WELLINGTON MANAGEMENT COMPANY, LLP
WELLINGTON TRUST COMPANY, NA
WELLINGTON MANAGEMENT INTERNATIONAL
WELLINGTON INTERNATIONAL MANAGEMENT COMPANY PTE LTD.
CODE OF ETHICS
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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.
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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.
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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.
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<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.
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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.
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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.
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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.
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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>
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>
November 1999
LINCOLN CAPITAL MANAGEMENT COMPANY
CODE OF ETHICS
Employees of Lincoln Capital should conduct themselves with integrity and
dignity and act in an ethical manner in dealings with clients, business
partners, fellow employees and the public.
PROHIBITION AGAINST ASSISTING LEGAL AND ETHICAL VIOLATIONS
An employee shall not knowingly participate in any act that violates any
applicable law, rule, or regulation of any Government, Government agency, or
regulatory organization governing professional, financial, or business activity,
nor any act which would violate any provision of this Code of Ethics.
PROHIBITION AGAINST USE OF MATERIAL NON-PUBLIC INFORMATION
It is a violation of United States Federal securities law and a serious breach
of Lincoln Capital's Code of Ethics for an employee to trade in, or recommend
trading in, the securities of a company, either for personal gain or on behalf
of the firm's clients, while in the possession of material, nonpublic
information ("inside information") obtained either in the course of performing
duties, or through personal contacts. Such violations could subject an employee
and Lincoln Capital to significant civil as well as criminal liability,
including the imposition of monetary penalties. It could also result in
irreparable harm to the reputation of Lincoln Capital. Tippees (i.e., persons
who receive material, nonpublic information) also may be held liable if they
pass along such information to others.
Inside information is generally understood as material information about an
issuer of publicly-traded securities that has not been made known to either the
professional investment community or to the public at large. Inside information
is MATERIAL if it would be likely to have a substantial effect on the price of
the issuer's securities or if a reasonable investor would be likely to consider
it important in making his/her investment decision. Such information usually
originates from the issuer itself and could include, among other things,
knowledge of a company's earnings or dividends, a significant change in the
value of assets, changes in key personnel or plans for a merger or acquisition.
For example, a Lincoln Capital portfolio manager, analyst or trader may receive
information about an issuer's earnings or a new product in a private
communication with the issuer. Such information is usually considered INSIDE
INFORMATION because it has not been effectively disseminated to the public at
large. As a general rule, any information received from an issuer that has not
been made public in a press release, a public filing or forum should be
considered inside information.
In addition, Rule 14e-3 under the Securities Exchange Act of 1934 (the "Exchange
Act") makes it unlawful to buy or sell securities while in possession of
material information relating to a tender offer, if the person buying or selling
the securities knows or has reason to know that the information is nonpublic and
has been acquired, directly or indirectly, from the person making or planning to
make the tender offer, from the target company, or from any officer, director,
partner or employee
I-2
<PAGE>
or other person acting on behalf of either the bidder or the target company.
This rule prohibits not only trading, but also the communication of material,
nonpublic information relating to a tender offer to another person in
circumstances under which it is reasonably foreseeable that the communication
could result in a trade by someone in possession of the material, nonpublic
information.
Insider trading violations do not result when a perceptive investor reaches a
conclusion about a corporate action or event through an analysis of public
information and nonmaterial, nonpublic information (such as major cost cutting
initiatives, new products, etc.). This is known as the mosaic theory. The data
used in creating the mosaic may be gathered from all of the sources at the
investor's disposal, including the company itself and sources outside of the
company, such as suppliers, customers, and competitors. The investor may use
conclusions reached under the mosaic theory as the basis for investment
recommendations without the need for the company to release the information
through broad, public means. Additionally, mere possession of material nonpublic
information is not a violation.
ACTIVITIES WITH RESPECT TO MATERIAL INSIDE INFORMATION
Engaging in communication of material inside information could result in
violation of the Federal securities laws. Individuals who commit such acts could
be subject to severe penalties under the securities laws and termination from
Lincoln Capital.
1) Whenever an employee believes that he/she may have come into possession
of material, nonpublic information about a public company, he/she
personally must notify the Compliance Director as well as one other
Managing Director and may not communicate such information to anyone
else. Additionally, Lincoln Capital is obliged to contact the company
and urge that the information be made public.
2) Whenever an employee has material, nonpublic information relating to
any security, an employee may not buy or sell that security, or any
derivative of that security, personally or for family members, any
client account under Lincoln Capital management or any other person. In
addition, an employee may not recommend to others that they should buy
or sell that security or any derivative thereof.
RESPONSIBILITIES OF SUPERVISORS
A person with supervisory responsibility shall exercise reasonable oversight of
their employees to prevent violation of applicable statutes, regulations and
provisions of this Code of Ethics. This Code has been adopted by Lincoln Capital
to comply with regulatory requirements. Any questions about the Code or the
applicability of the Code to a personal securities transaction should be
directed to the Compliance Director. If the Compliance Director is not
available, questions should be directed to another Managing Director. In so
doing the employee is entitled to rely upon reasonable procedures established by
Lincoln Capital.
PROHIBITION AGAINST MISREPRESENTATION OF SERVICES
An employee shall not make any statements, orally or in writing, which
misrepresent:
1) the services that the individual or Lincoln Capital performs for
clients;
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<PAGE>
2) the qualifications of such person or Lincoln Capital;
3) the investment performance that the person or Lincoln Capital has
achieved or can reasonably be expected to achieve for the client; and or
4) the expected performance of any investment.
An employee shall not make, orally or in writing, explicitly or implicitly, any
assurances about or guarantees of any investment or its return except
communication of accurate information as to the terms of the investment
instrument and the issuer's obligations under the instrument.
FAIR DEALING WITH CLIENTS
An employee shall act in a manner consistent with the obligation to deal fairly
with all clients when:
1) disseminating investment recommendations;
2) disseminating material changes from prior investment advice; and
3) taking investment action.
<PAGE>
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<PAGE>
PRIORITY OF TRANSACTIONS
An employee shall give client transactions priority over personal transactions,
and ensure that any personal transactions do not adversely affect client
interests. If an employee decides to purchase or sell a security or other
investment, the employee must obtain prior approval from the Compliance Director
prior to executing the transaction.
DISCLOSURE OF CONFLICTS
An employee, when making an initial investment recommendation, shall disclose to
the Compliance Director and the Equity or Fixed Income Group, whichever is
appropriate, any potential conflict of interest relating to any beneficial
ownership of the securities or other investments involved that might reasonably
be expected to impair the employee's ability to render unbiased and objective
advice.
An employee shall disclose all matters that could reasonably be expected to
interfere with the employee's duty to Lincoln Capital and/or Lincoln Capital
clients, or with the ability to render unbiased and objective advice.
An employee shall also comply with all requirements as to disclosure of
conflicts of interest imposed by law and by rules and regulations of
organizations governing the employee's activities, and shall comply with any
prohibitions on the employee's activities if a conflict of interest exists.
If an employee is a director of a public company, Lincoln Capital will not trade
in any security of that company.
I-5
<PAGE>
Personal Trading
Below are rules governing personal purchases and sales of Common Stocks, Taxable
Fixed Income Securities, Options and Futures Contracts. These rules apply to
transactions in which an employee is deemed to have a beneficial interest in or
accounts over which the employee exercises discretion or control. Some examples
are:
1) securities an employee owns or has pledged to another;
2) securities an employee holds in a joint account with a spouse or
immediate family member;
3) securities held by any partnership other than Lincoln Partners in which
an employee is a general partner or by a trust of which an employee is a
beneficiary (except for a remainder interest that does not participate in
investment decisions regarding trust assets);
4) securities held by an employee as trustee of a trust of which the
employee is the settlor or an immediate family member has a beneficial
interest; and
5) securities held by a spouse, unless legally separated, or minor children
or a person living in the employee's household.
An employee will not be deemed to have a beneficial interest in securities if
they are held by a limited partnership in which the employee does not have or
share investment control over the partnership's portfolio.
These examples are not exclusive. There are other circumstances in which an
employee may or may not be deemed to have a beneficial interest. Any questions
should be directed to the Compliance Director.
PROHIBITION OF TRADING BENCHMARK ISSUES
Lincoln Capital employees may not buy or sell securities which are used or are
designated for possible use for Lincoln Capital client accounts. We call these
securities Benchmark issues. Each employee must submit a list of any Benchmark
issues owned at each year-end to the Compliance Director.
Effective 12/31/94, an employee of Lincoln Capital is prohibited from
buying Benchmark issues. The names of Lincoln Benchmark issues are attached and
include all present holdings of Lincoln Capital and other companies considered
to be candidates for Lincoln Capital accounts.
Any Benchmark issues already owned by Lincoln Capital employees prior
to the above date or acquired prior to employment by Lincoln Capital are
"grandfathered," and do not have to be sold. Nor is sale required for an issue
bought after 12/31/94 which subsequently is designated a Benchmark issue. A list
of benchmark issues at each calendar year-end must be submitted to the
Compliance Director. New employees must submit Benchmark issues to the
Compliance Director upon employment. Lincoln Capital employees may sell such
securities only in accordance with the transaction rules set forth below.
I-6
<PAGE>
REPORTING
Every Lincoln Capital employee must arrange for duplicate confirms of all
personal trades to be sent by their broker to Lincoln Capital's Compliance
Director. In addition, employees must report all personal trades in writing
quarterly. A copy of the Form is provided on page 9 of this document. Employees
must provide Lincoln Capital's Compliance Director with an annual statement of
all transactions and holdings from their broker. Annual statements are due in
January. Separate confidential files will be maintained for each employee. The
Compliance Director will review reports of all personal securities transactions
for adherence to the Code and compliance with applicable law and regulation.
PRIOR PERMISSION (PRE-CLEARANCE)
Prior to the purchase or sale of any non-Benchmark issue, an employee must
submit a request in writing to the Compliance Director using a trade
authorization form (example provided on page 10 of this document) which is
available from Equity trading. The employee cannot execute the trade until the
form is signed and returned. The Compliance Director will sign the form only
after ensuring (with the assistance of Equity trading) that the employee
transaction does not conflict with any current client transaction, pending order
or intention to buy or sell the issue for client accounts.
Once authorized, the employee has THREE days to execute the trade or else must
re-submit another request. The employee is also bound by the blackout period and
60-day rule described below. All trade execution information needs to be
supplied on the trade authorization form and returned to Equity trading.
In the absence of the Compliance Director, trades may be cleared by another
Managing Director. The Compliance Director's trades will be cleared by another
Managing Director. A log of all approvals and denials is kept by the Compliance
Director. The Code of Ethics is not intended to restrict personal investment
activities of employees beyond that necessary to accomplish its purposes.
