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Exhibit No. 15(d)
CODE OF ETHICS & GENERAL
COMPLIANCE HANDBOOK
STANDISH, AYER & WOOD, INC.
STANDISH, AYER & WOOD INVESTMENT TRUST
STANDISH FUND DISTRIBUTORS, L.P.
STANDISH, AYER & WOOD MASTER PORTFOLIO
STANDISH, AYER & WOOD DOMESTIC MASTER PORTFOLIO
STANDISH INTERNATIONAL MANAGEMENT CO., L.P.
SEPTEMBER 2000
[LOGO]
STANDISH, AYER & WOOD, INC.-Registered Trademark-
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STANDISH, AYER & WOOD-Registered Trademark-..................................1
INTRODUCTION..............................................................1
PERSONAL SECURITY TRANSACTION PROCEDURES.....................................3
PRECLEARANCE ACCOUNTS.....................................................4
REPORTING ACCOUNTS........................................................5
PRECLEARING A TRADE.......................................................5
NEW EMPLOYEE REQUIREMENTS.................................................6
INVESTMENT CONTROL HOLDINGS FORM..........................................6
REPORTING ACCOUNTS FORM...................................................6
CERTIFICATION OF COMPLIANCE REQUIREMENTS..................................7
BROKERAGE ACCOUNT REPORTING...............................................7
ANNUAL DECLARATIONS.......................................................7
QUARTERLY DECLARATION.....................................................8
CONFLICTS COMMITTEE.......................................................9
PRIVATE OFFERINGS AND PRIVATE PLACEMENTS.................................10
EXEMPTIONS FROM CODE OF ETHICS REQUIREMENTS..............................10
CHARLES SCHWAB...........................................................10
CONFIDENTIALITY..........................................................10
PERSONAL SECURITY TRANSACTION RESTRICTIONS..................................11
RESTRICTED SECURITIES....................................................11
60 DAY HOLDING/WAITING PERIODS...........................................11
14 DAY BLACKOUT PERIOD FOR INVESTMENT DECISION MAKERS....................11
MARGIN ACCOUNTS..........................................................11
OPTION TRADING ON SECURITIES AND INDICES.................................12
INITIAL PUBLIC OFFERINGS (IPO)...........................................12
LIMIT ORDERS.............................................................12
PERSONAL SECURITIES TRANSACTION DO'S AND DON'TS.............................13
PERSONAL SECURITIES TRANSACTION QUESTIONS & ANSWERS........................14
OTHER STANDISH POLICIES.....................................................16
PERSONAL GIFTS POLICY....................................................16
OUTSIDE EMPLOYMENT.......................................................17
CLIENT RELATED POLITICAL CONTRIBUTION POLICY.............................17
PROPRIETARY AND CONFIDENTIAL INFORMATION AND DEVELOPMENTS POLICY.........17
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EXTERNAL BUSINESS AND CHARITABLE ACTIVITIES.............................18
COMPENSATION FROM EXTERNAL BUSINESS, CHARITABLE ACTIVITIES AND
OUTSIDE EMPLOYMENT.....................................................20
COPYRIGHT POLICY........................................................20
POLICY STATEMENT ON INSIDER TRADING........................................23
INTRODUCTION............................................................23
POLICY ON INSIDER TRADING...............................................23
WHAT IS MATERIAL INFORMATION?...........................................23
WHAT IS NON-PUBLIC INFORMATION?.........................................24
ISOLATION OF INFORMATION................................................27
TERMINATION OF ETHICAL WALL PROCEDURES..................................28
CERTAIN OPERATIONAL PROCEDURES IN CONNECTION WITH ENFORCEMENT OF
INSIDER INFORMATION AND INSIDER TRADING POLICIES ......................28
TRADING DESK POLICIES AND PROCEDURES.......................................31
GENERAL TRADING DESK POLICY AND BROKERAGE PRACTICES.....................31
TRADE AGGREGATION & ALLOCATION PROCEDURES..................................32
GUIDING PRINCIPLES......................................................32
GENERAL PROCEDURES......................................................32
PRIORITY OF ORDER FILL..................................................32
BLOCK TRADES............................................................33
ALLOCATIONS.............................................................33
REALLOCATIONS...........................................................34
TRADES PLACED OFF PREMISES..............................................35
ANNUAL REVIEW...........................................................35
CODE OF ETHICS.............................................................36
THE CODE OF ETHICS......................................................48
STANDARDS OF PROFESSIONAL CONDUCT.......................................48
REPORTING ACCOUNTS FORM.................................................51
EMPLOYEE CLEARANCE TO TRADE FORM........................................52
INVESTMENT CONTROL ACCOUNTS HOLDINGS FORM...............................53
STANDISH, AYER & WOOD, INC. BROKER CONTACT LETTER......................54
QUARTERLY REPORT OF PERSONAL SECURITIES TRANSACTIONS....................55
FORM OF PRIOR APPROVAL INVESTMENTS IN PRIVATE PLACEMENTS
AND PRIVATE OFFERINGS..................................................57
APPLICATION FOR PRIOR APPROVAL OF OUTSIDE AFFILIATIONS..................58
CODE OF ETHICS SPECIAL EXEMPTION FORMS..................................59
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STANDISH, AYER & WOOD-Registered Trademark-
INTRODUCTION
Standish, Ayer & Wood, Inc., Standish, Ayer & Wood Trust, Standish International
Management Co., LLC, Standish fund Distributors, L.P., and Standish Investments,
Inc., (hereinafter collectively referred to herein as "Standish") has long
recognized the importance of proper conduct for its employees (employees is
defined to include all employees of Standish and on-site independent
contractors) - when trading securities in personal accounts.
Long before new industry standards were recommended by the Advisory Group on
Personal Investing of the Investment Company Institute (ICI), Standish
established the Conflicts Committee to ensure that all personal investment
activities and personal conduct do not conflict with the best interests of our
clients. Preclearance procedures for all personal trading activity in investment
control accounts were adopted in November of 1993. Since that time Standish's
procedures have been continually re-evaluated and, beginning in January of 1995,
the Firm adopted the ICI recommendations into its Code of Ethics.
There is no question in our minds that Standish has a highly ethical business
culture. The detailed policies and procedures contained in this book do not
reflect a need to create an ethical business culture at Standish -- we have
that. It does reflect the fact that our industry has been guilty of ethical
lapses and that scrutiny of our behavior by both regulators and the public can
be expected to increase. These formal procedures will allow us to demonstrate
beyond any shadow of doubt Standish's commitment to the highest standards of
ethical business behavior. For many of us, these requirements impose a modestly
complicated set of new record keeping duties. In a few cases, these rules will
actually limit an individual's ability to implement personal investment
decisions in a timely fashion.
We welcome your feedback on these policies and procedures and we are anxious to
make them as reasonable to live with as possible. It is vital for all of us to
recognize, however, that our prominence as a firm and our absolute commitment to
maintaining our professional reputation make our strict adherence to these rules
MANDATORY for all of us.
Code of Ethics training and education is required for all new employees shortly
after commencement of employment. The Code of Ethics Supervisor will contact you
to set up a time to go over these procedures and answer any questions you may
have.
This Code of Ethics and General Compliance Handbook ("Handbook"), is provided as
an easy reference tool. This Handbook cannot cover every situation. If you have
consulted the Handbook and you are still in doubt about the policies and
procedures, please contact the Code of Ethics Supervisor for further
explanation. Prevention is better than cure.
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BACKGROUND TO TODAY'S REGULATORY ENVIRONMENT
For over five decades, Congress and the Securities and Exchange Commission (SEC)
have recognized that conflicts of interest might arise when investment company
personnel trade for their own accounts. Federal securities laws impose certain
standards upon the personal trading activities of all market participants. In
particular, all investors are precluded from engaging in insider trading or
tipping. Investment company personnel, additionally, are subject to specific
regulations that address potential conflicts arising from their personal
investing activities.
Recently, attention has been redirected to this issue and is largely
attributable to several factors. First, assets under investment management have
grown significantly in recent years. Second, the SEC and Congress have conducted
extensive reviews of the investment industry, its current regulations and other
issues. Third, recent press reports have, among other things, exposed several
prominent portfolio managers that have either been sanctioned or terminated by
their firms due to their failure to comply with their firm's internal procedures
relating to personal securities trading practices. Finally, the SEC has
instituted administrative proceedings against several managers and/or their
firms for trading improprieties.
Together these developments precipitated renewed investigation into the
potential conflicts of interest that might arise when investment company
personnel engage in personal securities transactions. The conflicts identified
include front running, the opportunity for lucrative side deals in the form of
initial public offerings and private placements, and issues that might arise
when portfolio managers serve on boards of directors of public companies.
Because the securities industry has had a long standing tradition of
self-governance, a special advisory group to address these issues was formulated
by the Investment Company Institute (ICI). This group reviewed the practices and
standards governing personal investing and made recommendations deemed necessary
for the best interests of all investors. In addition to drawing on the extensive
knowledge of its members, it also sought the views of former senior SEC
officials, representative of accounting and law firms, academicians
knowledgeable in the fields of ethics, finance and investment company
regulation, and representatives of other industries to arrive at a consensus.
The SEC supports the findings and recommendations of this advisory group and, as
a result, these recommendations have become the standard for the investment
industry.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 2
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PERSONAL SECURITY TRANSACTION PROCEDURES
The procedures set forth below have been adopted by Standish, and apply to all
employees (as previously defined) and covered persons. "Covered persons" are
immediate family members or financial dependents not residing in your household
where you have direct or indirect (sole or shared) investment control over these
accounts. Covered persons include any child, stepchild, parent, stepparent,
grandparent, sibling, in-law, relation by adoption, spouse or person with whom
personal assets are pooled.
