE PLACEMENTS. Vanguard access persons are
prohibited from acquiring securities in a private placement without
prior approval from the Vanguard Compliance Department. 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 a Vanguard fund's later consideration of an
investment in the issuer.
5) PROHIBITION ON OPTIONS. Vanguard access persons are prohibited from
acquiring or selling any option on any security.
6) PROHIBITION ON SHORT-SELLING. Vanguard access persons are prohibited
from selling any security that the access person does not own or
otherwise engaging in "short-selling" activities.
7) PROHIBITION ON SHORT-TERM TRADING PROFITS. Vanguard access persons are
prohibited from profiting in the purchase and sale, or sale and
purchase, of the same (or related) securities within 60 calendar days.
In the event that an access person realizes profits on
<PAGE>
such short-term trades, the access person must relinquish such profits
to The Vanguard Group Foundation.
c) BLACKOUT RESTRICTIONS FOR ACCESS PERSONS. All Vanguard access persons
are subject to the following restrictions when their purchases and sales of
securities coincide with trades by the Vanguard funds:
1) PURCHASES AND SALES WITHIN THREE DAYS FOLLOWING A FUND TRADE. Vanguard
access persons are prohibited from purchasing or selling any security
within three calendar days after a Vanguard 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 Vanguard Group Foundation.
2) PURCHASES WITHIN SEVEN DAYS BEFORE A FUND PURCHASE. A Vanguard access
person who purchases a security within seven calendar days before a
Vanguard fund purchases the same (or a related) security is prohibited
from selling the security for a period of six months following 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 Vanguard Group Foundation any gain from the transaction.
3) SALES WITHIN SEVEN DAYS BEFORE A FUND SALE. A Vanguard access person
who sells a security within seven days before a Vanguard fund sells
the same (or a related) security must relinquish to The Vanguard Group
Foundation the difference between the access person's sale price and
the Vanguard fund's sale price (assuming the access person's sale
price is higher).
4) RESTRICTIONS NOT APPLICABLE TO TRADES BY VANGUARD INDEX FUNDS. The
restrictions of this section 7c do not apply to purchases and sales of
securities by Vanguard access persons which would otherwise violate
section 7c solely because the transactions coincide with trades by any
Vanguard index funds.
SECTION 8: ADDITIONAL TRADING RESTRICTIONS FOR INSTITUTIONAL CLIENT CONTACTS
<PAGE>
a) APPLICATION. The restrictions of this section 8 apply to all Vanguard
Institutional client contacts. For purposes of the Code of Ethics, an
"Institutional client contact" includes any Vanguard employee who works in a
department or unit at Vanguard that has significant levels of interaction or
dealings with the management of clients of Vanguard's Institutional Investor
Group. The Vanguard Compliance Department will notify Vanguard employees who
qualify as Institutional client contacts of the restrictions of this Section 8.
b) PROHIBITION ON TRADING SECURITIES OF INSTITUTIONAL CLIENTS. Vanguard
Institutional client contacts are prohibited from acquiring securities issued by
clients of the Vanguard Institutional Investor Group (including any options or
futures contracts based on such securities). In the event that any individual
who becomes subject to this prohibition already owns securities issued by
Institutional clients, the individual will be prohibited from disposing of those
securities without prior approval from the Vanguard Compliance Department. The
restrictions of this section 8 apply to all transactions in which Institutional
client contacts have acquired or would acquire beneficial ownership (see section
6a) of a security, including transactions by a spouse or minor child. However,
the restrictions do not apply to transactions in any account over which an
individual does not possess any direct or indirect control or influence. The
Vanguard Compliance Department will maintain a list of the Institutional clients
to which the prohibitions of this section 8 apply. The Vanguard Compliance
Department may waive the prohibition on acquiring securities of Institutional
clients in appropriate cases (including, for example, cases in which an
individual acquires securities as part of an inheritance or through an
employer-sponsored employee benefits or compensation program).
SECTION 9: COMPLIANCE PROCEDURES
a) APPLICATION. The requirements of this section 9 apply to all Vanguard
personnel other than disinterested Directors and Trustees (see section 7a). The
requirements apply to all transactions in which Vanguard personnel have acquired
or would acquire beneficial ownership (see section 6a) of a security, including
transactions by a spouse or minor child. However, the requirements do not apply
to transactions involving: (i) direct obligations of the Government of the
United States; (ii) high quality short-term debt instruments, including bankers'
acceptances, bank certificates of deposit, commercial paper, and repurchase
agreements; and (iii) shares of registered open-end investment companies
(including shares of any Vanguard fund). In addition, the requirements do not
apply to securities acquired for accounts over which the person has no direct or
indirect control or influence.