Therefore, the pre-clearance procedure will not apply to:
1) purchases or sales of mutual funds (including any public or private
fund advised by Lincoln Capital);
2) bank certificates of deposit or commercial paper;
3) U.S. government securities and municipal securities;
4) purchases which are part of an automatic dividend reinvestment plan;
5) purchases or sales over which you have no direct influence or control;
and or
6) purchases or sales of stock index options, financial futures or index
participations (however, options on individual securities must receive
pre-clearance).
BLACKOUT PERIOD
Even after receiving written permission to make a specific trade, an employee is
still prohibited from buying or selling the security within three calendar days
before or after Lincoln Capital and/or Lincoln Partners trades in that security
(counting the trade date). To avoid even the
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<PAGE>
appearance of "front running," if Lincoln Capital and/or Lincoln Partners
decides within the three day blackout period to trade in that particular stock
or sector of the fixed income market for fundamental reasons, the employee must
disgorge to a charitable organization any profits realized on the trade. If
Lincoln Capital trading within the 3 day period is done only for cash flow
reasons, that is, to adjust broadly client holdings because of unforeseen
capital contributions or withdrawals, the employee does not have to forego any
profit on the trade.
60 DAY RULE
Employees are prohibited from profiting in the purchase and sale, or sale and
purchase, of the same security within 60 calendar days.
PURCHASE OF PRIVATE SECURITY
Employees must receive approval from the Compliance Director prior to the
purchase of a private issue ("private placement"). In the case of a private
placement originated by a broker-dealer with whom Lincoln Capital may execute
trades for its clients, approval must be received from a second Lincoln Capital
Managing Director in addition to the Compliance Director. (If the Compliance
Director is the purchaser, approval is necessary from two other Managing
Directors.) These persons will consider potential conflicts of interest with
client accounts or opportunities in deciding whether to approve a purchase of a
private issue. If an issue which has been purchased by an employee in a private
placement (or another security of the same issuer) is ultimately considered by
Lincoln Capital as a viable prospect for purchase by clients, the Lincoln
Capital employee holding such an issue shall consult with the Compliance
Director who shall decide whether it is appropriate or desirable for the
employee to disqualify himself from any considerations with respect to the
purchase or sale of such issue or such issuer for client accounts.
Initial Public Offering
Because of the nature of the business relationship between Lincoln Capital and
its securities brokers, employees of Lincoln Capital are prohibited from
purchasing shares in an initial public offering.
DIRECTORSHIPS
Membership on the Board of Directors of a Benchmark issue will require prior
approval by Lincoln Capital Managing Directors. A person serving as a director
of any such company shall not participate in the decision to recommend or to
purchase or sell a security of such company for client accounts.
RESTRICTIONS ON RECEIVING GIFTS
Employee's shall not receive any gift in merchandise or service of more than
nominal value from any person or entity that does business with or on behalf of
Lincoln Capital.
COMPENSATION
1) Disclosure of Additional Compensation Arrangements
An employee shall inform Lincoln Capital of compensation or other
benefit arrangements
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in connection with any additional services.
2) Disclosure of Referral Fees
An employee shall make appropriate disclosure to Lincoln Capital of any
consideration paid or other benefit delivered to others for
recommending Lincoln's services to a prospective client. Where
applicable, any referral fee arrangements will be conducted in
accordance with Rule 206(4)-3 under the Investment Advisers Act.
3) Duty to Employer
An employee shall not undertake independent practice for compensation
or other benefit in competition with Lincoln Capital, unless written
consent is obtained from Lincoln Capital.
RELATIONSHIPS WITH OTHERS
1) Preservation of Confidentiality
An employee shall preserve the confidentiality of information
communicated by the client concerning matters within the scope of the
confidential relationship, unless the employee receives information
concerning illegal activities on the part of the client.
2) Fiduciary Duties
An employee, in relationships with clients, shall use particular care
in determining applicable fiduciary duty, and shall comply with such
duty as to those persons and interests to whom it is owed.
CONSEQUENCES FOR FAILURE TO COMPLY WITH THE CODE OF ETHICS
Compliance with this Code of Ethics is a condition of employment at Lincoln
Capital. Taking into consideration all relevant circumstances, the Compliance
Director, in consultation with other Managing Directors, will determine what
action is appropriate for any breach of the provisions of the Code.
PROFESSIONAL MISCONDUCT
An employee shall not:
1) commit a criminal act that upon conviction materially reflects
adversely on the employee's fitness as an employee of Lincoln Capital;
2) engage in conduct involving dishonesty, fraud, deceit or
misrepresentation;
3) use, sell, dispense, or possess any illegal drugs or narcotics; nor
5) report to work under the influence of alcohol.
I-9
At the time of employment and subsequently at the beginning of each calendar
year, every Lincoln Capital employee must review and sign a copy of the Code of
Ethics and certify that the employee has reported all personal securities
transactions in accordance with this Code.
I-10
<PAGE>
QUARTERLY EMPLOYEE TRADE REPORTING FORM
LINCOLN CAPITAL MANAGEMENT COMPANY
Name:
For Quarter Ending:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of Buy or Date of Total
Security Sell No. of Shares Transaction Broker Price Cost
-------- ---- ------------- ----------- ------ ----- ----
</TABLE>
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<PAGE>
TRADING REQUEST FORM
Date:______________________
I would like to purchase/sell the following securities:
Have you purchased or sold any of the above securities within the past 60 days?
Signed:________________________________
Compliance Director:___________________
Trader:________________________________
After approval, record the completed transaction below and return to Compliance
Director:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name of Security Buy No. Date of Broker Price Total Cost
---------------- or Sell Shares Transaction ------- ----- ----------
------- ------ -----------
</TABLE>
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RESTRICTIONS ON RECEIVING GIFTS
Lincoln employees shall not accept a gift in merchandise or service of more than
nominal value from any person or entity that does business with or on behalf of
Lincoln Capital. All employees are required to exercise good judgement in their
interaction with brokers and suppliers, as even the appearance of a conflict of
interest could prove to be detrimental to Lincoln. Specifically: 1) solicitation
of any free goods or services from a supplier is prohibited; 2) provision for
travel and/or accommodations is prohibited.
If an employee has any questions about the appropriateness of a gift from a
supplier, he/she should first discuss it with the Compliance Director.
II-12
<PAGE>
GRANAHAN INVESTMENT MANAGEMENT, INC.
CODE OF ETHICS UNDER RULE 17j-1
INTRODUCTION
Rule 17j-1 under the Investment Company Act of 1940 generally prohibits
persons associated with an investment company or its investment adviser from
engaging in any fraudulent, deceptive, manipulative or otherwise unlawful
practice in connection with the purchase or sale by such persons of securities
held or acquired by the investment company.
Set forth below is the Code of Ethics adopted by the Board of Directors
of Granahan Investment Management, Inc. (the "Company"). This Code of Ethics is
based on the principle that the directors, officers and employees of the Company
owe a fiduciary duty to all of the Company's clients including the shareholders
of the Vanguard Explorer Fund to conduct their affairs, including their personal
securities transactions, in such a manner as to avoid: (i) serving their own
personal interests ahead of the shareholders; (ii) taking advantage of their
position; and (iii) any actual or potential conflicts of interest.
The effective date of the Code of Ethics is January 1, 1996. Please
direct any questions to John J. Granahan, President.
CODE OF ETHICS
I. Definitions
1. "Fund" means that portion of the Vanguard Explorer Fund under the
management of the Company.
2. "Accounts" refers to all accounts under the management of the Company.
3. "Board of Directors" means the Board of Directors of the Company.
4. "Officer" means any officer of the Company other than one serving solely
as Clerk or Assistant Clerk.
5. "Employee" means any director, officer or employee of the Company
6. "Access person" means any director, officer, or "advisory person" of the
Company.
7. "Advisory person" means any employee of the Company, who, in connection
with his or her regular functions or duties, makes, participates in, or obtains
information
<PAGE>
regarding the purchase or sale of a security by the Fund or the Accounts, or
whose functions relate to the making of any recommendations with respect to such
purchases or sales.
8. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and communicated
and, with respect to the person making the recommendation, when such person
seriously considers making such a recommendation.
9. "Beneficial ownership" shall be interpreted in the same manner as it
would be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an access person or an advisory
person has or acquires. "Beneficial ownership" is generally understood to
include those securities from which a person enjoys some economic benefits which
are substantially equivalent to ownership regardless of who is the registered
owner.
10. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
11. "Security" shall include all forms of debt and equity securities,
except that it shall not include shares of registered open end investment
companies, securities issued by the Government of the United States, short term
government securities, bankers' acceptances, bank certificates of deposit,
commercial paper, and other money market instruments.
II. Prohibited Transactions-All
1. It is a basic policy that no director, officer or employee of the
Company should be permitted to profit from the securities activities of the
Fund, the Accounts or the Company. Accordingly, no such person shall purchase or
sell, directly or indirectly, any security in which he or she has, or by reason
of such transactions acquires, any direct or indirect beneficial ownership and
which to his or her actual knowledge at the time of such purchase or sale:
(i) is being considered for purchase or sale by the Fund or
the Accounts; or
(ii) is being purchased or sold by the Fund or the Accounts.
2. No such director, officer or employee shall disclose to other persons
the securities activities engaged in or contemplated for the Fund or the
Accounts.
3. No such director, officer or employee shall seek or accept anything of
value, either directly or indirectly, from broker-dealers or other persons
providing services to the Company because of such person's association with the
Company.
<PAGE>
For the purposes of this provision, the following gifts from
broker-dealers or other persons providing services to the Company will not be
considered to be in violation of this section:
(i) an occasional meal;
(ii) an occasional ticket to a sporting event, the theater or
comparable entertainment;
(iii) a typical holiday gift.
III. Prohibited Transactions-Officers and Advisory Persons
In addition to the prohibited transactions set forth in Section 2, no
officer or advisory person shall:
1. Acquire any securities in an initial public offering, in order to
preclude any possibility of such person profiting from his or her position with
the Company.
2. Purchase or sell a security within at least seven calendar days before
and after the Fund or an Account trades in that security. Any profits improperly
realized on trades within the proscribed periods will be subject to
disgorgement.
3. Purchase any securities in a private placement, without prior approval
of Mr. Granahan. Any person authorized to purchase securities in a private
placement shall disclose that investment when they play a part in the Fund's or
an Account's subsequent consideration of an investment in the issuer. In such
circumstances, the Fund's or an Account's decision to purchase securities of the
issuer shall be subject to independent review by a Company officer with no
personal interest in the issuer.
4. Profit in the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within 60 calendar days. Any profits realized on such
short-term trades shall be subject to disgorgement.
5. Serve on the board of directors of any publicly traded company without
prior authorization of Mr. Granahan. Any such authorization shall be based upon
a determination that the board service would be consistent with the interests of
the Fund and its shareholders or an Account.
IV. Prohibited Transactions-Other
The Fund or an Account shall not invest in a security of an issuer of which
a director
<PAGE>
or officer of the Company is an officer, director, or the owner of more than 5%
of its outstanding securities.