All employees are required to preclear accounts in which they have direct or
indirect (sole or shared) investment control and report transactions in which
they may not exercise direct or indirect (sole or shared) investment control for
various accounts. It is assumed that you have investment control over all
accounts registered jointly with your spouse. The types of accounts and the
reporting mechanisms required for them are described in detail below. If after
reviewing the details below you are unsure of what category you or your covered
persons account may come under, please call the Code of Ethics Supervisor.
"Securities" as defined herein and which require preclearance and reporting
include, but are not limited to:
- Stocks
- Bonds
- Municipal Bonds
- Closed-end Funds
- Private Placements
- Options
- Warrants
"Transactions" as defined herein and which require preclearance and reporting
include, but are not limited to:
- Volitional trades (purchases and sales)
- Gifting of securities
- Option trading
- Lump sum purchases or sales through dividend reinvestment plans (DRIP)
- Lump sum purchases or sales through employee stock ownership plans
(ESOP)
An exemption from preclearance and reporting is available for certain
individuals. Please refer to Section titled CONDITIONAL EXEMPTIONS FROM CODE OF
ETHICS REQUIREMENTS.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 3
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PRECLEARANCE ACCOUNTS
DEFINED: Accounts held by you and/or covered persons in which you have a
beneficial and pecuniary interest and exercise direct or indirect (sole or
shared) investment control.
Transactions and Security investments, as defined above, in these type of
accounts require preclearance by the Code of Ethics Supervisor prior to
execution of the transaction or investment and reporting of the same made to the
Code of Ethics Supervisor via broker trade confirmations and brokerage
statements and/or in the event these transactions are not executed via a broker
than a trade confirmation and/or statement from the issuer of the security.
Type of accounts which may hold Securities and are subject to our Code include,
but are not limited to:
- Individual
- Spousal,
- Joint
- Childs
- Retirement (IRA, 401K, etc.)
- Trusts where the employee and/or covered person has investment control
PLEASE NOTE THAT ALL ACCOUNTS THAT CONTAIN SECURITIES WILL BE DEEMED
"PRECLEARANCE ACCOUNTS". AN EMPLOYEE WHO DOES NOT EXERCISE DIRECT OR
INDIRECT (SOLE OR SHARED) INVESTMENT CONTROL OVER AN ACCOUNT MAY FILE FOR AN
EXEMPTION FROM PRECLEARANCE OF A BENEFICIAL INTEREST ACCOUNT BY COMPLETING A
DISCLAIMER OF INVESTMENT CONTROL FORM AND SUBMITTING THE SAME FOR REVIEW AND
APPROVAL BY THE CONFLICTS COMMITTEE. IF APPROVED BY THE CONFLICTS COMMITTEE,
THESE ACCOUNTS WOULD THEN BECOME REPORTING ACCOUNTS ONLY. (FOR MORE DETAIL
ON REPORTING ACCOUNTS PLEASE SEE BELOW). TYPES OF ACCOUNTS WHICH MAY QUALIFY
FOR EXEMPTION:
EMPLOYEE STOCK OWNERSHIP PLANS
TRUST ACCOUNTS
Exempt security transactions which do not require preclearance and reporting
include, but are not limited to:
- Direct obligations of the U.S. Government
- Money market instruments
- Open-end mutual funds
- Automatic dividend or capital gain activity
- Transactions involving disposition of fractional shares of securities
Required reporting:
- Duplicate trade confirmations from brokerage firm sent directly to
Standish
- Duplicate monthly statement from brokerage firm sent directly to
Standish
- If no brokerage firm associated with transaction, appropriate
documentation evidencing transaction, i.e. stock certificate; issuers
certificate, etc.
- Annual statement from brokerage firms for all preclearance accounts
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 4
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REPORTING ACCOUNTS
DEFINED: Accounts held by you and/or covered persons in which you have a
beneficial or pecuniary interest but do not exercise direct or indirect (sole or
shared) investment control and have obtained exemption from preclearance
requirements by the approval of a Disclaimer of Investment Control form by the
Conflicts Committee.
Activity in Reporting Accounts is required to be reported but is not subject to
preclearance or other Code requirements. Although these accounts are not subject
to preclearance or other Code requirements they will be audited for trading
irregularities on a regular basis. The Conflicts Committee may impose further
restrictions and safeguards on a case by case basis.
Types of accounts which are Reporting Accounts:
- Any account, in which you have a beneficial interest, that holds
securities as defined in this Code and over which you have no
investment control.
Required Reporting:
- Duplicate quarterly statements
- If no brokerage firm associated with transaction appropriate
documentation evidencing transaction.
- Annual statement from brokerage firm for all Investment Decision Makers
(IDMs)
PRECLEARING A TRADE
PROCEDURES
An "Employee Clearance to Trade" form must be submitted to the Code of
Ethics Supervisor by 11:00 a.m. Any request received after 11:00 a.m. will
be held for submission the next day. The Employee Clearance to Trade Form
is available from the Code of Ethics Supervisor or on the Standish
Intranet. The form should be completed to include the following
information:
- Your name
- Name of the account where the transaction may execute
- Brokerage firm
- Name of the security
- Security symbol
- Type of transaction
- Number of shares involved
If you are absent from the office preclearance to trade may be submitted by
e-mail or voice mail directly to the Code of Ethics Supervisor.
The employee's request to trade, whether submitted by form, e-mail or voice
mail, must be approved by the Code of Ethics Supervisor prior to any trade
execution for all preclearance accounts. If clearance to trade is granted,
permission is valid for the day of approval only. If the trade does not
execute on the approval date, subsequent approval must be obtained. A phone
call and e-mail confirming approval and/or denial of a request will serve
as employee notification.
In the absence of the Code of Ethics Supervisor other designated Compliance
personnel, including the Compliance Officer, Beverly Banfield, may also
preclear trades. Please do not attempt to clear your trades through either
the Trading Desks or Portfolio Managers, since only Compliance Department
personnel have the authority to grant approval.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 5
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DISCLOSURE AT INTERNAL RESEARCH MEETINGS
Due to the potential conflicts that may be present or perceived, Standish
has long maintained a policy that individuals responsible for security
research and analysis are required to disclose (see below) any personal
interest in a security or instrument under discussion by Standish.
To be more specific, it is necessary to disclose this information during
the actual recommendation discussion, and more importantly, to have the
minutes, stock action report, or written record of the recommendation
reflect these facts.
NEW EMPLOYEE REQUIREMENTS
All employees and independent contractors are required to provide Standish with
various information regarding preclearance accounts, reporting accounts and
outside affiliations.
All employees and independent contractors will be notified by their managers
during the interview process that they must comply with Standish's Code. They
will be provided with a copy of the Code and asked to affirm in writing prior to
engagement that they have received, read, understood and will abide by the Code
and policies and procedures set therein for personal securities transactions. On
the date of their employment they will meet with the Code of Ethics Supervisor
to review personal securities transaction procedures and quarterly reporting. It
is the responsibility of the contracting manager to inform Compliance when a
contracted employee is departing.
The reporting mechanisms are detailed below.
INVESTMENT CONTROL HOLDINGS FORM
All employees, within 10 days of the date of hire, are required to provide
Standish with a list of beneficially owned securities holdings. This inventory
will include all brokerage account holdings, private placements, securities held
in certificate form, DRIPs (dividend reinvestment plans), ESOPs (employee stock
ownership plans) and retirement accounts (i.e. IRAs, 401K).
Direct obligations of the U.S. Government, money market instruments, and
holdings in open-end mutual funds need not be listed.
The Investment Control Holdings Form facilitates reporting for securities held
outside of a brokerage account for new hires. If securities are held within a
brokerage account, a copy of the statement most recent to your date of hire will
be accepted in lieu of completing this form.
REPORTING ACCOUNTS FORM
Reporting Accounts are all brokerage accounts in which an employee may exercise
direct or indirect (sole or shared) investment control and/or have a pecuniary
beneficial interest. Reporting Accounts also include those accounts, in which
you may have a pecuniary beneficial interest but no investment control or
accounts of immediate family members that do not live in your residence in which
you have direct or indirect (sole or shared) investment control must be
included.
All Standish employees and independent contractors must complete a Reporting
Accounts Form upon employment. The Reporting Accounts Form is used to provide
Standish with an inventory of all such brokerage accounts. Any transactions in
accounts listed in this section would be subject to quarterly reporting
requirements. The Form is broken down into three sections:
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 6
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1. The top section is for listing investment control accounts with a
beneficial interest (see Questions and Answers for a detailed
explanation of what constitutes investment control and the appendix of
the Trust's Code of Ethics for beneficial interest). Any transactions
in accounts listed in this section are subject to preclearance
requirements, as well as quarterly reporting.
2. The middle section is for listing accounts in which you have no
investment control but have a beneficial interest. Included in this
section would be accounts such as a trust in which you are a
knowledgeable beneficiary in which you currently have no direct or
indirect (sole or shared) investment control.
3. The bottom section is for listing accounts of immediate family members
or financial dependents who do not live in your residence but in which
you have direct or indirect (sole or shared) investment control.
CERTIFICATION OF COMPLIANCE REQUIREMENTS
New employees and independent contractors of Standish are required to review and
sign the Certification of Compliance Requirements Form to confirm that they have
received, read, understood and will abide by the various codes and standards of
ethical business conduct adopted by Standish.
BROKERAGE ACCOUNT REPORTING
BROKERAGE ACCOUNT REPORTING REQUIREMENTS
Your (and/or your covered person's) brokerage firms must be notified when
you are hired that Standish is a registered investment adviser. Your (and/or
your covered persons) are responsible for informing your brokerage firms to
provide Standish with duplicate confirmations and periodic statements as
defined above for all Preclearance and Reporting Accounts.
NEW BROKERAGE ACCOUNTS
Although Standish has no restrictions on where you may maintain a brokerage
account, you must receive permission from the Code of Ethics Supervisor
BEFORE OPENING A NEW ACCOUNT. Brokerage firms will require that you provide
them with a Form 407 letter (or "407 letter") informing them that you are an
employee of Standish, an affiliate of a broker/dealer, and that permission
has been granted for you to open the account and that duplicate trade
confirmations and statements must be sent (or faxed) to:
Standish, Ayer & Wood, Inc.