<PAGE>
b) DISCLOSURE OF PERSONAL HOLDINGS. All Vanguard personnel must disclose
their personal securities holdings to the Vanguard Compliance Department upon
commencement of employment with Vanguard. These disclosures must identify the
title, number of shares, and principal amount with respect to each security
holding.
c) RECORDS OF SECURITIES TRANSACTIONS. All Vanguard personnel must notify
the Vanguard Compliance Department if they have opened or intend to open a
brokerage account. Vanguard personnel must direct their brokers to supply the
Vanguard Compliance Department with duplicate confirmation statements of their
securities transactions and copies of all periodic statements for their
brokerage accounts.
d) CERTIFICATION OF COMPLIANCE. All Vanguard personnel must certify
annually to the Vanguard Compliance Department that: (i) they have read and
understand this Code of Ethics; (ii) they have complied with all requirements of
the Code of Ethics; and (3) they have reported all transactions required to be
reported under the Code of Ethics.
SECTION 10: REQUIRED REPORTS BY DISINTERESTED DIRECTORS AND TRUSTEES
Disinterested Directors and Trustees (see section 7a) are required to report
their securities transactions to the Vanguard Compliance Department only in
cases where the Director or Trustee knew or should have known during the 15-day
period immediately preceding or following the date of the transaction that the
security had been purchased or sold, or was being considered for purchase or
sale, by a Vanguard fund.
SECTION 11: APPLICATION TO INVESTMENT ADVISERS
a) ADOPTION OF CODE OF ETHICS. Each investment adviser to a Vanguard fund
must adopt a code of ethics in compliance with Rule 17j-1 and provide the
Vanguard Compliance Department with a copy of the code of ethics and any
subsequent amendments. Each investment adviser is responsible for enforcing its
code of ethics and reporting to the Vanguard Compliance Department on a timely
basis any violations of the code of ethics and resulting sanctions.
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b) PREPARATION OF ANNUAL REPORTS. Each investment adviser to a Vanguard
fund must prepare an annual report on its code of ethics for review by the Board
of Trustees of the Vanguard fund. This report must contain the following:
1) a description of any issues arising under the adviser's code of ethics
including, but not limited to, information about any violations of the
code, sanctions imposed in response to such violations, changes made
to the code's provisions or procedures, and any recommended changes to
the code; and
2) a certification that the investment adviser has adopted such
procedures as are reasonably necessary to prevent access persons from
violating the code of ethics.
SECTION 12: REVIEW BY BOARDS OF DIRECTORS AND TRUSTEES
a) REVIEW OF INVESTMENT ADVISERS' CODE OF ETHICS. Prior to retaining the
services of any investment adviser for a Vanguard fund, the Board of Trustees of
the Vanguard fund must review the code of ethics adopted by the investment
adviser pursuant to Rule 17j-1 under the Investment Company Act of 1940. The
Board of Trustees must receive a certification from the investment adviser that
the adviser has adopted such procedures as are reasonably necessary to prevent
access persons from violating the adviser's code of ethics. A majority of the
Trustees of the Vanguard fund, including a majority of the disinterested
Trustees of the Fund, must determine whether the adviser's code of ethics
contains such provisions as are reasonably necessary to prevent access persons
from engaging in any act, practice, or course of conduct prohibited by the
anti-fraud provisions of Rule 17j-1.
b) REVIEW OF VANGUARD ANNUAL REPORTS. The Vanguard Compliance Department
must prepare an annual report on this Code of Ethics for review by the Board of
Directors of Vanguard and the Boards of Trustees of the Vanguard funds. The
report must contain the following:
1) a description of issues arising under the Code of Ethics since the
last report including, but not limited to, information about any
violations of the Code, sanctions imposed in response to such
violations, changes made to the Code's provisions or procedures, and
any recommended changes to the Code; and
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2) a certification that Vanguard and the Vanguard Funds have adopted such
procedures as are reasonably necessary to prevent access persons from
violating the Code of Ethics.
SECTION 13: SANCTIONS
In the event of any violation of this Code of Ethics, Vanguard senior management
will impose such sanctions as deemed necessary and appropriate under the
circumstances and in the best interests of Vanguard fund shareholders. In the
case of any violations by Vanguard employees, the range of sanctions could
include a letter of censure, suspension of employment without pay, or permanent
termination of employment.
SECTION 14: RETENTION OF RECORDS
Vanguard must maintain all records required by Rule 17j-1 including: (i) copies
of this Code of Ethics and the codes of ethics of all investment advisers to the
Vanguard funds; (ii) records of any violations of the codes of ethics and
actions taken as a result of the violations; (iii) copies of all certifications
made by Vanguard personnel pursuant to section 9d; (iv) lists of all Vanguard
personnel who are, or within the past five years have been, access persons
subject to the trading restrictions of section 8 and lists of the Vanguard
compliance personnel responsible for monitoring compliance with those trading
restrictions; and (v) copies of the annual reports to the Boards of Directors
and Trustees pursuant to section 12.