V. EXEMPTED TRANSACTIONS
The prohibitions of Sections II and III of this Code shall not apply
to:
1. Purchases or sales effected in any account over which the employee
has no direct or indirect influence or control.
2. Purchases or sales of shares of any registered investment company.
3. Purchases or sales which are non-volitional on the part of either
the employee or the Fund.
4. Purchases which are part of an automatic dividend reinvestment
plan.
5. Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent such rights
were acquired from such issuer, and sales of such rights so acquired.
6. Purchases or sales which receive the prior approval of an officer
of the Company because:
(i) they are only remotely potentially harmful to the Fund
or an Account;
(ii) they would be very unlikely to affect a highly
institutional market; or
(iii) they clearly are not related economically to be
securities to be purchased, sold or held by the Fund
or an Account.
VI. PRIOR APPROVAL
All access persons shall receive prior approval from the President or
other officer before purchasing or selling securities.
VII. REPORTING
1. Every access person and advisory person shall disclose to the
President all personal securities holdings upon commencement of employment and
thereafter on an annual basis as of December 31 and direct their brokers to
supply the President duplicate copies of personal securities transactions
confirmations and copies of periodic statements for securities accounts.
<PAGE>
2. Every officer and advisory person shall report to the President with
respect to transactions in any security as required by the Investment Adviser's
Act of 1940.
VIII. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors may
impose such sanctions as they deem appropriate, including, among other things, a
letter of censure or suspension or termination of the employment of the
violator.
XI. RETENTION OF RECORDS
This Code of Ethics, a copy of each report filed by employees, any
written report relating to the interpretation of such Codes, or violations
thereunder, and lists of all persons required to make reports, shall be
preserved with records of the Company for the period required by Rule 17j-1.
XII. ANNUAL CERTIFICATION
Each employee of the Company will be required to certify each year that
they have read and understood this Code of Ethics.
January 1, 1996
<PAGE>
CODE OF ETHICS
SCOPE AND PURPOSE
This Code of Ethics (the "Code") applies to:
o all directors, officers and employees of: }
- Schroder Investment Management North } Collectively }
America Inc., } "SIM NA" }
- Schroder Investment Management North }
America Limited } Collectively
- Schroder Fund Advisors Inc., ("SFA") } The "US
} Schroder
o Schroder Investment Management International } Group"
Limited ("SIMIL") }
o New York based employees of Schroder US }
Holdings Inc. ("SI") who are located on the 34th floor }
of 787 Seventh Avenue, New York, NY 10019 }
o all persons employed by any subsidiary of }
Schroders plc } ("Schroders") who are Access }
Persons (as defined below) of any registered }
investment company managed by SIM NA.
Set forth below is the Code of Ethics (the "Code") for the US Schroder Group, as
required by Rule 17j-1 under the Investment Company Act of 1940 (the "Investment
Company Act"), Section 204A of the Investment Advisers Act of 1940 (the
"Advisers Act"), Rule 204-2(a)(12) under the Advisers Act and Section 20A of the
Securities Exchange Act of 1934 ( the "Exchange Act"). The Code applies to every
employee (full- and part-time) of the US Schroder Group.
The objective of the Code is to ensure that all business dealings and securities
transactions undertaken by employees, whether for clients or for personal
purposes, are subject to the highest ethical standards. Incorporated within the
Code are an Insider Trading Policy and a Personal Securities Transactions
Policy, which contain procedures that must be followed by all personnel.
Every employee, by means of an Annual Certification of Compliance with the Code
of Ethics (see Exhibit B), must retain, read and acknowledge receipt and
understanding of this Code, which will be updated as necessary. Any questions
regarding the Code should be referred to the appropriate Ethics Supervisor.
The Code contains additional restrictions and requirements for certain Access
Persons (as defined in Appendix A), including all US Schroder Group fund
managers, investment analysts, traders, and those employees who, in connection
with their duties, are aware of securities under consideration for purchase or
sale on behalf of clients. Such persons will be
<PAGE>
notified in writing of their status. These restrictions are designed to prevent
any conflict or the appearance of any conflict of interest between trading for
their personal accounts and securities transactions initiated or recommended for
clients.
STATEMENT OF POLICIES
(a) CONFIDENTIALITY
Personnel are expected to honor the confidential nature of company and
client affairs. Information designated as confidential shall not be
communicated outside of the US Schroder Group or other affiliated
companies of Schroders other than to advisers consulted on a
confidential basis, and shall only be communicated within Schroders on
a "need to know" basis or as otherwise authorized by management in
conformity with the Code.
PERSONNEL MUST ALSO AVOID MAKING UNNECESSARY DISCLOSURE OF ANY internal
information concerning Schroders and its business relationships and
must use such information in a prudent and proper manner in the best
interests of Schroders and its clients.
(b) LEVEL OF CARE
Personnel are expected to represent the interests of Schroders and its
clients in an ethical manner and to exercise due skill, care, prudence
and diligence in all business dealings, including but not limited to
compliance with all applicable regulations and laws, and to avoid
illegal activities and other conduct specifically prohibited to its
personnel by the respective policies of any of the US Schroder Group
companies in relation to which a person is a director, officer or
employee.
(c) FIDUCIARY DUTIES
All personnel have fiduciary duties:
(i) at all times to place the interests of their clients before
their own and not to take inappropriate advantage of their
position, and
(ii) to conduct themselves in a manner which will avoid any actual
or potential conflict of interest or any abuse of a position
of trust and responsibility.
<PAGE>
(D) REQUIREMENTS
(i) Personnel are required to comply with the Insider Trading
Policy and Personal Securities Transactions Policy
incorporated herein.
(II) Personnel are prohibited from receiving any gift or other
thing of more than de minimis value from any person or entity
that does business with or on behalf of any client.
Personnel are prohibited from serving on the board of directors of any publicly
listed or traded company or of any company whose securities are held in any
client portfolio, except with the prior authorization of the Chairman or Chief
Executive of SIM NA, the Chairman of SIMIL or, in their absence, a majority of
the Ethics Committee, based upon a determination that the board service would be
consistent with the interests of Schroders' clients. If permission to serve as a
director is given, the company will be placed permanently on Section Two of the
US Schroder Group Restricted List. Transactions in that company's securities for
client and personal securities accounts will only be authorized when
certification has been obtained from that company's Secretary or similar officer
that its directors are not in possession of material price sensitive information
with respect to its securities.
COMPLIANCE
THE ETHICS COMMITTEE (see Appendix A) is responsible for ensuring that a copy of
the Code is delivered to all persons at the time of the commencement of their
employment with any US Schroder Group company, as well as on an annual basis. As
a condition of continuing employment, each employee is required to acknowledge
in writing receipt of a copy of the Code and that he or she has understood the
obligations and responsibilities hereunder and on an annual basis to certify
compliance with it on the form provided.
THE ETHICS SUPERVISORS (see Appendix A) are each responsible for maintaining
with respect to their company the records and filings required under the Code
and must report immediately to the Ethics Committee any evidence of a breach of
the Code by any personnel. Following such report, there will be a prompt review
of the situation by the Ethics Committee and, if necessary, appropriate
disciplinary and/or dismissal proceedings will be instituted, including, but not
limited to, referral to the appropriate regulatory agency. Each Ethics
Supervisor will conduct a regular annual review, in addition to any other
special reviews which may be deemed appropriate by the Ethics Supervisor, to
supervise the operation of the Code (including the Insider Trading and Personal
Securities Transactions Policies) and will report SUCH REVIEWS BY JANUARY 31ST
of each year to the Ethics Committee or other senior officer of the US Schroder
Group appointed to receive this information.
<PAGE>
QUESTIONS
All questions about an individual's responsibilities and obligations under the
Code of Ethics should be referred to any member of the Ethics Committee, to the
Chief Compliance Officer in New York or London, to the General Counsel of
Schroder U.S. Holdings Inc., or to the relevant Ethics Supervisor.
<PAGE>
INSIDER TRADING POLICY
THE SCOPE AND PURPOSE OF THE POLICY
It is a violation of United States federal law and a serious breach of
Schroders' policies for any employee to trade in, or recommend trading in, the
securities of a company, either for his/her personal gain or on behalf of the
firm or its clients, while in the possession of material, nonpublic information
("inside information") which may come into his/her possession either in the
course of performing his/her duties, or through personal contacts. Such
violations could subject you, Schroders, and our parent organizations, to
significant civil as well as criminal liability, including the imposition of
monetary penalties, and could also result in irreparable harm to the reputation
of SCHRODERS. TIPPEES (I.E., persons who receive material, nonpublic
information) also may be held liable if they trade or pass along such
information to others.
The US Insider Trading and Securities Fraud Enforcement Act of 1988 ("ITSFEA")
requires all broker-dealers and investment advisers to establish and enforce
written policies and procedures reasonably designed to prevent misuse of
MATERIAL, NON-PUBLIC information. Although ITSFEA itself does not define
"insider trading", the US Supreme Court has previously characterized it as the
purchase or sale of securities (which include debt instruments and put and call
OPTIONS) WHILE IN POSSESSION OF INFORMATION WHICH IS BOTH MATERIAL AND
NON-PUBLIC, I.E., information not available to the general public about the
securities or related securities, the issuer and in some cases the markets for
the securities. The provisions of ITSFEA apply both to trading while in
possession of such information and to communicating such information to others
who might trade on it improperly. This policy supplements the policies and
procedures set forth in SIM NA, SFA's and SI's Chinese Wall Procedures, which
are incorporated herein by reference.
MATERIALITY
Inside information is generally understood as material information about an
issuer of publicly-traded securities that has not been made known to either the
professional investment community or to the public at large. Inside information
is material if it would be likely to have an effect on the price of the issuer's
securities or if a reasonable investor would be likely to consider it important
in making his/her investment decision. Such information usually originates from
the issuer itself and could include, among other things, knowledge of a
company's earnings or dividends, a significant change in the value of assets,
changes in key personnel or plans for a merger or acquisition.
For example, a portfolio manager, analyst or trader may receive information
about an issuer's earnings or a new product in a private communication with the
issuer. Such information is usually considered material and is generally inside
information because it has not been effectively disseminated to the public at
large. As a general rule, any information
<PAGE>
received from an issuer that has not been made public in a press release or a
public filing will be considered inside information. Upon learning the
information, the employee may not purchase or sell securities of the issuer for
him/herself or for any account under management until the information is
effectively disseminated to the public.
If an employee has received information regarding an issuer and he/she believes
that the information given has not been given in breach of fiduciary duties,
then that person may retain and act upon the information.