Attention: Code of Ethics
PO Box 9117
Boston, MA 02205-9117
NON COMPLIANCE OF BROKERAGE FIRM REPORTING
Every effort should be made to have your brokerage firm comply with all
reporting requirements within sixty (60) days. If your brokerage firm does
not meet the Code requirements within six months of either your date of hire
or the account opening date, whichever the case may be, you will be required
to close the account(s) within thirty (30) days of notification by the Code
of Ethics Supervisor, and establish a new account elsewhere.
ANNUAL BROKERAGE STATEMENTS
Annual brokerage statements of personal securities trading activity by all
personnel is an SEC requirement that was recently implemented. Employees
should ensure that their brokerage firms (for preclearance accounts and
reporting only accounts) provide annual brokerage statements to Standish.
ANNUAL DECLARATIONS
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 7
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CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS
Standish employees are required to review and sign the Annual Compliance
Audit to confirm that they understand and will abide by the various codes
and standards of ethical business conduct adopted by Standish on a yearly
basis. This usually takes place every February.
CONFIRMATION OF SECURITIES HOLDINGS
Employees must annually confirm that the information contained in the
Annual Report of Holdings is accurate and complete. This information is
generated from Standish's CPIMS system. The computer generated report for
each employee is an inventory of account holdings.
Employees must review the holdings and amend the report to include, but not
limited to the following:
- dividend reinvestment plan holdings
- all brokerage account holdings
- private placements
- securities held in certificate form
- DRIPs (dividend reinvestment plans)
- ESOPs (employee stock ownership plans)
- retirement accounts (i.e. IRAs, 401K).
Employees will be required to sign the report certifying that the holdings
are true, accurate and complete to the best of their knowledge and belief.
Employees need not list direct obligations of the U.S. Government, money
market instruments, and holdings in open-end mutual funds.
QUARTERLY DECLARATION
QUARTERLY REPORTING OF PERSONAL SECURITIES TRANSACTIONS
Quarterly reporting of personal securities trading activity is an SEC
requirement that has been in existence for many years. The Quarterly Report
of Personal Securities Transactions is the reporting mechanism for all
transactions during the prior quarter. The Report is automatically
generated by the Compliance Preclearance and Inventory Monitoring System
(CPIMS) and is based on information provided by brokerage confirmations and
statements. It is your responsibility to confirm that the information
provided is correct.
The Quarterly Report is broken down into three sections:
1. The TOP SECTION lists all transactions in Preclearance Accounts during
the quarter. Included in this section are all volitional actions
(buys/sells), as well as, stock gifting, option trading, warrants,
rights, etc.
2. The MIDDLE SECTION lists transactions in Reporting accounts and any
non-volitional actions for Preclearance Accounts (i.e., bond
maturities, called securities, mergers, acquisitions, security name
changes, stock splits or dividends, transfers, etc.).
3. The BOTTOM SECTION lists transactions for accounts of immediate family
members or financial dependents not residing in your household where an
employee has direct or indirect (sole or shared) investment control.
Quarterly Reports will be distributed at each calendar quarter-end.
Employees are expected to verify the Report for accuracy and completeness
and make any necessary changes or correct any omissions. The Report must be
signed and is due within 10 calendar days after the quarter-end, even when
there are no reportable transactions.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 8
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The Compliance Department maintains records of late submissions and will
levy fines for failure to timely submit the reports.
CONFLICTS COMMITTEE
CASE STUDY MEMOS
After every quarter-end, preclearance slips, broker confirmations, and
brokerage statements are reconciled. All discrepancies are evaluated and
reported to the Conflicts Committee for resolution. Any violations of
Standish policy and procedures and their resolutions are published
anonymously in the Case Studies memo and distributed to all employees as an
informational and educational document. The purpose for distributing this
information is to make every member of Standish aware of the importance
Standish places on enforcement of our rules, and more importantly, to
prevent recurrence of these violations.
VIOLATIONS
It is important to abide by all Standish Code of Ethics requirements
because failure to do so may be subject to fines and penalties. Typically,
non-compliance will result in a warning for a first violation (a fine may
be imposed at the sole discretion of the Conflicts Committee). A second
violation would typically result in a $250.00 fine, with subsequent
violations subject to $250.00 increments. If an individual with prior
violations remains violation free for five years, the individual's prior
violations will not be considered as a factor for any future fines.
In addition, more egregious violations may be subject to fines, penalties
or other sanctions including termination of employment in the sole
discretion of the Conflicts Committee. All fines will be donated to
charitable or educational organizations for which the violator will receive
no tax benefit.
SPECIAL CIRCUMSTANCES
The Conflicts Committee will address special circumstances when an employee
faces a potential conflict. Employees should feel free to raise issues with
the Committee that relate to personal circumstances through initial
consultation with the Code of Ethics Supervisor.
FINANCIAL HARDSHIP
In special circumstances (e.g. financial hardship) employees may receive
Conflicts Committee approval to trade in a security prior to the expiration
of the 60 day holding/waiting period. Violations of this restriction will
be subject to Conflicts Committee resolution and fines may be levied on a
case by case basis.
INITIAL PUBLIC OFFERING (IPO)
Standish rules prohibit the purchase of initial public offerings (new
issues of securities) until four days after issuance, and then at the
prevailing market price and subject to preclearance. The only exception to
this restriction is the initial offering of municipal securities which may
be purchased subject to preclearance.
In certain unique circumstances (such as an IPO involving a family-owned
corporation or a spouse's employer) this restriction may be waived subject
to Conflicts Committee approval. Such a waiver will only be granted if
Standish has no interest in participating in the offering for its clients.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 9
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PRIVATE OFFERINGS AND PRIVATE PLACEMENTS
Standish requires 48-hour advance notice and Conflicts Committee PRE-APPROVAL of
private offerings and private placements. Pre-approval takes into consideration,
among other factors, whether the investment opportunity should be reserved for
Standish's clients and whether this investment opportunity has been offered to
an individual by virtue of his or her position within Standish. Individuals who
have been authorized to acquire securities in a private placement and private
offering must disclose that investment when he or she plays a part in any
subsequent consideration by Standish of an investment in the issuer.
A specific form entitled "Investments in Private Placements and Private
Offerings" is available in the Code of Ethics Supervisor's office and Forms
section of the Handbook. This form must be completed and approved by the
Conflicts Committee prior to investment.
EXEMPTIONS FROM CODE OF ETHICS REQUIREMENTS
CONDITIONAL EXEMPTION FROM CODE OF ETHICS REQUIREMENTS
Certain independent contractors, retirees or employees on long-term
disability who are not expected to return to Standish, may be exempted from
Standish Code of Ethics requirements provided that specific conditions are
met. For these conditional requirements please refer to the Forms located
at the in the back of the Handbook. To qualify for this exemption, the
individual must sign one of the Special Exemption Forms and have the
written approval of the Compliance Officer, Ms. Beverly Banfield. If any of
the above conditions are no longer valid, the exempt individual must fully
comply with Code of Ethics requirements.
PARTIAL EXCEPTION FOR PROPRIETARY PROTOTYPE ACCOUNTS
A partial exception from certain Code of Ethics requirements has been
designed for proprietary prototype accounts managed by Standish. Further
details are available in the Code of Ethics Supervisor's office.
CHARLES SCHWAB
Standish has negotiated a reduced commission structure with Charles Schwab
whereby an employee can trade with a commission as low as $20.00 per trade. For
transactions over 400 shares, Schwab's commission is $0.05 per share. These
reduced commission accounts are full service SchwabOne accounts which allow
trading directly with a broker, touch-tone or Internet trading. In addition,
free Schwab research, debit card and check writing privileges may also apply.
Information regarding opening a new account or transferring an existing account
is available in the Code of Ethics Supervisor's office.
CONFIDENTIALITY
Unless there is a conflict, all materials submitted will be held in the
strictest confidence and will be subject to review only by the Code of Ethics
Supervisor, the National Association of Securities Dealers (NASD) and the
Securities and Exchange Commission (SEC).
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 10
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PERSONAL SECURITY TRANSACTION RESTRICTIONS
RESTRICTED SECURITIES
To assure that Standish clients of always come first, Standish has established
"Restricted" lists. These lists represent securities under consideration for
purchase or sale by Standish, securities subject to actual trading activity by
Standish, or securities otherwise subject to personal trading restrictions. A
security will remain on these lists until action is taken for all client
accounts where such action is appropriate or until action is deferred for any
reason. These lists are confidential and available only to the Code of Ethics
Supervisor or his designees, as they are utilized in the preclearance process.
60 DAY HOLDING/WAITING PERIODS
Standish believes that securities purchased by all employees must be for
investment purposes rather than short term trading. As a result, you are
required to hold a security for 60 calendar days before permission to sell may
be allowed. In addition, you are required to wait 60 calendar days before
permission may be granted to repurchase any security of the same issuer. In many
cases, this prohibition will effectively limit the utility of options trading
and short sales of securities because it might pose a risk of being locked in a
position.
In special circumstances (ex: financial hardship) employees may receive
Conflicts Committee approval to trade in the security prior to the expiration of
the 60 day holding/waiting period. Violations of this restriction will be
subject to Conflicts Committee resolution and fines may be levied on a case by
case basis.
14 DAY BLACKOUT PERIOD FOR INVESTMENT DECISION MAKERS
This restriction affects a select group of employees because it prohibits Mutual
Fund Investment Decision Makers (IDMs) from buying or selling a security for
their investment control accounts within seven days before or seven days after
their Fund trades in any security of the same issuer. Preclearance will be
automatically denied if your Fund has transacted in the same issue or issuer
within the seven-day period prior to your request. On the other hand, the
application of the seven-day period prior to a Fund trade may result inadvertent
violations (despite preclearance) since it is difficult to predict future Fund
transactions. If your Fund trades in the security within this period, you will
find yourself in violation of the blackout period, and your transaction will
have to be reversed.