Market information which emanates from outside the corporation but affects the
market price of an issuer's securities can also be inside information. For
example, inside information can also originate within Schroders itself. This
would include knowledge of activities or plans of an affiliate, or knowledge of
securities transactions that are being considered or executed on behalf of
clients. Inside information can also be obtained from knowledge about a client
that an employee has discovered in his/her dealings with that client. Inside
information pertaining to a particular issuer could also involve another company
that has a material relationship to the issuer, such as a major supplier's
decision to increase its prices.
In addition, Rule 14e-3 under the Exchange Act makes it unlawful to buy or sell
securities while in possession of material information relating to a tender
offer, if the person buying or selling the securities knows or has reason to
know that the information is nonpublic and has been acquired, directly or
indirectly from the person making or planning to make the tender offer, from the
target company, or from any officer, director, partner or employee or other
person acting on behalf of either the bidder or the target company. This rule
prohibits not only trading, but also the communication of material, nonpublic
information relating to a tender offer to another person in circumstances under
which it is reasonably foreseeable that the communication will result in a trade
by someone in possession of the material, nonpublic information.
PROCEDURES AND RESPONSIBILITIES OF EMPLOYEES
1. PERSONNEL WHO ACQUIRE NON-PUBLIC information (that may possibly be
material) about a company are immediately prohibited:
(a) from trading in the securities of that company or related
securities and financial instruments (as defined below)
whether for client accounts, for Schroder company accounts, or
for any Personal Account (see definition in Appendix A), and
(b) from communicating the information either inside or
outside Schroders except as provided below.
2. Such personnel, other than Senior Executives as defined in the Chinese
Wall Procedures, are required immediately to notify the most
senior-ranking available
<PAGE>
member of the Ethics Committee (see Appendix A) who will evaluate
whether the information is both material and non-public.
IF YOU ARE IN ANY DOUBT, SPEAK TO THE SENIOR-RANKING AVAILABLE MEMBER
OF THE ETHICS COMMITTEE.
3. If the information is determined by this member of the ethics committee
to be material and non-public, all securities of the relevant company
(or companies) and related securities or financial instruments will be
placed on Section One of the US Schroder Group Restricted List (see
discussion below) with immediate effect.
4. Only the member of the ethics committee who determined the information
to be material and non-public may decide whether it is necessary to
communicate the Inside Information to another party, either inside or
outside Schroders. If so, the communication must state clearly and
expressly that such information is MATERIAL, NON-PUBLIC and
confidential and that its possession precludes trading for any account
in any security of the specified company or any related security or
financial instrument.
5. This same member of the Ethics Committee is responsible for notifying
the Ethics Supervisor when such information ceases to be material and
non-public and for ensuring that the securities of the relevant company
or companies and related securities or financial instrument are removed
from the US Schroder Group Restricted List. The person who initially
reported possession of the information is required to notify the member
of the Ethics Committee of any change in status of the information of
which he or she becomes aware.
6. All employees are also responsible for preventing disclosure of any
non-public information in schroders' possession, whether or not that
information is material, except in accordance with the procedures set
out in this policy.
7. Any files likely to contain non-public information must be kept locked
and access to computerized files must be restricted at all times,
except when required by authorized personnel for the performance of
their duties at Schroders.
8. Non-public information which has not been deemed to be material under
2. above may be communicated only to such personnel as require such
information for the performance of their duties at Schroders.
<PAGE>
PENALTIES
Penalties for trading on or communicating material, nonpublic information are
severe, both for the individuals involved in such unlawful conduct and their
employers. Under the law, a person can be subject to some or all of the
penalties below, even if s/he does not personally benefit from the violation.
Penalties include:
1) civil injunctions;
2) disgorgement of profits;
3) treble damages - fines for the access person who committed the
violation, of up to 3 times the profit gained or loss avoided, whether
or not the person actually benefited;
4) fines for the employer or other controlling person of up to the greater
of $1,000,000, or 3 times the profit gained or loss avoided; and
5) jail sentences.
SPECIAL PROVISIONS FOR TRADING IN THE SECURITIES OF SCHRODERS PLC
Special restrictions apply to dealing in the securities of Schroders plc because
staff, by virtue of their employment, may be deemed to have Inside Information:
1. Securities of Schroders plc will not be purchased for any client
account without the permission of that client, and then only if
permitted by applicable law and with the prior approval of a member of
the Ethics Committee or Ethics Supervisor.
2. Personal securities transactions in the securities of Schroders plc are
subject to blackout periods and other restrictions which are outlined
in the Schroder London Group Staff Handbook. Copies of the restrictions
are available from the Ethics Supervisors. Staff wishing to deal in the
securities of Schroders plc must first contact the senior-ranking
dealer in Schroders' London equity dealing room who will explain the
applicable blackout periods, restrictions and authorizations required.
US SCHRODER GROUP RESTRICTED LIST
The US Schroder Group Restricted List is circulated only to those employees
responsible for placing securities trades, to members of the Ethics Committee
and to the Ethics Supervisors.
<PAGE>
SECTION ONE: No personnel may place trades in any securities, which term
includes options, warrants, debentures, futures, etc., on such securities
(hereinafter referred to as a related security or financial instruments, of any
company on Section One of the US Schroder Group Restricted List for any account
whatsoever, including client accounts, Schroder company accounts or Personal
Accounts at any time.
SECTION TWO: Trades in the securities or related securities or financial
instruments of any company on Section Two of the US Schroder Group Restricted
List (which contains those companies that have an officer of a US Schroder Group
Company on their board of directors, or where a US Schroder Group Company
manages a part of their balance sheet assets, i.e., corporate cash rather than
pension fund assets) may only be undertaken with the written permission of the
appropriate Ethics Supervisor.
No approval to trade will be given by the Ethics Supervisor:
(i) for any securities of a company currently on Section One of the US Schroder
Group Restricted List;
(ii) for any security of a company on Section Two of the US Schroder Group
Restricted List because an officer of a US Schroder Group Company serves as
a director of that company unless the Ethics Supervisor (or alternate) can
obtain confirmation from that company's Secretary or similar officer that
its directors are not in possession of material price sensitive information
with respect to its securities. Permission to trade in the securities of
any company on Section Two of the US Schroder Group Restricted List because
a US Schroder Group Company manages balance sheet assets for that company
(as opposed to pension fund assets) will only be given if the Ethics
Supervisor (or alternate) can obtain confirmation from the portfolio
manager responsible for that client that no US Schroder Group Company holds
any price sensitive information with respect to that company. Permission
will not, in any event, be given to any personnel personally involved in
the management of that client's account.
<PAGE>
PERSONAL SECURITIES TRANSACTIONS
POLICY
SCOPE AND PURPOSE OF THE POLICY
This Personal Securities Transactions Policy sets out the policies and
procedures required to be followed by all personnel in connection with trades
for Covered Accounts in Covered Securities (see Appendix A) in order to comply,
INTER ALIA, with the US Schroder Group's Code of Ethics. It sets out additional
restrictions and requirements for Level One Access Persons (as defined in
Appendix A). Further, it sets out the policies and procedures required to be
followed by outside directors (as defined in Appendix A) of Schroder Capital
Funds, Schroder Capital Funds (Delaware) and Schroder Series Trust
(collectively, the "Schroder Funds").
SIM NA LONDON, NEW YORK, SIMIL, AND SI-NEW YORK PERSONNEL
The procedures applicable to personnel employed by SIM NA in London and the US,
SIMIL, and to SI - New York personnel vary in detail but not in principle.
ESTABLISHING AN ACCOUNT
Before undertaking any transactions in Covered Securities, employees must
establish an account in accordance with the requirements of their employer
company.
New York
All US-based personnel of SIM NA and SI, unless exempted in writing by the
Ethics Committee, are required to maintain their Covered Accounts at Salomon
Smith Barney ("SSB") or Charles Schwab & Co. ("Schwab"). SSB and Schwab provide
an electronic download of employees' trades on T+1 which are accessed daily by
the Compliance Department. Additionally, both firms provide contemporaneous
copies of monthly account statements and trade confirmations to the Compliance
Department.
Personnel on secondment from London to New York may apply for a waiver of the
requirement to maintain brokerage ACCOUNTS AT SSB OR SCHWAB FOR NON-US
securities. At a minimum, such personnel must follow the procedures set forth in
the "Schroder Investment Management London Group Personal Investment Dealing
Rules" as described below and report their transactions in Covered Securities
quarterly to the New York Ethics Supervisor.
LONDON
All London-based personnel are required to comply with the requirements of the
"Schroder Investment Management London Group Personal Investment Dealing Rules,"
which are incorporated herein by reference, including placing all transactions
in Covered Securities
<PAGE>
through the Schroder London dealing room. London-based personnel must establish
an account to deal through Schroders' London dealing room according to the
procedures set out in the London Staff Handbook. Such procedures are
incorporated herein by reference within this Personal Securities Transactions
Policy. Upon establishing an account, London-based personnel covered by this
Policy are required to make arrangements for copies of all contracts and
confirmations to be sent to their Ethics Supervisor.
TORONTO AND MEXICO CITY
All Toronto and Mexico City based SIM NA personnel may maintain Covered
Accounts at the brokerage firm of their choosing, provided that Compliance (New
York) is notified. These employees are required to provide Compliance with
copies of monthly/periodic account statements and trade confirmations.
TRANSACTIONS
ALL TRANSACTIONS FALL INTO ONE OF FOUR CATEGORIES:
o TRANSACTIONS PROHIBITED BY THE POLICY
o TRANSACTIONS EXEMPT FROM ALL PROVISIONS OF THE POLICY
o TRANSACTIONS EXEMPT FROM THE PRE-CLEARANCE REQUIREMENTS BUT SUBJECT TO THE
REPORTING PROVISIONS OF THE POLICY
O TRANSACTIONS SUBJECT TO PRE-CLEARANCE AND THE REPORTING PROVISIONS
PROHIBITED TRANSACTIONS
All personnel are prohibited from trading for any Covered Account where the
execution of any such transaction would violate the principles and procedures of
the Code or Insider Trading Policy and no personnel shall request permission to
trade for any Covered Account if he or she knows that such trade:
(i) would result in the buying or selling of securities in competition with
buy or sell orders of, or on behalf of, clients, or operate to the
detriment of such clients including, without limitation, executing a
securities transaction on a day during which any client, including any
investment company for which a US Schroder Group company serves as
investment adviser, sub-adviser or manager (a "Schroder Managed Fund"),
has a pending "buy" or "sell" order in that same security until that
order is executed or withdrawn;
(ii) would be for the purpose of, or result in, the buying or selling of
securities to take advantage of recent or imminent trades of clients;
<PAGE>
(iii) would involve a security being considered for recommendation for
purchase or sale on behalf of a client;
(iv) would take place before a sufficient period of time has elapsed after
an open-market purchase or sale of any such security, by or on behalf
of any client, for the effects of such purchase or sale on the market
price to dissipate;
(v) would involve any security of any company currently on the US Schroder
Group Restricted List or any company with respect to which such person
has non-public information which has not been evaluated by a member of
the Ethics Committee in accordance with the provisions of the Insider
Trading Policy;
(vi) would involve trading in options on any of the stocks held by
or contemplated for client accounts;
(vii) would involve a "short sale" or otherwise would expose the employee
to unlimited risk of loss.
DE MINIMIS EXCEPTION: Transactions involving shares in certain companies traded
on US stock exchanges or the NASDAQ, will be approved regardless of whether
there are outstanding client orders unless there is a large outstanding order
for the purchase or sale of such securities by clients. A large order will
generally occur if the US equity large cap model has been revised. Other than
an adjustment in the model, outstanding orders for wrap fee or managed accounts
or to re-balance institutional or private accounts, will not preclude clearance
for a de minimis transaction.
The exception applies to transactions involving no more than 500 shares per
issuer per week in the aggregate for an employee's Covered Accounts, in
securities of companies with market capitalizations of $5 billion or more. In
the case of options, an employee may purchase or sell up to 5 option contracts
per week to control up to 500 shares in the underlying security of such large
cap company.
SHORT TERM TRADING
All personnel are strongly advised against short-term trading. All
personnel are bound by the Schroder Group policy that no one may
purchase and sell the same (or equivalent) security within seven
calendar days. (Please note that all London-based personnel are bound
by the 60 day holding period outlined below for Level One Access
Persons.) Such personnel are, in addition, subject to tighter
restrictions outlined below. The trading records of all personnel will
be reviewed quarterly by their Ethics Supervisor. Any personnel that
appear to have established a pattern of short term trading may be
subject to additional restrictions or penalties including, but not
<PAGE>
limited to, a limit or ban on future personal trading activity and a
requirement to disgorge profits on short-term trades.
The short term trading prohibition shall not pertain to the exercise
of a call sold by an employee to cover a long position. however,
although an employee may purchase a put to cover a long position, the
exercise of such put will only be approved if the underlying security
was held for the minimum required period (7 days or 60 days, as
appropriate). the exercise of a covered put is subject to the same
preclearance and reporting requirements as the underlying security.
COVERED SECURITIES
Securities, such as stocks, bonds and options, are covered by this Policy. The
same limitations pertain to transactions in a security related to a Covered
Security, such as an option to purchase or sell a Covered Security and any
security convertible into or exchangeable for a Covered Security.
NOT COVERED BY THIS POLICY ARE:
o securities which are direct obligations of the U.S. Government (i.e.,
Treasuries)
o any debt security directly guaranteed by any OECD member Government
o bankers' acceptances, bank certificates of deposit, commercial paper,
repurchase agreements and other high quality short-term debt instruments(1)
o shares or units in any open-end US registered investment company (mutual
fund)
o shares of any UK authorized unit trust(2)
If a security is not covered by this Policy, you may purchase or sell it without
obtaining pre-clearance and you do not have to report the transaction.
EXEMPT FROM PRECLEARANCE
The preclearance requirements do not apply to the following transactions.
however, such transactions MUST BE REPORTED as set forth in the section
on Reporting Requirements.
1) NON-DISCRETIONARY ACCOUNTS
--------
1 High quality short-term debt instruments means any instrument having a
maturity at issuance of less than 366 days and which is rated in one of the
highest two rating categories by a Nationally Recognized Statistical Rating
Organization, or which is unrated but is of comparable quality.
2 Please note that Schroder Unit Trusts Limited does not currently accept
investments by US Persons into Schroders UK authorized unit trusts.
<PAGE>
Transactions effected in any Covered Account over which the employee
has no direct or indirect influence or control is deemed a
non-discretionary account. An employee shall be deemed to have no
direct or indirect influence or control over an account only if the
following conditions are met:
a) Investment discretion for such account has been delegated in
writing to an independent fiduciary and such investment
discretion is not shared with the employee or decisions for
the account are made by a family member and not by the
employee;
b) The employee (and where applicable, the family member)
certifies in writing that he/she has not and will not discuss
any potential investment decisions with such independent
fiduciary or family member; and
c) The Ethics Committee approves such arrangements.
2) NON-VOLITIONAL TRADES
Transactions which are non-volitional on the part of the employee
(i.e., the receipt of securities pursuant to a stock dividend or
merger). However the volitional sale of securities acquired in a
non-volitional manner is treated as any other securities trade and
subject to the preclearance requirements.
3) AUTOMATIC TRANSACTIONS AND DIVIDEND REINVESTMENT PLANS
Purchases of the stock of a company pursuant to an automatic dividend
reinvestment plan, automatic direct stock purchase plan, dividend
reinvestment plan or an employee stock purchase plan sponsored by such
company. such deductions that take place on an automatic, regular
(i.e., weekly, monthly, quarterly) basis from either a paycheck or
account (i.e., bank account, money market account) need not be
pre-cleared.
However the volitional sale of such securities is treated as any other
securities trade and subject to the preclearance requirements. In
addition, if an employee mails in a payment to purchase securities
directly from the issuer, that purchase must be pre-cleared on the day
the payment is mailed in to the issuer (see the following section).
4) RIGHTS OFFERINGS
Receipt or exercise of rights issued by a company on a pro rata basis
to all holders of a class of security and the sale of such rights.
Employees must, however, pre-clear transactions for the acquisition of
such rights from a third-party or the disposition of such rights.
<PAGE>
TRADING PRECLEARANCE
Before each transaction in a Covered Secuirty, all personnel must complete a
"Personal Securities Transaction - Request to Trade" form (see Appendix C).
U.S. Securities
Personnel wishing to trade in US securities must have the form signed by the
senior fund manager present (in New York or London and corresponding to the
director's, officer's or employee's location) responsible for supervising client
investments in large capitalization US equities, small capitalization US
equities, investment grade fixed income securities or high yield securities, as
appropriate, to the effect that no client trades are presently contemplated in
that security. Boston-based personnel wishing to trade in small capitalization
US equities should obtain certification from the senior fund manager in Boston;
all other personnel wishing to trade in small capitalization US equities should
obtain certification from the senior New York or London-based (as applicable)
small company fund manager.
IF YOU WISH TO PURCHASE AN INITIAL PUBLIC OFFERING(3) OR SECURITIES IN A PRIVATE
PLACEMENT(4) YOU MUST OBTAIN PERMISSION FROM THE CHIEF COMPLIANCE OFFICER.
Any employee who has been authorized to acquire securities in a Private Place
is required to disclose that investment in any subsequent consideration of
a client's investment in securities of the issuer. In such circumstances,
the decision to purchase securities of the issuer for a client shall be
subject to an independent review by personnel with no personal interest in
the matter.
Non U.S. Securities
Personnel wishing to trade in non-US equity securities must obtain
certification, by fax if necessary, from the senior London-based SIM NA or SIMIL
fund manager responsible for supervising client investments in the country where
such securities are primarily traded. Country funds and ADRs are treated as
non-US securities and certification must therefore be obtained from the senior
London based SIM NA or SIMIL fund manager responsible for the relevant country.
-------------------
3 An IPO is an offering of securities registered under the Securities Act, the
issuer of which, immediately before the registration, was not subject to
reporting requirements under the federal securities laws.
4 A private placement is an offering of securities that are not registered under
the Securities Act because the offering qualified for an exemption from the
registration provisions.
<PAGE>
APPROVAL OF TRADING
Final responsibility for approving all trades, other than those placed through
Schroders' London dealing room, rests with the Ethics Supervisor, or in his/her
absence with any member of the Ethics Committee. London-based personnel must
send the signed Request to Trade form to their Ethics Supervisor at the same
time that the required dealing ticket is submitted to the senior-ranking dealer
in Schroders' London dealing room. Members of the Ethics Committee, including
the Ethics Supervisor, shall have their own personal trades, other than those
placed through Schroders' London dealing room, approved by another member of the
Ethics Committee.
If an employee receives permission to trade a security or instrument, the trade
must be executed AFTER such permission is granted and, for US-based personnel
BEFORE the end of the next business day after permission has been received.
Trades for London-based personnel must be executed within 24 hours after
permission is granted. If the trade is not executed within the appropriate time
frame and the person still wishes to effect the transaction, pre-clearance must
again be obtained - this would be the case for limit orders and orders such as
good-till-canceled as well.
(For Personal Equity Plans and similar vehicles which are subject to a mandatory
cooling-off period, trade date shall be deemed to be the date on which the
application is submitted rather than the date on which the cooling-off period
expires and not the date the trade is executed.)
If an employee fails to preclear a transaction in a Covered Security, he/she may
be monetarily penalized, by a fine and/or disgorgement of profits or avoidance
of loss. These types of violations will result in reprimands and could also
negatively affect the person's employment at Schroders. All preclearance
violations will be forwarded to the Ethics Committee to determine sanctions.
In cases where approval is not granted for any Covered Account transactions in a
security, Schroders will provide no compensation for any consequential losses in
a Covered Account.
ADDITIONAL RESTRICTIONS AND REQUIREMENTS FOR LEVEL ONE ACCESS PERSONS
The following additional restrictions and requirements apply to LEVEL ONE ACCESS
PERSONS, namely all US Schroder Group fund managers, investment analysts,
traders and those persons who, in connection with their regular functions or
duties, obtain: (i) information regarding the purchase or sale of a security on
behalf of a client or (ii) information as to specific securities under
consideration for purchase or sale on behalf of clients. These additional
restrictions are designed to prevent any conflict or the appearance of any
conflict
<PAGE>
of interest between trading for their Covered Accounts and securities
transactions initiated or recommended by them for clients:
i) Level One Access Persons are prohibited from buying or selling a security
within seven calendar days before and after any client trades in that
security. Any profits realized on transactions within the proscribed
periods (based on the difference in the price per share between that paid
or received, as appropriate, by the client and that paid or received by
such Access Person) will be required to be disgorged to the appropriate
client or, if that is not possible, to a charitable organization designated
by the Ethics Committee.
ii) Level One Access Persons are prohibited from profiting in the purchase and
sale of the same (or equivalent) securities within 60 calendar days. This
60 day restriction is in lieu of the general seven day restriction on
short-term trading described above. Any profits realized on any such
short-term trades will be required to be disgorged to a charitable
organization designated by the Ethics Committee.
iii) Level One Access Persons are required to disclose, on commencement of
employment and subsequently in an annual filing to their Ethics Supervisor,
all their personal securities holdings.
REPORTING REQUIREMENTS
All personnel are required to report his/her transactions in Covered Securities
holdings in Covered Accounts, as follows.
REPORTS OF EACH TRANSACTION IN A COVERED SECURITY
o Personnel are required to report to Compliance, no later than at the
opening of business on the business day following the day of execution of a
trade for a Personal Account, including:
name of security
nature of transaction (purchase, sale, etc.)
number of shares/units or principal amount
price of transaction
date of trade
name of broker
SSB and Schwab provide the New York Compliance Department with a daily report of
the above information with respect to any personal securities transactions
executed by New York-based personnel.