When a violation results from a transaction which can be reversed prior to
settlement, the transaction costs will be the employees' responsibility. When a
trade cannot be reversed, the Conflicts Committee will review the circumstances
to arrive at a determination.
MARGIN ACCOUNTS
While a margin account may be used in personal transactions, the use of leverage
is not encouraged. It is permissible to borrow against securities in personal
accounts for transactions such as (but not limited to) buying and selling
covered put and call options on securities and indices (see below). Short sales
of securities are also permitted.
All such transactions are subject to our normal preclearance procedures which
may preclude transactions of any kind involving instruments on the Restricted
List. For example, you may not be able to cover a short position or exercise an
option when you desire to do so. Therefore, allowance of additional time as a
cushion is advisable.
Standish maintains a prohibition on the personal purchase of highly leveraged
instruments such that all speculative trading of options, financial futures,
options on futures, currencies and/or commodities is not permitted.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 11
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OPTION TRADING ON SECURITIES AND INDICES
It is permissible to purchase and sell options on securities and indices with a
minimum expiration of 60 days or more, subject to preclearance. If an option is
exercised (by other than the Standish employee), this transaction would be
considered a non-volitional action and 60 day holding/waiting periods would not
apply. On the other hand, in order for a Standish employee to cover or exercise
a position, 60-day holding or waiting periods apply and will be enforced. Please
note that preclearance procedures may preclude transactions of any kind
involving instruments on the Restricted List. For example, you may not be able
to cover a position or exercise an option when you desire to do so.
INITIAL PUBLIC OFFERINGS (IPO)
Standish rules prohibit the purchase of initial public offerings (new issues of
securities) until four days after issuance, and then at the prevailing market
price, subject to preclearance. The only exception to this restriction is the
initial offering of municipal securities which may be purchased subject to
preclearance.
In certain unique circumstances (such as an IPO involving a family-owned
corporation or a spouse's employer) this restriction may be waived subject to
Conflicts Committee approval. Such a waiver will only be granted if Standish has
no interest in participating in the offering for its clients.
LIMIT ORDERS
Preclearance procedures require a transaction to execute on the date
preclearance is given, therefore, only "same day" limit orders are permitted.
Other types of limit orders are not allowed because they may execute on a day
different than preclearance, and may be subject to Firm restrictions.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 12
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PERSONAL SECURITIES TRANSACTION
DO'S AND DON'TS
DO:
- Preclear and report transactions (purchase, sales, gifts) in equities,
bonds, municipals, closed-end funds, etc. in all accounts over which you
exercise direct or indirect (shared or sole) investment control and have a
beneficial interest. If you are unsure if a transaction requires
preclearance, ask the Code of Ethics Supervisor.
- Report trades in accounts in which you have a beneficial interest but do
not have investment control.
- Report trades in accounts of immediate family members or financial
dependents who do not reside in your household if you have direct or
indirect (shared or sole) investment control.
- Return your Quarterly Report form within 10 calendar days of each
quarter-end.
- Disclose in research meetings your personal interest in a company under
discussion.
- When in doubt, ask -- there are no penalties for being overly cautious or
over-reporting.
DON'T:
- Put your own personal trading activity ahead of the Standish clients.
- Trade any security for accounts in which you have investment control and a
beneficial interest without preclearance.
- Purchase any initial public offerings (IPO's), whether common stock,
convertibles, bonds, etc. (exception municipal bonds, subject to
preclearance).
- Purchase a private placement without long form approval from the Conflicts
Committee.
- Engage in highly leveraged, speculative transactions such as currency or
commodities trading.
- Use any Standish trading personnel to execute your personal transactions.
- Place limit orders exceeding "same day" on trades.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 13
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PERSONAL SECURITIES TRANSACTION
QUESTIONS & ANSWERS
WHAT TYPE OF SECURITIES ARE SUBJECT TO THE PRECLEARANCE AND REPORTING
REQUIREMENTS?
The acquisition or disposal of any security is fully subject to our Code of
Ethics rules whether transacted through a broker, an ESOP, a telemarketer, the
Internet or other forms of electronic media. This includes any transactions in
equities, bonds, municipal securities, closed-end funds, etc. The only
exclusions are transactions in direct obligations of the U.S. Government, money
market instruments, open-end mutual funds, automatic capital gain or dividend
activity and disposition of fractional shares.
WHAT TYPE OF TRANSACTIONS DO I NEED TO PRECLEAR?
The Code extends to all purchases, sales, or any other type of acquisition or
disposition of reportable securities, including gifts of stock. Therefore, for
example, trading of options on securities, or indices, or gifts of stock require
preclearance and are reportable under the Code.
WHAT TYPE OF TRANSACTIONS ARE REPORTABLE UNDER THE CODE BUT DO NOT REQUIRE
PRECLEARANCE?
Transactions in which you have a beneficial interest (see below definition and
examples), but have no direct or indirect influence or investment control must
be reported, such as a trust account for your benefit in which you play no role.
In addition, security transactions for immediate family members or financial
dependents who do not reside in your household if you have direct or indirect
(sole or shared) investment control must be reported. Transactions in these
categories are reported in the middle or bottom section of your Quarterly Report
form.
WHAT IS MEANT BY INVESTMENT CONTROL?
1940 Act definitions aside, investment control means the power to influence or
direct the disposition or acquisition of an investment. An example of this would
be a joint account, an account for which you are trustee or co-trustee, or any
account over which you have investment influence or decision-making authority.
WHAT IS BENEFICIAL INTEREST?
Examples include (but are not limited to) securities held by you whether in
certificate form, book entry or otherwise held; securities held by others for
your benefit; securities held by a trust in which you have an income or
remainder interest, securities held by any partnership in which you are a
partner; securities held in the name of your minor child or any relative
presently sharing your home; securities held in the name of your spouse (unless
you are legally separated); or pledged securities held for your benefit. Please
refer to the appendix of the Trust's Code of Ethics section for a more complete
description.
<PAGE>
HOW DO I HANDLE TRANSACTIONS IN AN INVESTMENT CLUB OR OUTSIDE INVESTMENT
COMMITTEE IN WHICH I PARTICIPATE, OR IN FAMILY ACCOUNTS, IN WHICH I HAVE BEEN
GIVEN INVESTMENT CONTROL/DISCRETION?
So long as you have investment influence or control, whether in your sole
discretion or as part of a group, team or couple, preclearance and reporting are
required. In cases of no investment influence or control, such transactions must
be reported, however a "Disclaimer of Investment Control" form must be completed
and approved by the Conflicts Committee.
WHAT ARE THE RULES PERTAINING TO MARGIN ACCOUNTS?
It is permissible to borrow against securities holdings in personal accounts for
transactions such as (but not limited to) buying and selling put and call
options on securities and indices; however, the use of leverage is not
encouraged. Short sales of securities may also be employed. All such
transactions are subject to our usual preclearance requirements which may
preclude wind-up transactions of any kind including instruments on the
Restricted List.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 15
<PAGE>
OTHER STANDISH POLICIES
PERSONAL GIFTS POLICY
Standish expects all of its employees and directors to meet the highest
standards of business ethics. All of our actions must both reflect this high
standard and avoid even the slightest appearance of impropriety. If you accept
material gifts from anyone with whom Standish does business, you place yourself
and Standish in a compromising position. Therefore, no Standish employee or
director should seek or accept gifts, favors, preferential treatment,
entertainment, or any special arrangements of material value from any
broker-dealer, any supplier to Standish or any other source where a potential
conflict of interest might arise. Wherever possible, gifts should be refused and
a refusal explained in terms of strict company policy that we, as a highly
regulated industry, must follow.
Certain types of business related "entertainment" are acceptable. Broker or
company supplied meals that occur as part of a business function or lunches or
dinners conducted for business purposes but not directly related to a business
function (presentation, etc.) are permitted.
Just as Standish entertains clients to build rapport, it is appropriate for
Standish employees to attend theater, sporting events and other entertainment
when accompanied by your host and ticket provider. It is expected that this sort
of entertainment by brokers and vendors be limited in frequency. The aggregate
of these items in one calendar year should not exceed $250 per employee from a
single source.
Please note that the $250 total entertainment expense per employee from one
vendor annually is an absolute limitation to be adhered to in all instances. By
way of illustration, the full market value of the tickets, as well as the costs
of food, beverages and local transportation fare are all included in the $250
limit. As noted below the costs of any lodging, or the costs of transportation
to a location outside of the Boston area, borne by any Standish vendor is
strictly prohibited. When more than one or two employees attend or when
spouses/guests are invited, special caution is clearly needed. These events must
be thoroughly reviewed with your supervisor and/or the Compliance Officer ahead
of time.
Small gifts are permitted from a single source (typically in the form of
reminder advertising such as pens, clocks, umbrellas, etc.) so long as the value
does not exceed $100 in a calendar year. Food and holiday related gifts should
be discouraged and, where the value exceeds $100, returned to the source.
In the normal course of business, employees may need to attend conferences
sponsored by brokers, vendors or issuers in which many of the costs are covered
by the sponsor. While this activity is permitted, Standish policy does not allow
for sponsor payment of the conference fee, airfare or lodging.
There are limited circumstances in which the fee and/or lodging may be paid by
your sponsor. Examples include events where you are a presenter, or the event is
held at a private residence or sponsor-owned facility where there are no fees or
lodging charges. Pre-approval by the Compliance Officer must be obtained prior
to arrangements being finalized. If a vendor, broker or issuer is paying
anything with a market value in excess of Standish's $250 limitation, you must
have the approval of the Compliance Officer before your arrangements are
finalized. Approval will be granted in very limited situations, which benefit
knowledge and ultimately Standish clients.