Any personnel seconded from London to New York who are granted a waiver from the
requirement to maintain personal accounts at SSB or Schwab shall, within ten
days after the
<PAGE>
end of each calendar quarter, provide the New York Ethics Supervisor with copies
of all pre-clearance forms and contract notes for transactions executed through
the London dealing desk.
The reporting obligation of London-based personnel shall be discharged by
arranging in advance for copies of contract notes/confirmations for all their
transactions to be sent automatically to Compliance upon completion of a trade.
INITIAL EMPLOYMENT
o No later than 10 days after initial employment with a US Schroder Group
Company, each employee must provide Compliance (New York or London, as
appropriate) with a list of each Covered Security s/he owns (as defined
above). The information provided must include the title of the security,
number of shares owned, and principal amount, as well as a of list of all
Covered Accounts where Covered Securities are held. The employee will sign
and date the report.
QUARTERLY REPORTS
o No later than 10 days after the end of each calendar quarter, each employee
will provide Compliance (New York or London, as appropriate) with a report
of all transactions in Covered Securities in the quarter, including the
name of the Covered Security, the number of shares and principal amount,
whether it was a buy or sell, the price and the name of the broker through
whom effected. The employee will also report any new Covered Accounts
established during the quarter, including the name of the broker/dealer and
the date the Covered Account was established. The report will be signed and
dated by the employee.
ANNUAL REPORTS
o Within 30 days after the end of the calendar, each employee must report all
his/her holdings in Covered Securities as at December 31, including the
title, number of shares and principal amount of each Covered Security the
employee owns (as defined above) and the names of all Covered Accounts. The
employee will sign and date the report.
Exceptions:
o An employee need not report any transactions in covered securities or any
covered accounts in which s/he has no direct or indirect influence or
control.
o A director of a schroder fund who is not an "interested person"5 is not
required to make initial, quarterly or annual reports provided that s/he
did not know, nor in the ordinary course of fulfilling his/her duties as a
director, s/he should not have known, that during
---------------
5 As defined in Section 2(a)(19) of the Investment Company Act.
<PAGE>
the 15 day period immediately before or after his/her transaction in a
covered security, the fund purchased or sold the covered security or that
the covered security was considered for purchase or sale by the fund.
The information on personal securities transactions received and recorded by SIM
NA and SIMIL (on behalf of their employees) will be deemed to satisfy the
reporting obligations contained in Rule 204-2(a)(12) under the Advisers Act and
Rule 17j-1 under the Investment Company Act. Such reports may, where
appropriate, contain a statement to the effect that the reporting of the
transaction is not to be construed as an admission that the person has any
direct or indirect beneficial interest or ownership in the security.
Reports by the Ethics Supervisors
On a quarterly basis, the appropriate Ethics Supervisors, in order to assist
them in fulfilling their regulatory obligations, will report to the Boards of
Trustees of the Schroder Funds or the Schroder-managed Funds, as appropriate,
and the Supervisory Principal of SFA, any violations of this Code and the
actions, if any, taken by the Ethics Committee.
Adopted: October 1, 1995
Amended: May 15, 1996
May 1, 1997
June 12, 1998
June 2, 1999
March 14, 2000
<PAGE>
APPENDIX A
DEFINITIONS
"ETHICS SUPERVISOR" means the persons designated from time to time by the Ethics
Committee to administer the Code, who currently are:
<TABLE>
<CAPTION>
<S> <C>
---------------------------------------------------------------------------------------------------------------
Barbara Brooke Schroders U.S. Holdings Inc.
Manning for: Schroder Investment Management North America Inc. (New
(alts: ) Evett Lawrence York and Mexico City)
Brian Murphy Schroder Investment Management North America Ltd. (Toronto
only)
---------------------------------------------------------------------------------------------------------------
Barbara Brooke Schroder Fund Advisors Inc.
Manning for: Schroder Capital Funds
(alt: Sandra Poe) Schroder. Investment Management North America Inc. (New
York)
Schroder Capital Funds (Delaware)
Schroder Series Trust
---------------------------------------------------------------------------------------------------------------
Paul Martin for: Schroder Investment Management North America Inc. (London)
Schroder Investment Management North America Limited
(London)
Schroder Investment Management International Limited
---------------------------------------------------------------------------------------------------------------
</TABLE>
"ETHICS COMMITTEE" means the committee designated by the US Schroder Group
Companies from time to time, which currently comprises:
Jeremy Willoughby(Chairman)
Richard Foulkes
Barbara Brooke Manning
Richard Mountford
Andrew Smethurst
Mark Smith
"ACCESS PERSON" will be divided into two categories: Level One Access Person
means any director, officer or employee who is an Advisory Person (as defined
herein) of SIM NA, SFA, SI and the Schroder Funds. All other directors and
officers are Level Two Access Persons.
"ADVISORY PERSON" is any employee who, in connection with his/her regular
functions or duties, makes, participates in, or obtains information regarding
the purchase or sale of a security on behalf of any advisory client or
information regarding securities under consideration for purchase or sale on
behalf of clients or whose functions relate to the making of any recommendations
with respect to such purchases or sales.
<PAGE>
A SECURITY IS "BEING CONSIDERED FOR PURCHASE OR SALE" when a recommendation to
purchase or sell a security has been made or communicated and, with respect to
the person making the recommendation, when such person seriously considers
making such a recommendation.
"COVERED ACCOUNT" is an account in which securities are owned by you. This
includes IRA accounts. Under the Policy, accounts held by your spouse (including
his/her IRA accounts), minor children and other members of your immediate family
(children, stepchildren, grandchildren, parents, step parents, grandparents,
siblings, in-laws and adoptive relationships) who share your household are also
considered your accounts. In addition, accounts maintained by your domestic
partner (an unrelated adult with whom you share your home and contribute to each
other's support) are considered your accounts under this Policy.
If you are in any doubt as to whether an account falls within this definition of
Covered Account, please see Compliance. Further, if you believe that there is a
reason that you are unable to comply with the Policy, for example, your spouse
works for another regulated firm, you make seek a waiver from Compliance.
"COVERED SECURITIES" generally means stocks, bonds and options. The same
limitations pertain to transactions in a security related to a Covered Security,
such as an option to purchase or sell a Covered Security and any security
convertible into or exchangeable for a Covered Security.
NOT COVERED BY THIS POLICY ARE:
o securities which are direct obligations of the U.S. Government (i.e.,
Treasuries)
o any debt security directly guaranteed by any OECD member Government
o bankers' acceptances, bank certificates of deposit, commercial paper,
repurchase agreements and other high quality short-term debt instruments (6)
o shares or units in any open-end US registered investment company (mutual fund)
o shares of any uk authorized unit trust(7)
"DISINTERESTED DIRECTOR/TRUSTEE" means a Director or Trustee of the any of the
Schroder Funds who is not an "interested person" of the Funds within the meaning
of Section 2(a)(19) of the Investment Company Act or the rules thereunder.
--------
1 High quality short-term debt instruments means any instrument having a
maturity at issuance of less than 366 days and which is rated in one of the
highest two rating categories by a Nationally Recognized Statistical Rating
Organization, or which is unrated but is of comparable quality. 2 Please note
that Schroder Unit Trusts Limited does not currently accept investments by US
Persons into Schroders UK authorized unit trusts.
<PAGE>
"US SCHRODER GROUP RESTRICTED LIST" means a list of securities determined from
time to time by the Ethics Committee, in accordance with provisions of the
Insider Trading Policy, to be inappropriate for trading by personnel covered by
this Code and, in certain circumstances, by any client portfolio of any US
Schroder Group Company.
<PAGE>
CODE OF ETHICS
OF
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
PREAMBLE
This Code of Ethics ("Code") is being adopted in compliance
with the requirements of Sections 204A and 206 of the Investment Advisers Act of
1940 (the "Advisers Act") and Rule 204-2 thereunder and Section 17j of the
Investment Company Act of 1940 (the "40 Act") and Rule 17j-1 thereunder, to
effectuate the purposes and objectives of those provisions. Section 204A of the
Advisers Act requires the establishment and enforcement of policies and
procedures reasonably designed to prevent the misuse of material, nonpublic
information by investment advisers. Rule 204-2 imposes recordkeeping
requirements with respect to personal securities transactions of access persons
(defined below). Section 206 of the Advisers Act and Rule 17j-1 of the 40 Act
make it unlawful for certain persons, including
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. (the "Firm"):
-----------------------------------------
(1) To employ a device, scheme or artifice to defraud any
client or prospective client, or any mutual fund
portfolio managed by the Firm (the "Fund");
(2) To engage in any transaction, practice or course of
business which operates or would operate as a fraud
or deceit upon any client or prospective client, or
the Fund;
(3) Acting as principal for his own account, knowingly to
sell any security to or purchase any security from a
client, or acting as broker for a person other than
such client, knowingly to effect any sale or purchase
of any security for the account of such client,
without disclosing to such client in writing before
the completion of such transaction the capacity in
which he is acting and obtaining the consent of the
client to such transaction. The prohibitions of this
paragraph (3) shall not apply to any transaction with
a customer of a broker or dealer if such broker or
dealer is not acting as an investment adviser in
relation to such transaction;
(4) To engage in any act, practice, or course of
business which is fraudulent, deceptive or
manipulative; or
<PAGE>
(5) To make to the Fund any untrue statement of a
material fact or omit to state to the Fund a material
fact necessary in order to make the statements made,
in light of the circumstances in which they are made,
not misleading.
This Code contains provisions reasonably necessary to prevent
persons from engaging in acts in violation of the above standard and procedures
reasonably necessary to prevent violations of the Code.
This Code of Ethics is adopted by the Board of Directors of
the Firm. This Code is based upon the principle that the directors and officers
of the Firm, and certain affiliated persons of the Firm, owe a fiduciary duty
to, among others, the clients of the Firm and shareholders of the Fund to
conduct their affairs, including their personal securities transactions, in such
manner to avoid (i) serving their own personal interests ahead of clients or
shareholders; (ii) taking inappropriate advantage of their position with the
Firm or the Fund; and (iii) any actual or potential conflicts of interest or any
abuse of their position of trust and responsibility. This fiduciary duty
includes the duty of the Compliance Officer of the Firm to report violations of
this Code of Ethics to the Firm's Board of Directors and to the Fund's
Compliance Officer.
POLICY STATEMENT ON INSIDER TRADING
The Firm forbids any officer, director or employee from
trading, either personally or on behalf of others, including accounts managed by
the Firm, on material nonpublic information or communicating material nonpublic
information to others in violation of the law. This conduct is frequently
referred to as "insider trading." The Firm's policy applies to every officer,
director and employee and extends to activities within and outside their duties
at the Firm. Any questions regarding the Firm's policy and procedures should be
referred to the Firm's Compliance Officer.
The term "insider trading" is not defined in the federal
securities laws, but generally is used to refer to the use of material nonpublic
information to trade in securities (whether or not one is an "insider") or to
communications of material nonpublic information to others.
While the law concerning insider trading is not static, it is
generally understood that the law prohibits:
1) trading by an insider, while in possession of
material nonpublic information, or
2) trading by a non-insider, while in possession of
material nonpublic information, where the information
either was disclosed to the non-insider in violation
of an insider's duty to keep it confidential or was
misappropriated, or
3) communicating material nonpublic information to
others.
<PAGE>
The concept of "insider" is broad. It includes officers,
directors and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a special confidential relationship in the
conduct of a company's affairs and as a result is given access to information
solely for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending officers,
and the employees of such organizations. In addition, the Firm may become a
temporary insider of a company it advises or for which it performs other
services. For that to occur, the company must expect the Firm to keep the
disclosed nonpublic information confidential and the relationship must at least
imply such a duty before the Firm will be considered an insider.
Trading on inside information is not a basis for liability
unless the information is material. "Material information" generally is defined
as information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Information is nonpublic until it has been effectively
communicated to the market place. One must be able to point to some fact to show
that the information is generally public. For example, information found in a
report filed with the SEC, or appearing in Dow Jones, Reuters Economic Services,
The Wall Street Journal or other publications of general circulation would be
considered public. You should be particularly careful with information received
from client contacts at public companies.
Before trading for yourself or others in the securities of a
company about which you may have potential inside information, ask yourself the
following questions:
i. Is the information material? Is this information that an
investor would consider important in making his or her
investment decisions? Is this information that would
substantially effect the market price of the securities if
generally disclosed?
ii. Is the information nonpublic? To whom has this information
been provided? Has the information been effectively
communicated to the marketplace?
If, after consideration of the above, you believe that the
information is material and nonpublic, or if you have questions as to whether
the information is material and nonpublic, you should take the following steps.
i. Report the matter immediately to the Firm's Compliance
Officer.
ii. Do not purchase or sell the securities on behalf of yourself
or others.
<PAGE>
iii. Do not communicate the information inside or outside the
Firm, other than to the Firm's Compliance Officer.
iv. After the Firm's Compliance Officer has reviewed the issue,
you will be instructed to continue the prohibitions against
trading and communication, or you will be allowed to trade
and communicate the information.
Information in your possession that you identify as material
and nonpublic may not be communicated to anyone, including persons within the
Firm, except as provided above. In addition, care should be taken so that such
information is secure. For example, files containing material nonpublic
information should be sealed; access to computer files containing material
nonpublic information should be restricted.
The role of the Firm's Compliance Officer is critical to the
implementation and maintenance of the Firm's policy and procedures against
insider trading. The Firm's Supervisory Procedures can be divided into two
classifications - prevention of insider trading and detection of insider
trading.
To prevent insider trading, the Firm will:
i. provide, on a regular basis, an educational program to
familiarize officers, directors and employees with the
Firm's policy and procedures, and
ii. when it has been determined that an officer, director or
employee of the Firm has material nonpublic information,
1. implement measures to prevent dissemination of such
information, and
2. if necessary, restrict officers, directors and
employees from trading the securities.
To detect insider trading, the Firm's Compliance Officer will:
i. review the trading activity reports filed by each officer,
director and employee, and
ii. review the trading activity of accounts managed by the Firm.
<PAGE>
A. DEFINITIONS
(1) "ACCESS PERSON" means any director, officer, general
partner, advisory person, investment personnel, portfolio
manager, or employee of the firm.
(2) "ADVISORY PERSON" means any natural person in a control
relationship to the Firm who obtains information concerning
recommendations made to the Firm or the Fund with regard to
the purchase or sale of a security by the Firm or the Fund.
(3) "AFFILIATED COMPANY" means a company which is an affiliated
person.
(4) "AFFILIATED PERSON" of another person means (a) any person
directly or indirectly owning, controlling, or holding with
power to vote, 5 per centum or more of the outstanding
voting securities or such other person; (b) and person 5 per
centum or more of whose outstanding voting securities are
directly or indirectly owned, controlled or held with power
to vote, by such other person; (c) any person directly or
indirectly controlling, controlled by, or under common
control with, such other person; (d) any officer, director,
partner, copartner, or employee of such other person; (e) if
such other person is an investment company, any investment
adviser thereof or any member of an advisor board thereof;
and (f) if such other person is an unincorporated investment
company not having a board of directors, the depositor
thereof.
(5) A security is "BEING CONSIDERED FOR PURCHASE OR SALE" or is
"BEING PURCHASED OR SOLD" when a recommendation to purchase
or sell the security has been made and communicated, which
includes when the Firm or the Fund has a pending "buy" or
"sell" order with respect to a security, and, with respect
to the person making the recommendation, when such person
seriously considers making such a recommendation. "PURCHASE
OR SALE OF A SECURITY" includes the writing of an option to
purchase or sell a security.
(6) "BENEFICIAL OWNERSHIP" shall be as defined in, and
interpreted in the same manner as it would be in determining
whether a person is subject to the provisions of, Section 16
of the Securities Exchange Act of 1934 and the rules and
regulations thereunder which, generally speaking,
encompasses those situations where the beneficial owner has
the right to enjoy some economic benefit from the ownership
of the security. A person is normally regarded as the
beneficial owner of securities held in the name of his or
her spouse or minor children living in his or her household.
<PAGE>
(7) "CONTROL" means the power to exercise a controlling
influence over the management or policies of a company,
unless such power is solely the result of an official
position with such company. Any person who owns
beneficially, either directly or through one or more
controlled companies, more than 25 per centum of the voting
securities of a company shall be presumed to control such
company. Any person who does not so own more than 25 per
centum of the voting securities of any company shall be
presumed not to control such company. A natural person shall
be presumed not to be a controlled person.
(8) "INVESTMENT PERSONNEL" means (a) any portfolio manager of
the Firm or the Fund as defined in (10) below; and (b)
securities analysts, traders and other personnel who provide
information and advice to the portfolio manager or who help
execute the portfolio manager's decisions.
(9) "PERSON" means any natural person or a company.
(10) "PORTFOLIO MANAGER" means an employee of the Firm entrusted
with the direct responsibility and authority to make
investment decisions.
(11) "SECURITY" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest
or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or
privilege on any security (including a certificate of
deposit) or on any group or index of securities (including
any interest therein or based on the value thereof), or any
put, call, straddle, option, or privilege entered into on a
national securities exchange relating to foreign currency,
or, in general, any interest or instrument commonly known as
a "security," or any certificate of interest or
participation in, temporary or interim certificate for,
receipt for, guarantee of, or warrant or right to subscribe
to or purchase, any of the foregoing. Security shall not
include securities issued by the government of the United
States or by federal agencies and which are direct
obligations of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and shares of
unaffiliated registered open-end investment companies
(mutual funds).
<PAGE>
B. TRADING RESTRICTIONS FOR ACCESS PERSONS
(1) GENERAL RESTRICTIONS FOR ACCESS PERSONS. Access persons are
subject to the following restrictions with respect to their
securities transactions:
(a) PROHIBITION ON ACCEPTING GIFTS OF MORE THAN DE MINIMIS
VALUE. Access persons are prohibited from accepting any
gift or other thing of more than de minimis value from
any person or entity that does business with or on
behalf of the Firm or the Fund; for the purpose of this
Code de minimis shall be considered to be the annual
receipt of gifts from the same source valued at $250 or
less per individual recipient, when the gifts are in
relation to the conduct of the Firm's business;
(b) PROHIBITION ON SERVICE AS A DIRECTOR OR PUBLIC
OFFICIAL. Investment Personnel are prohibited from
serving on the board of directors of any publicly
traded company without prior authorization of the
President or other duly authorized officer of the Firm
or the Fund. Any such authorization shall be based upon
a determination that the board service would be
consistent with the interests of the Firm's clients and
the Fund's shareholders. Authorization of board service
shall be subject to the implementation by the Firm of a
"Chinese Wall" or other procedures to isolate such
investment personnel from making decisions about
trading in that company's securities.
(c) PROHIBITION ON INITIAL PUBLIC OFFERINGS. Access persons
are prohibited from acquiring securities in an initial
public offering.
(d) PROHIBITION ON PRIVATE PLACEMENTS. Access persons are
prohibited from acquiring securities in a private
placement without prior approval from the Firm's
Compliance Officer. In the event an access person
receives approval to purchase securities in a private
placement, the access person must disclose that
investment if he or she plays any part in the Firm's
later consideration of an investment in the issuer.
(e) PROHIBITION ON OPTIONS. Access persons are prohibited
from acquiring or selling any option on any security.
(f) PROHIBITION ON SHORT-SELLING. Access persons are
prohibited from selling any security that the access
person does not own or otherwise engaging in
"short-selling" activities.
(g) PROHIBITION ON SHORT-TERM TRADING PROFITS. Access
persons are prohibited from profiting in the purchase
and sale, or sale and
<PAGE>
purchase, of the same (or equivalent) securities
within sixty (60) calendar days. Trades made in
violation of this prohibition should be unwound, if
possible. Otherwise, any profits realized on such
short-term trades shall be subject to disgorgement.
(2) BLACKOUT RESTRICTIONS FOR ACCESS PERSONS. All access persons
are subject to the following restrictions when their
purchases and sales of securities coincide with trades
by any client of the Firm or by the Fund:
(a) PURCHASES AND SALES WITHIN THREE DAYS FOLLOWING A TRADE
BY A CLIENT OR THE FUND. Access persons are prohibited
from purchasing or selling any security within three
calendar days after any client or the Fund has traded
in the same (or a related) security. In the event that
an access person makes a prohibited purchase or sale
within the three-day period, the access person must
unwind the transaction and relinquish any gain from the
transaction to the appropriate client portfolio(s) or
the Fund.
(b) PURCHASES WITHIN SEVEN DAYS BEFORE A PURCHASE BY A
CLIENT OR THE FUND. Any access person who purchases a
security within seven calendar days before any client
or the Fund purchases the same (or a related) security
is prohibited from selling the security for a period of
six months following the client or the Fund's trade. In
the event that an access person makes a prohibited sale
within the six-month period, the access person must
relinquish to the appropriate client portfolio(s) or
the Fund any gain from the transaction.
(c) SALES WITHIN SEVEN DAYS BEFORE A SALE BY A CLIENT OR
THE FUND. Any access person who sells a security within
seven days before any client or the Fund sells the same
(or a related) security must relinquish to the
appropriate client portfolio(s) or the Fund the
difference between the access person's sale price and
the client portfolio(s) or the Fund's sale price
(assuming the access person's sale price is higher).