Absolutely prohibited are gifts of material value such as:
1. Non-business related entertainment such as sporting events, theater, golf
games, ski trips, etc. that represent a degree of extravagance that is
inappropriate or where the host and ticket supplier is not present;
2. The cost of transportation to a location outside the Boston area;
3. The cost of any lodging;
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 16
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4. Preferential brokerage commissions, spreads, or allocations for the
personal account of an Standish employee or director; and
5. Vendor arranged Standish-only large scale or lavish entertainment events.
These examples are illustrative and not all inclusive.
Standish has made arrangements with a ticket broker to supply tickets for those
occasions when client entertaining requires that we obtain tickets to
entertainment events. Please contact our travel coordinator for information on
ticket requests. Requests to broker-dealers or any other Standish vendor for
tickets for clients or for personal use is not allowed.
It is expected that Standish employees and directors will use prudent judgment
when differentiating between business and social functions. Any employee who has
questions about the meaning of this policy should check with the Compliance
Department. Any violations or abuse of this gifts policy will be reviewed by the
Executive Committee.
Standish employs the honor system and each employee is expected to use best
business judgment in these matters. We recognize the complexities and variations
that may be presented, and therefore encourage employees to check with their
immediate supervisors and/or the Compliance Officer when in doubt.
OUTSIDE EMPLOYMENT
All outside paid employment requires Conflicts Committee and Executive Committee
approval. Forms are available in the Code of Ethics Supervisor's office.
CLIENT RELATED POLITICAL CONTRIBUTION POLICY
Standish is acutely aware of the actual and/or appearance of conflicts of
interest when government officials or political candidates request political
contributions from investment managers. Standish believes that such
contributions are inconsistent with our standards of practice. We look with
disfavor on any contributions related to an existing client or reasonable
prospect which might be perceived as a conflict, and, as a general policy,
refrain from making any such contributions by either Standish, its officers,
directors or its employees. Any requests for political contributions from
entities related to existing or reasonably likely prospective clients should be
reported to the Executive Committee.
PROPRIETARY AND CONFIDENTIAL INFORMATION AND DEVELOPMENTS POLICY
PROPRIETARY INFORMATION
a) Employees should be aware that all information, whether or not in writing,
of a private, secret or confidential nature and concerns Standish's
business or financial affairs (collectively, "Proprietary Information") is
and shall be the exclusive property of Standish. By way of illustration,
but not limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, contracts, developments, plans,
research data, financial data, personnel data, computer programs, and
customer and supplier lists. Standish expects that employees will not
disclose any Proprietary Information to others outside Standish or use the
same for any unauthorized purposes without written approval by an officer
of Standish, either during or after employment, unless and until such
Proprietary Information has become public knowledge without fault by the
employee or the employee is required to do so by law.
b) All files, letters, memoranda, reports, records, data, or other written,
photographic, or other tangible material containing Proprietary Information
which shall come into an employee's custody or possession shall be
and are the exclusive property of Standish to be used by the employee only
in the course of employment. All such records or copies thereof and all
tangible property of Standish in an employee's custody or possession shall
be
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 17
<PAGE>
delivered to Standish, upon the earlier or (i) a request by Standish or
(ii) the termination of the employee's employment. After such delivery, the
employee shall not retain any such records or copies thereof or any such
tangible property.
Standish intends for the non-disclosure policy and the
return-of-proprietary-information policy set forth in paragraphs (a) and
(b) above also extend to such types of information, records and tangible
property of customers of Standish or suppliers to Standish or other third
parties who may have disclosed or entrusted the same to Standish or to the
employee in the course of Standish's business.
Standish expects that employees will not disclose or use Proprietary
Information and records of the type set forth in paragraphs (a) and (b)
above, both during employment and after the termination of the employment
relationship with Standish. Standish further expects that employees will
not accept future employment or enter into any contractual or business
relationship with any business or other entity if that employment or
relationship will cause the employee to violate this proprietary and
confidential information and developments policy.
Standish does not prohibit or restrict an employee's future use of the
knowledge or skills he or she may develop while an employee of Standish.
GENERAL
Equitable Remedies. Standish believes that the restrictions contained in this
policy are necessary for the protection of the business and goodwill of Standish
and are reasonable for such purpose. Employees should be aware that any breach
of this policy is likely to cause Standish substantial and irrevocable damage
and therefore, in the event of any such breach, Standish, in addition to such
other remedies which may be available, shall pursue specific performance and
other injunctive relief.
Change in Control. This policy may also be applied by any other corporation or
entity which acquires (whether by purchase, merger, consolidation or otherwise)
all or substantially all of the business or assets of Standish.
EXTERNAL BUSINESS AND CHARITABLE ACTIVITIES
All external positions, including but not limited to serving as an officer,
director, trustee or consultant whether for publicly-traded, privately-held, or
non-profit organizations require both the Conflicts Committee and Executive
Committee (hereinafter referred to as "the Committees") approval prior to
acceptance of the position by any Standish employee.
General Principle
As a general principle, Standish does not encourage outside business
relationships unless such participation serves to benefit Standish or its
clients or involves community service and then only if such participation does
not present material conflicts with Standish's service to its clients. As such,
the following general guidelines have been adopted:
1. Any outside relationships with for-profit organizations (whether private or
publicly traded) in competing business lines ARE PROHIBITED.
2. Requests for approval of acceptance of positions as an officer, director,
trustee or consultant for non-profit organizations (whether private or
publicly traded) will generally receive favorable consideration by the
Committees, unless a potential conflict exists and provided said charitable
position does not involve free continuous investment advice and management.
Requests for approval of acceptance of positions as an officer, director,
trustee or consultant for publicly-held companies are not encouraged unless
acceptance of such positions will serve to benefit Standish's clients and
will be approved only when suitable arrangements can be constructed to
guard against trading conflicts. Such arrangements may include isolating
such personnel from investment
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 18
<PAGE>
decisions relating to the company on which they serve, and, where necessary
and not in conflict with the interests of clients, preventing firm-wide
trading in that company's securities. A special restricted list has been
developed to prevent unapproved trading in companies in which Standish
employees serve as directors.4.All requests must first be approved by the
Committees, which will consider if the position involves conflicts and
whether it is possible to establish appropriate procedural oversight to
address such conflicts. If suitable procedures cannot be constructed, in
the best interests of Standish, the request will be denied. Even where
approval is granted the employee must be continually vigilant that his
actions will not bring Standish into disrepute and he will not be perceived
as using his position improperly.
4. Once a position is approved, the employee must reapply to the Committees if
there is or is proposed to be, a material change in the interest or nature
of the relationship or activity . The Committees may reconsider the
appropriateness of service under Item 3 above at any time and terminate
such service if they decide it is no longer in the best interest of
Standish.
5. Due to the legal fiduciary responsibilities of a trustee or executor,
these appointments will involve special scrutiny. Procedures and controls
are under development in this area, and guidelines concerning these
relationships will be published once this study is completed.
REPORTING
Annually, every employee will be requested to review the CPIMS generated list of
all fiduciary, corporate or other external business relationships (whether
private, publicly-held or non-profit), subject to review by the Committees.
Employees are cautioned that they should not accept service as an officer,
director or trustee of an outside charitable organization or not-for profit
entity where such investment responsibility is involved without the ability to
discharge his fiduciary duties with respect to such investments.
Examples of reportable external business and charitable activities include, but
is not limited to:
- Serving as an officer or general partner for a corporation whether
privately held, publicly-traded or non-profit
- Serving on a Board of Trustees where you act as a fiduciary for any type of
trust whether or not you have a pecuniary interest
- Serving on a Board of Directors for a publicly-traded, private or
non-profit corporation
- Acting as a Consultant for a real estate company or co-op, etc. where you
have decision making responsibilities such as establishing policies,
selecting officers, distributing income
- Acting as a Counsel member for a church or non-profit organization where
you have decision and/or investment making responsibilities
- Acting as an Executor of an estate if you are responsible for investment
decisions
- Investment Club Member -reportable under external business, AND reportable
and subject to preclearance under personal securities transaction holdings
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 19
<PAGE>
Examples of non-reportable external business and charitable activities include,
but is not limited to:
- Membership in a church, recreational club (i.e. scuba diving, little
league)
- Membership of a Condominium Association where you do not have decision
making responsibilities such as establishing policies with regard to
investments.
COMPENSATION FROM EXTERNAL BUSINESS, CHARITABLE ACTIVITIES AND OUTSIDE
EMPLOYMENT
Compensation from external business and charitable activities should be refused
and the refusal explained in terms of company policy. When such refusal is not
possible, all fees or remuneration, including but not limited to beneficial
interest in shareholdings of a nominal value or patent interests, received from
external business or charitable activities will be reviewed by the Committees
and by the Compensation Committee. Such review may include an offset to Standish
compensation for that employee's paid external activities.
ALL outside "paid" employment requires pre-approval by the Committees prior to
acceptance of said employment.
An Outside Affiliations Prior Approval Form must be completed for those
activities listed above and may be obtained from the Code of Ethics Supervisor
for submittal to the Committees.
COPYRIGHT POLICY
The library subscribes to the Copyright Clearance Center in Danvers, a
federally-licensed company which in turn provides copyright clearance to
subscribers. The CCC has over a million publishers and publications which it
licenses. You may access the CCC on the Internet to see if a particular
publication is covered for copyright clearance: www.copyright.com. Access "pal"
for the correct section and enter the name of the publication you need to copy.
Reprints can be disseminated to clients on a limited basis. However, the
original cannot be manipulated in any way without permission from the publisher.
If a "dressed-up" version is needed to send to clients, the publisher may want
to provide these himself. Reprints can be disseminated at a conference on a
limited basis, and there is a special office at the CCC to deal with this
function. When in doubt, consult the librarian.
We are now a client of Copyright Clearance Center, and if a particular
publication or publisher is licensed by them, we will be covered for copyright
permission. However, if you are using a chart, photograph, or article, you must
list the source.
To ascertain if a particular publication or publisher is covered you can use the
internet.