<PAGE>
C. EXEMPTED TRANSACTIONS
The prohibitions of Sections B (1)(f)(g) and B (2)(a)(b)(c)
shall not apply to:
(1) purchases or sales effected in any account over which
the access person has no direct or indirect influence
or control;
(2) purchases or sales which are non-volitional on the part
of either the access person or the Firm;
(3) purchases which are part of an automatic dividend
reinvestment plan; and
(4) purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
securities, to the extent such rights were acquired
from such issuer, and sales of such rights so acquired.
D. COMPLIANCE PROCEDURES
(1) RECORDS OF SECURITIES TRANSACTIONS. All access persons
must notify the Firm's Compliance Officer if they have
opened or intend to open a brokerage account. Access
persons must direct their brokers to supply the Firm's
Compliance officer with duplicate confirmation
statements of their securities transactions and copies
of all periodic statements for their brokerage
accounts.
(2) PRE-CLEARANCE OF SECURITIES TRANSACTIONS. All access
persons shall receive prior written approval from the
Firm's Compliance Officer, or other officer designated
by the Board of Directors, before purchasing or selling
securities. The personal securities transactions
pre-clearance form is attached as Exhibit D.
(3) DISCLOSURE OF PERSONAL HOLDINGS. All access persons
shall disclose to the Firm's Compliance Officer all
personal securities holdings upon the later of
commencement of employment or adoption of this Code of
Ethics and thereafter on an annual basis as of December
31. This initial report shall be made on the form
attached as Exhibit A and shall be delivered to the
Firm's Compliance Officer.
(4) CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. Every
access person shall certify annually that:
(a) they have read and understand the Code of Ethics and
recognize that they are subject thereto;
<PAGE>
(b) they have complied with the requirements of the Code of
Ethics; and
(c) they have reported all personal securities transactions
required to be reported pursuant to the requirements of
the Code of Ethics.
The annual report shall be made on the form attached as
Exhibit B and delivered to the Firm's Compliance Officer.
(5) REPORTING REQUIREMENTS
(a) Every access person shall report to the Compliance
Officer of the Firm the information described in,
Sub-paragraph (5)(b) of this Section with respect to
transactions in any security in which such person has,
or by reason of such transaction acquires, any direct
or indirect beneficial ownership in the security;
provided, however, that an access person shall not be
required to make a report with respect to transactions
effected for any account over which such person does
not have any direct or indirect influence.
(b) Reports required to be made under this Paragraph (5)
shall be made not later than 10 days after the end of
the calendar quarter in which the transaction to which
the report relates was effected. Every access person
shall be required to submit a report for all periods,
including those periods in which no securities
transactions were effected. A report shall be made on
the form attached hereto as Exhibit C or on any other
form containing the following information:
(i) the date of the transaction, the title and the
number of shares, and the principal amount of
each security involved;
(ii) the nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
(iii) the price at which the transaction was
effected; and
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected.
<PAGE>
Duplicate copies of the broker confirmation
of all personal transactions and copies of
periodic statements for all securities
accounts may be appended to Exhibit C to
fulfill the reporting requirement.
(c) Any such report may contain a statement that the report
shall not be construed as an admission by the person
making such report that he or she has any direct or
indirect beneficial ownership in the security to which
the report relates.
(d) The Compliance Officer of the Firm shall notify each
access person that he or she is subject to these
reporting requirements, and shall deliver a copy of
this Code of Ethics to each such person upon request.
(e) Reports submitted to the Compliance Officer of the Firm
pursuant to this Code of Ethics shall be confidential
and shall be provided only to the officers and
directors of the Firm, Firm counsel or regulatory
authorities upon appropriate request.
(6) CONFLICT OF INTEREST
Every access person shall notify the Compliance Officer
of the Firm of any personal conflict of interest
relationship which may involve the Firm's clients
(including the Fund), such as the existence of any
economic relationship between their transactions
and securities held or to be acquired by any portfolio
of the Firm. Such notification shall occur in the
pre-clearance process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall promptly report to
the Board of Directors and to the Fund's Compliance
Officer all apparent violations of this Code of Ethics
and the reporting requirements thereunder.
(2) When the Firm's Compliance Officer finds that a
transaction otherwise reportable to the Board of
Directors under Paragraph (1) of this Section could not
reasonably be found to have resulted in a fraud, deceit
or manipulative practice in violation of Section 206 of
the Advisers Act or Rule 17j-1 of the 40 Act, he may,
in his discretion, lodge a written memorandum of such
finding and the reasons therefor with the reports made
pursuant to this Code of Ethics, in lieu of reporting
the transaction to the Board of Directors.
<PAGE>
(3) The Board of Directors, or a Committee of Directors
created by the Board of Directors for that purpose,
shall consider reports made to the Board of Directors
hereunder and shall determine whether or not this Code
of Ethics has been violated and what sanctions, if any,
should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
(1) The Firm's Compliance Officer shall prepare an annual
report relating to this Code of Ethics to the Board of
Directors. Such annual report shall:
(a) Summarize existing procedures concerning personal
investing and any changes in the procedures made during
the past year;
(b) identify any violations requiring significant remedial
action during the past year; and
(c) identify any recommended changes in the existing
restrictions or procedures based upon the Firm's
experience under its Code of Ethics, evolving industry
practices or developments in applicable laws or
regulations.
The Fund's Compliance Officer will prepare a similar report
for the Fund's Board of Directors.
G. SANCTIONS
Upon discovering a violation of this Code, the Board of
Directors may impose such sanctions, as they deem appropriate, including, among
other things, a letter of censure or suspension or termination of the employment
of the violator.
H. RETENTION OF RECORDS
This Code of Ethics, a list of all persons required to make
reports hereunder from time to time, as shall be updated by the Firm's
Compliance Officer, a copy of each report made by an access person hereunder,
each memorandum made by the Firm's Compliance Officer hereunder and a record of
any violation hereof and any action taken as a result of such violation, shall
be maintained by the Firm.
Dated: January 3, 2000
<PAGE>
Exhibit A
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
CODE OF ETHICS
INITIAL REPORT OF ACCESS PERSONS
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
1. I hereby acknowledge receipt of a copy of the Code of Ethics for Barrow,
Hanley, Mewhinney & Strauss, Inc. (the "Firm").
2. I have read and understand the Code and recognize that I am subject thereto
in the capacity of "Access Persons."
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may
involve the Firm or the Fund, such as any economic relationship between my
transactions and securities held or to be acquired by the Firm or any of
its portfolios, including the Fund.
4. As of the date below I had a direct or indirect beneficial ownership in the
following securities:
<TABLE>
<CAPTION>
======================================== ====================================== ======================================
<S> <C> <C> <C>
NAME OF SECURITIES NUMBER OF SHARES (DIRECT OR INDIRECT)
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
======================================== ====================================== ======================================
</TABLE>
NOTE: Do NOT report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C> <C>
Date: Signature:
------------------------------------------- ------------------------------------------------
(First date of investment personnel
status)
Print Name:
------------------------------------------------
Title:
------------------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
------------------------------------------------
Date: Signature:
------------------------------------------- ------------------------------------------------
Firm's Compliance Officer
</TABLE>
<PAGE>
Exhibit B
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
CODE OF ETHICS
ANNUAL REPORT OF ACCESS PERSONS
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of an "Access Person."
2. I hereby certify that, during the year ended December 31, 20 ___, I have
complied with the requirements of the Code and I have reported all securities
transactions required to be reported pursuant to the Code.
3. I hereby certify that I have not disclosed pending "buy" or "sell"
orders for a portfolio of the Firm or the Fund to any employees of any other UAM
affiliate, except where the disclosure occurred subsequent to the execution of
withdrawal of an order.
4. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Firm or the Fund, such as any economic relationship between my transactions
and securities held or to be acquired by the Firm or any of its portfolios,
including the Fund.
5. As of December 31, 20___, I had a direct or indirect beneficial
ownership in the following securities:
<TABLE>
<CAPTION>
======================================== ====================================== ======================================
<S> <C> <C> <C>
TYPE OF INTEREST
NAME OF SECURITIES NUMBER OF SHARES (DIRECT OR INDIRECT)
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
---------------------------------------- -------------------------------------- --------------------------------------
======================================== ====================================== ======================================
</TABLE>
NOTE: Do NOT report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C> <C>
Date: Signature:
------------------------------------------- ------------------------------------------------
Print Name:
------------------------------------------------
Title:
------------------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
------------------------------------------------
Date: Signature:
------------------------------------- ------------------------------------------------
Firm's Compliance Officer
</TABLE>
<PAGE>
Exhibit C
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
ACCESS PERSONS
Securities Transactions Report For the Calendar Quarter Ended: _______________
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
During the quarter referred to above, the following transactions were effected
in securities of which I had, or by reason of such transaction acquired, direct
or indirect beneficial ownership, and which are required to be reported pursuant
to the Code of Ethics adopted by the Firm.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
=================== ================= ============ ================ ==================== ========== ======================
SECURITY DATE OF NO. OF DOLLAR AMOUNT NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES OF TRANSACTION TRANSACTION OR BANK THROUGH
(Purch., Sale, WHOM EFFECTED
Other)
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
------------------- ----------------- ------------ ---------------- -------------------- ---------- ----------------------
=================== ================= ============ ================ ==================== ========== ======================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control, (ii) excludes other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that I have
no knowledge of the existence of any personal conflict of interest relationship
which may involve the Firm or the Fund, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
Firm clients or any related portfolios, including the Fund.
NOTE: Do not report transactions in U.S. Government securities, bankers'
acceptances, bank certificates of deposit, commercial paper and unaffiliated
registered open-end investment companies (mutual funds).
<TABLE>
<CAPTION>
<S> <C> <C>
Date: Signature:
------------------------------------------- ------------------------------------------------
(First date of investment personnel status)
Print Name:
------------------------------------------------
Title:
------------------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
------------------------------------------------
Date: Signature:
--------------------------------------- ------------------------------------------------
Firm's Compliance Officer
</TABLE>
<PAGE>
Exhibit D
BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.
ACCESS PERSONS
Personal Securities Transactions Pre-clearance Form
(see Section D(2), Code of Ethics)
To the Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:
I hereby request pre-clearance of the following proposed transactions:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
=================== =========== =================== ==================== ============= ====================== ====================
SECURITY NO. OF DOLLAR AMOUNT OF NATURE OF PRICE BROKER/DEALER AUTHORIZED
SHARES TRANSACTION TRANSACTION (OR OR BANK THROUGH
(Purch., Sale, PROPOSED WHOM EFFECTED YES NO
Other) PRICE)
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------------------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
------------------- ----------- ------------------- -------------------- ------------- ---------------------- --------- ----------
=================== =========== =================== ==================== ============= ====================== ========= ==========
Date: Signature:
------------------------------------------- ------------------------------------------------
(First date of investment personnel
status)
Print Name:
------------------------------------------------
Title:
------------------------------------------------
Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.
------------------------------------------------
Date: Signature:
------------------------------------------- ------------------------------------------------
Firm's Compliance Officer
</TABLE>
<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.
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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.