STEPS:
The URL is www.copyright.com
Enter the Authentication as "Standish\username" for Username Then enter your
Network password as normal and click "OK" Use the link "Catalog of Titles". This
will bring you to the link "PAL"
Arrive here to a 'search page' and you should add the publisher or publication
in question to the search parameters
If you cannot find the publication, call the library for help (x7331)
It is the intent of the management that Standish, Ayer & Wood comply with the
U.S. Copyright Law (Title
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 20
<PAGE>
17, United States, Code, Sections 101 et seq). Standish, Ayer & Wood does not
condone the unauthorized reproduction or use of copyrighted materials, in any
format. Compliance with the Copyright Laws is the individual responsibility of
every employee.
The president shall appoint a Copyright Officer who shall:
(a) implement this Copyright Policy;
(b) prepare and distribute copyright policy memoranda as appropriate;
(c) answer questions about the copyright law and provide advice about
compliance with the law and this Policy;
(d) maintain appropriate records of permissions, agreements and licenses;
(e) ensure the placement of appropriate copyright notices on or near copying
equipment, and;
(f) in the event of any copyright infringement, counsel the individual(s)
involved and take the steps appropriate to avoid further infringement.
The Copyright Officer is Dorothy Morris, Librarian.
With few exceptions, U.S. Copyright Law extends to all "works of authorship
fixed in any tangible medium of expression... from which they can be perceived,
reproduced or otherwise communicated, either directly or with the aid of a
machine or device." (Section 102.) As a practical matter, this means essentially
anything that includes either text or graphics, including computer programs and
materials available on the Internet.
In general, if a work is protected, the U.S. Copyright Law gives the copyright
owner the exclusive right to control both copying of the work, and the use of
the work in connection with the preparation of some further work. A "copy"
includes (a) a copy of text or images made using a copy machine, (b) text or
images transmitted by or downloaded from a computer, or (c) any other
replication of text or images, again including copying from the Internet.
The U.S. Copyright Law provides some exceptions permitting copying of
copyrighted works in certain circumstances. The principal relevant exception is
the so-called "fair use" exception. This provides that the "fair use of a
copyrighted work for purposes such as criticism, comment, news reporting,
teaching..., scholarship, or research, is not infringement of copyright."
(Section 107.) The U.S. Copyright Law provides a number of factors that are to
be considered in determining whether a use is a "fair use."
These factors include:
The purpose and character of the use;
The nature of the copyrighted work;
The amount and substantiality of the portion used in relation to the copyrighted
work as a whole; and
The effect of the use upon the potential market for or value of the
copyrighted work.
In most cases, the first and last factors will be the most important. For
example, widespread photocopying of journal articles is not "fair use" in most
cases since the copying is used as a substitute for purchasing additional copies
and has a clearly negative effect on the potential market.
On the other hand, using part of a journal article as background or as a basis
for discussion in a subsequent work may be a permissible "fair use."
Similarly, downloading a third party's home page so that it can be used as an
example or for reference is really no different than using a newspaper
advertisement for the same purpose, and is also probably permissible.
The point, in both these examples, is that the "use" of the "copied" material
was for the purposes of analysis, explanation or instruction, and has no effect
on the potential market for "copies."
Obviously, what is or is not "fair use" will often be unclear, and routing the
original (or obtaining reprints from the
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 21
<PAGE>
publisher) may often be the best course of action.
Employees may not copy a copyrighted work (or portion thereof) unless the
copying is authorized, e.g., by specific written permission from the copyright
owner, under a license, or under the "fair use" provision. The Copyright Officer
will advise whether any license covers the book, periodical, newsletter, or
other work in question, and will also advise whether any particular desired
copying would be a permitted "fair use."
Standish, Ayer & Wood is now covered by a license with Copyright Clearance
Center. Although millions of publications are covered, some smaller ones may not
be, and when planning to reproduce an article, graph or picture, especially if
it is going out to clients or the public, you are encouraged to ask the
Copyright Officer if the publication is covered. Moreover, you may now access
the Copyright Center online yourself (see Library Intranet, also Library
Bulletin Board for instructions) to check licensing.
A copyrighted work also may not be manipulated (i.e., changed in any way from
the original), unless the change has been authorized by the copyright owner or,
under the circumstances, is permitted "fair use." The Copyright Officer will
advise whether any particular revision or use is authorized by a license or
would be "fair use."
The contents of certain software licensed by Standish, Ayer & Wood and the data
supplied by subscription with certain electronic information services may not
only be protected by copyright but also by specific contractual provisions to
which Standish is bound relating to copying, confidentiality and similar
matters.
Effective: November 5, 1997
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 22
<PAGE>
POLICY STATEMENT ON INSIDER TRADING
INTRODUCTION
Occasionally Standish employees come into possession of material non-public
information (often called "inside information"). Various federal and state laws,
regulations and court decisions, as well as general ethical and moral standards,
impose certain duties with respect to this inside information. The violation of
these duties could subject both Standish and the individuals involved to severe
civil and criminal penalties and damage our reputation. As a result, Standish
has adopted this policy statement governing inside information. Standish views
seriously any violation of this policy statement. Violations constitute grounds
for disciplinary sanctions, which may include dismissal and/or referral to civil
and criminal authorities.
Courts may attribute one employee's knowledge of inside information to another
employee or group that later trades in the affected security within an
organization or affiliated group of organizations, even if there had been no
actual communication of this knowledge. Thus, by buying or selling a particular
security in the normal course of business, Standish personnel other than those
with actual knowledge of inside information could inadvertently subject Standish
to liability. Alternatively, the intended effect of someone obtaining inside
information in a legitimate set of circumstances may be to restrict the
legitimate trading activities of other persons within the company.
The risks in this area can be significantly reduced through the conscientious
use of a combination of trading restrictions and information barriers designed
to confine material non-public information to a given individual, group or
department (so-called "ETHICAL WALLS"). One purpose of this Policy Statement is
to establish a workable procedure for applying these techniques in ways that
offer significant protection to Standish and its personnel, while providing the
flexibility to carry on our day-to-day investment management activities on the
behalf of our clients.
SEE THE ATTACHED REFERENCE TABLE IF YOU HAVE ANY QUESTIONS ON THIS POLICY OR WHO
TO CONSULT IN CERTAIN SITUATIONS.
POLICY ON INSIDER TRADING
TRADING PROHIBITION - No officer, director or employee of Standish may buy or
sell a security (or a related option or warrant) in a company, either for
themselves or on behalf of others, while in possession of material non-public
information ("inside information") about the company. This means that you may
not buy or sell a security for yourself or anyone else, including your spouse, a
relative, friend, or a client, and you may not recommend that anyone else buy or
sell a security on the basis of inside information regarding that security.
COMMUNICATION PROHIBITION - No officer, director or employee of Standish may
communicate material non-public information to others who have no official need
to know. This is known as "tipping" which is also a violation of the insider
trading laws, even if the "tipper" does not personally benefit, when a third
party benefits from the inside information. Therefore, you should not discuss
such information acquired on the job or otherwise with your spouse or with
friends, relatives, clients, or anyone else outside of Standish except on a
need-to-know basis relative to your duties at Standish, and then only as
described below. If you convey material non-public information to another
person, even inadvertently, once he or she trades on such information, he or she
would be deemed to violate insider trading laws. This is known as "tippee
liability."
WHAT IS MATERIAL INFORMATION?
Information is "material" when a reasonable investor would consider it important
in making an investment decision. Generally, this is information the disclosure
of which could reasonably be expected to have an effect on the price of a
company's securities. The information could be positive or negative.
Whether something is material must be evaluated relative to the company in whose
securities a trade is being considered - a multi-million dollar contract may be
immaterial to Boeing, but material to a smaller capitalization
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 23
<PAGE>
company. Some examples of material information could include: dividend changes,
earnings results, changes in previously released earnings estimates, changes in
management, significant merger, joint venture or acquisition proposals or
agreements, stock buy back proposals, tender offers, rights offerings, new
product releases or schedule changes, significant accounting write-offs or
changes, credit rating changes, changes in capital structure (e.g. stock
splits), accounting changes, major technological discoveries or breakthroughs,
major capital investment plans, major contract awards or cancellations,
governmental investigations, major litigation or disposition of litigation,
liquidity problems, and extraordinary management developments or changes.
Material information may also relate to the market for a company's securities.
Information about a significant order by an affiliate of a company to purchase
or sell the company's securities may, in some contexts, be deemed material.
Similarly, pre-publication information regarding reports to be issued in the
financial press may also be deemed material. For example, the Supreme Court
upheld the criminal convictions of insider traders who capitalized on
pre-publication information about the Wall Street Journal's "HEARD ON THE
STREET" column.
Since there is no clear definition of what is material, assessments sometimes
require a fact specific inquiry. For this reason, if you are in possession of
non-public informative and have questions about whether information is material,
please direct them to the Compliance Officer or Code of Ethics Supervisor.
WHAT IS NON-PUBLIC INFORMATION?
Information is "PUBLIC" when it has been disseminated broadly to investors in
the marketplace. Tangible evidence of dissemination is the best indication that
the information is public. For example, information is public after it has
become available to the general public through a public filing with the SEC or
some other governmental agency, the Dow Jones "tape," release by Standard &
Poors, Bloombergs or Reuters or publication in the Wall Street Journal or some
other publication of general circulation. Information remains non-public until a
reasonable time elapses after it is disseminated. While there is no specific
rule and the timing will vary depending on the means of dissemination,
generally, trading 24 hours after the public dissemination of information would
not be prohibited. The waiting period may be considerably shorter where a widely
disseminated press release is involved.
WHAT ARE SOME EXAMPLES OF HOW STANDISH PERSONNEL COULD OBTAIN INSIDE INFORMATION
AND WHAT YOU SHOULD DO IN THESE CASES?
In the context of Standish's business, the following are some examples of how a
person could come into possession of insider information:
(a) BOARD OF DIRECTORS SEATS
Standish officers, directors and employees are sometimes asked to sit on the
Board of Directors of public companies. These public companies will generally
have restrictions on their Board members' trading in the companies' securities
except during specified "window periods" following the public dissemination of
financial information. As noted elsewhere in the CODE OF ETHICS AND GENERAL
COMPLIANCE HANDBOOK, service as an outside director of a public company requires
Conflicts Committee and Executive Committee approval. If approval is given, the
company will be subject to procedures to safeguard against potential conflicts
of interest or insider trading, such as Ethical Wall procedures or placing the
securities on a restricted list. Cases of fund managers sitting on Boards of
public companies have been highlighted in the press and have underscored the
effect of inadequate safeguards could be to inadvertently render securities
"illiquid" for Standish clients. In order to mitigate against this risk, anyone
sitting on a board of a public company should consider the Ethical Wall
procedures below as applicable to them and should abide by them. Similarly,
Standish personnel serving on the Board of a privately held company may come
into possession of inside information in connection with proposed transactions
or agreements by such companies with publicly traded companies.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 24
<PAGE>
(b) DEAL-SPECIFIC INFORMATION
Under certain circumstances, an employee may receive insider information for a
legitimate purpose in the context of a transaction in which a Standish account
is a potential participant. This "DEAL-SPECIFIC INFORMATION" may be used by the
department to which it was given for the purpose for which it was given.
Generally, if a confidentiality agreement is to be signed, it should be assumed
that insider information is involved. However, even in the absence of a
confidentiality agreement, insider information may be involved. This type of
information may be given in connection with a client making a direct investment
in a company in the form of equity or debt; it may be also involve a purchase by
a client of a debt or equity security in a secondary transaction or in the form
of a participation. This type of situation typically arises in mezzanine
financings, loan participations, bank debt financings, venture capital
financing, purchases of distressed securities, oil and gas investments and
purchases of substantial blocks of stock from insiders. YOU SHOULD REMEMBER THAT
EVEN THOUGH THE INVESTMENT FOR WHICH THE DEAL-SPECIFIC INFORMATION IS BEING
RECEIVED MAY NOT BE A PUBLICLY TRADED SECURITY, THE COMPANY MAY HAVE OTHER
CLASSES SECURITIES THAT ARE PUBLICLY TRADED AND THE RECEIPT OF THE INFORMATION
BY STANDISH CAN AFFECT THE ABILITY OF OTHER PARTS OF THE ORGANIZATION TO TRADE
IN THOSE SECURITIES. Likewise, a client that is a public company may disclose
insider information concerning the client and its securities to Standish
personnel (e.g. requesting that Standish raise cash in an account managed by
Standish in preparation for an acquisition). For the foregoing reasons, if you
are to receive any deal-specific information on a company with any class of
publicly traded securities, please contact the Code of Ethics Supervisor.
(c) CREDITORS' COMMITTEES
On occasion a debt security may go into default or an issuer may into bankruptcy
and Standish accounts may hold a significant portion of the issue. In that case
Standish may be asked to participate on a Creditors' Committee. Creditors'
Committees are often involved in negotiations involving restructuring,
work-outs, recapitalizations and other significant events that would affect the
company and are frequently given access to insider information. Standish
employees' sitting on such a committee could substantially affect Standish's
ability to trade in securities in the company. In addition, members of the
Creditor's Committee are considered fiduciaries with respect to certain other
creditors of the company. For this reason, Standish employees sitting on
Creditor's Committees cannot be involved, or influence others involved in
decision-making by Standish trading in the issuer's securities. Therefore,
before sitting on any Creditors' Committee, you must first get the approval of
the Compliance Officer.
In most cases the bankruptcy court must specifically approve Ethical Wall
procedures before Standish or its employees may trade in any of the securities
issued by the subject company.
(d) CONTACTS AND PUBLIC COMPANIES
For Standish analysts, contacts with public companies represent an important
part of our research efforts. Standish makes investment decisions on the basis
of Standish's conclusions formed through such contacts and analysis of publicly
available information. Difficult legal issues arise, however, when, in the
course of these contacts, a Standish employee becomes aware of MATERIAL
non-public information. This could happen, for example, if a company's Chief
Financial Officer prematurely discloses quarterly results to an analyst or an
investor relations representative makes a selective disclosure of adverse news
to a handful of investors. If an issue arises, a research analysts' notes could
be subject to scrutiny and they have become increasingly the target of
plaintiffs' attorneys in securities class actions.
This area is one of particular concern to the investment business and,
unfortunately, it is one with a great deal of legal uncertainty. In a notable
1983 case, the U.S. Supreme Court recognized explicitly the important role of
analysts to ferret out and analyze information as necessary for the preservation
of a healthy market. It also recognized that questioning of corporate officers
and insiders is an important part of this information gathering process. The
Court thus framed narrowly the situations in which analysts receiving insider
information would be required to "disclose or abstain" from trading (generally
where the corporate insider was disclosing for an improper purpose, such as
personal benefit, and the analyst knows it). However, the Securities and
Exchange Commission has declared publicly its disfavor with the case, and since
then has brought enforcement proceedings indicating that it will take action
against what it sees as "selective disclosures" by corporate insiders to
securities analysts, even
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 25
<PAGE>
where the corporate insider was getting no personal benefit and was trying to
correct market misinformation. Thus, the status of company-to-analyst contacts
has been characterized as "a fencing match on a tightrope".
Because of this uncertainty, caution is the recommended course of action. If an
analyst receives what he or she believes is insider information or feels he or
she received information in violation of a corporate insider's fiduciary duty or
for his personal benefit, he/she should contact the Code of Ethics Supervisor.
WHAT IS THE EFFECT OF RECEIVING THE INSIDE INFORMATION?
The person actually receiving the inside information is subject to the trading
and communication prohibitions discussed above. However, since Standish is an
investment firm, questions arise as to how widely that information is to be
disseminated throughout the company. It may be extremely difficult to `disprove'
the possession of inside information by others in Standish if it is clear that
some personnel had possession of it. THEREFORE, PERSONS RECEIVING INSIDER
INFORMATION SHOULD BE AWARE THAT THE CONSEQUENCES CAN EXTEND WELL BEYOND
THEMSELVES OR EVEN THEIR DEPARTMENTS.
In the event of receipt of insider information by an employee, the company will
generally adopt one of two postures: (1) place a "firm wide restriction" on
securities in the affected company which would bar any purchases or sales of the
securities by any department or person within Standish, whether for a client or
personal account (absent specific approval); or (2) establish an Ethical Wall
around the individual or a select group or department. In the latter case, those
persons falling within the Ethical Wall would be subject to the trading
prohibition and except for need-to-know communications to others within the
Ethical Wall, the communication prohibition discussed above. The breadth of the
Ethical Wall and the persons included within it would have to be determined on a
case-by-case basis. In these circumstances, the Ethical Wall procedures are
designed to "isolate" the inside information and limit access to it by an
individual or select group in order to allow the remainder of the company not to
be affected by it. In any case where an Ethical Wall is imposed, the Ethical
Wall procedures discussed below must be strictly observed.
DOES STANDISH MONITOR TRADING ACTIVITIES?
The Compliance Department restricts trading in securities identified to it as
securities in which Standish employees may be deemed to possess inside
information. The Compliance Department surveys transactions effected by its
employees and its client accounts for the purpose of, among all things,
identifying transactions that may violate laws against insider trading and, if
necessary, investigating such trades.
PENALTIES AND ENFORCEMENT BY SEC AND PRIVATE LITIGANTS
The Director of Enforcement of the SEC has said that the SEC pursues all cases
of insider trading regardless of the size of transaction and regardless of the
persons involved. INSIDER TRADING IS A VERY TRACEABLE CRIME. Updated and
improved detection, tracking and surveillance techniques in the past few years
have strengthened enforcement efforts by the SEC, as well as, the stock
exchanges. This surveillance is done routinely in many cases or can be based on
informants in specific cases.
For example, after any significant company announcement impacting the price of a
company's securities, the SEC and exchange officials will automatically review
recent trading that benefited from the news. In the event any trading looks
suspicious, the records of the brokers involved with such trades will be
requested and reviewed and the broker representatives will be questioned about
their customers who traded, how these trade ideas were generated, how these
trades were received and/or how the trading compares to the customer's normal
activity. Likewise, company officials and their representatives (law firms,
accounting firms, etc.) may be asked under oath whether they know or have had
any contact with persons on the list of those trading. Links between insiders
and those trading (family relationships, neighborhoods, presence at certain
meetings) will be explored through extensive and widespread interviews and
affidavits and document requests.
Penalties for violations are severe for both the individual involved and
possibly his or her employer. These could include:
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 26
<PAGE>
- civil penalties of up to three times all profits made (or losses avoided)
- criminal fines of up to $1 million for individuals, $2.5 million for
companies
- jail sentences up to 10 years
- civil lawsuits by shareholders of the company in question.
WHAT YOU SHOULD DO IF YOU HAVE A QUESTION ABOUT INSIDE INFORMATION?
Before executing any trade for yourself or others, including clients of
Standish, you must consider whether you have access to material non-public
information. If you believe you have received oral or written material,
non-public information, you should discuss the situation immediately with the
Compliance Officer or Code of Ethics Supervisor. You should not discuss the
information with anyone else within or outside Standish. The Compliance Officer
will, with the assistance of counsel as required, determine whether the
information is of a nature requiring restrictions on use and dissemination and
when any restrictions should be lifted.
The Securities and Exchange Commission has recognized that Ethical Wall
procedures designed to isolate material non-public information to specific
individuals or groups can be a legitimate means of curtailing the attribution of
knowledge of this inside information to an entire company. In those situations
where Standish believes insider information can be isolated, the following
Ethical Wall procedures would apply. These Ethical Wall procedures are designed
to "quarantine" or "isolate" the individuals or select group of persons within
the Ethical Wall.
IDENTIFICATION OF THE WALLED-IN INDIVIDUAL OR GROUP
The persons subject to the Ethical Wall procedures will be identified by name.
If the Ethical Wall procedures are applicable simply because of someone serving
on a Board of Directors of a public company in a personal capacity, it is likely
that the Ethical Wall will apply exclusively to that individual, although in
certain circumstances it may be appropriate to expand the wall.
Where the information is received as a result of being on a Creditors'
Committee, serving on a Board in a capacity related to Standish investment
activities or receipt of deal-specific information, the walled in group will
generally refer to the group associated with that matter and, in some cases,
related groups or groups that are highly interactive with the group.
Determination of the breadth of the Ethical Wall is fact-specific and must be
made by the Compliance Officer and Code of Ethics Supervisor. Therefore, as
noted above, it is important to advise them if you come into possession of
material non-public information.
ISOLATION OF INFORMATION
Fundamental to the concept of a Ethical Wall is that the inside formation be
effectively quarantined to the walled-in group. The two basic procedures that
must be followed to accomplish this are as follows:
(a) RESTRICTIONS ON COMMUNICATIONS
Communications regarding the inside information or the subject company should be
held only with persons within the walled-in group on a need-to-know basis or
with the Compliance Officer. Communications should be discreet and should not be
held in the halls, in the lunchroom or on cellular phones. In some circumstances
it may be appropriate to use a code name for the subject company as a
precautionary measure. If persons outside the group are aware of your access to
information and ask you about the target company, they should be told simply
that you are not at liberty to discuss it. Individuals within the walled-in
group must excuse themselves from any research discussions on the effected firm.
On occasion, it may be desirable to discuss the matter with someone at Standish
outside the group. NO SUCH COMMUNICATIONS SHOULD BE HELD WITHOUT FIRST RECEIVING
THE PRIOR CLEARANCE BY THE COMPLIANCE OFFICER OR THE CODE OF ETHICS SUPERVISOR.
IN SUCH CASES, THE PERSON OUTSIDE THE GROUP AND POSSIBLY HIS OR HER ENTIRE
DEPARTMENT WILL BE DESIGNATED AS "INSIDE THE WALL" AND WILL BE SUBJECT TO ALL
THE ETHICAL WALL RESTRICTIONS.
(b) RESTRICTIONS ON ACCESS TO INFORMATION
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 27
<PAGE>
The files, computers and offices where confidential information is physically
stored should generally be made inaccessible to persons not within the walled-in
group. In certain circumstances, there is adequate and physical segregation of
the group such access would be very limited. However, in other cases where there
is less physical segregation between the group and others, additional
precautionary measures should be taken to make sure that any confidential
non-public information is kept in files securely and not generally accessible.
(c) TRADING ACTIVITIES BY PERSONS WITHIN THE ETHICAL WALL
Persons within the Ethical Wall are prohibited from buying or selling securities
in the subject company, whether on the behalf of Standish clients or in personal
transactions. This restriction would not apply in the following two cases: (1)
Where the affected persons have received DEAL-SPECIFIC information, the persons
are permitted to use the information to consummate the deal for which it was
given; and (2) the security in the affected account may be liquidated if the
client has specifically instructed Standish to liquidate the security provided
that no recommendation has been made to, and no confidential information has
been shared with the client. In the latter, Standish would attribute the
purchase or sale as by the direction of the client rather than pursuant to
Standish discretionary authority. Standish would be acting merely in an
executory capacity again, assuming no recommendation has been made to, and no
confidential information has been shared with the client. The liquidating
portfolio manager should confirm in writing to the Compliance Department in
connection with such a liquidation that no confidential information has been
shared with the client.
It will be the responsibility of each Portfolio Manager (or in the case that the
portfolio manager is in the walled-in group, their designee) to ensure that
members of his or her group are abiding by these Ethical Wall procedures in
every instance.
TERMINATION OF ETHICAL WALL PROCEDURES
When the information has been publicly disseminated and a reasonable time has
elapsed, or if the information has become stale, the Ethical Wall procedures
with respect to the information can generally be eliminated. This is
particularly true where the information was received in an isolated
circumstance, such as an inadvertent disclosure to an analyst or receipt of
deal-specific information. However, persons who by reason of an ongoing
relationship or position with the company are more exposed to the receipt of
such information on a frequent basis (for example, being a member of the Board
of Directors or on a Creditors' Committee) would ordinarily be subject to the
Ethical Wall procedures on a continuing basis and may be permitted to trade only
during certain "window periods" when the company permits such "access" persons
to trade. The Compliance Officer will determine when Ethical Wall Procedures can
be terminated. It will be the responsibility of each Manager to ensure that
members of his or her group are abiding by these Ethical Wall procedures in
every instance.
CERTAIN OPERATIONAL PROCEDURES IN CONNECTION WITH ENFORCEMENT OF INSIDER
INFORMATION AND INSIDER TRADING POLICIES
The following are certain operational procedures that will be followed to ensure
communication of insider trading policies to Standish employees and enforcement
thereof by the Company.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 28
<PAGE>
(a) EDUCATION AND TRAINING
New Employees - The policy is located in the CODE OF ETHICS AND GENERAL
COMPLIANCE HANDBOOK. Each new employee receives the Handbook from Human
Resources or the Compliance Department. The Compliance Department will have each
new employee certify that he or she has read, understands and agrees to abide by
the Code of Ethics (including the policy on insider trading). Each new employee
is required to attend a Code of Ethics Training Session which discusses, among
other items, this policy.
Existing Employees - Each employee will be required to certify annually that he
has read, understands and will abide by this policy.
(b) MAINTENANCE OF RESTRICTED LIST
The Compliance Department maintains a Restricted List of the securities for
which Standish is generally limited firm-wide from engaging in transactions. The
Code of Ethics Supervisor maintains a copy of the list. The Restricted List is
updated whenever there is a change. The Code of Ethics Supervisor must approve
any exception, which is then documented and kept on file.
(c) MAINTENANCE OF WATCH LIST
Standish will maintain a Watch List of companies for which it has material
non-public information and it has instituted a Ethical Wall. This list will be
used for the purpose of surveillance as described below. The list contains
information such as the contact person that resulted in the securities being put
on the list, the group(s) subject to the Ethical Wall, when a security is put on
the list or taken off, when it should be reviewed to see if it can be removed
(e.g. when confidentiality agreement expires), why the security was added and
deleted, and whether there is a confidentiality agreement.
(d) SURVEILLANCE
The Compliance Department will periodically review trading in shares of
companies on the Watch List by Standish personnel, whether on behalf of clients
or in personal trading. If the Code of Ethics Supervisor determines that there
has been any unusual trading that warrants further investigation, he/she will
coordinate a review. If any impropriety is found, the Code of Ethics Supervisor
will report it to the Conflicts Committee for resolution.
(e) CONSENT TO SERVICE ON BOARDS OF DIRECTORS
In order to monitor situations where material, non-public information may become
available by reason of a board position, employees are required to obtain
consent from the Conflicts Committee and Executive Committee prior to accepting
positions on non-Standish boards of directors.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
IF YOU HAVE A QUESTION ABOUT YOU SHOULD CONTACT
-------------------------------------------------------------------------------------------------------
<S> <C>
Whether information is "material" or "non-public" Compliance Officer or Code of
Ethics Supervisor
-------------------------------------------------------------------------------------------------------
Taking a Board of Directors Seat An approval form must be
(pre-approval is required) submitted to the Code of
Ethics Supervisor and approved
by the Conflicts Committee and
Executive Committee.
-------------------------------------------------------------------------------------------------------
Obtaining deal-specific information (pre-approval is Your Department Head or, if further
required) inquiry is needed or desired,
Compliance Officer
-------------------------------------------------------------------------------------------------------
Contacts with a public company Your Department Head or, if
further inquiry is needed or
desired, Compliance Officer or
Code of Ethics Supervisor
-------------------------------------------------------------------------------------------------------
This Policy in general Compliance Officer or Code of
Ethics Supervisor
-------------------------------------------------------------------------------------------------------
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 29
<PAGE>
-------------------------------------------------------------------------------------------------------
Setting up a Ethical Wall Compliance Officer or Code of Ethics
Supervisor
-------------------------------------------------------------------------------------------------------
Who is "within" or "outside" a Ethical Wall Compliance Officer or Code of Ethics
Supervisor
-------------------------------------------------------------------------------------------------------
Restricted Securities List Compliance Officer or Code of Ethics
Supervisor
-------------------------------------------------------------------------------------------------------
Terminating a Ethical Wall Compliance Officer or Code of Ethics
Supervisor
-------------------------------------------------------------------------------------------------------
</TABLE>
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 30
<PAGE>
TRADING DESK POLICIES AND PROCEDURES
GENERAL TRADING DESK POLICY AND BROKERAGE PRACTICES
Those members of the Staff directly involved in executing securities
transactions for Standish clients and all other staff members should observe the
following guidelines:
1. All transactions should be executed with the objective of achieving the
best overall results for the client.
2. Security orders should be placed with the aim of incurring competitive
commission rates which together with the price will result in a favorable
overall execution. The broker/bank should receive a commission that will
assure his best effort and at the same time result in a favorable rate for
the client. Brokerage which is directed by the client is an exception to
this guideline.
3. A portion of the brokerage business for each discretionary account will be
placed with brokers who provide investment research services at competitive
commission rates.
4. At regular intervals Standish will review the allocation of brokerage
commissions.
5. Any new brokerage relationships, installation of direct wires, etc., should
be cleared with the Trading Committee and the Desk Manager.
6. The Trading Desk will place orders solely for clients of Standish, Ayer &
Wood, Inc.
7. All transactions are confidential and are not to be discussed by any staff
member outside of Standish.
8. Gifts from brokers -- Whenever possible, staff members should discourage
gifts from brokers. Please refer to Personal Gifts policy for a detailed
explanation.
9. Any questions concerning the interpretation of these Guidelines should be
referred to the Compliance Officer.
<PAGE>
TRADE AGGREGATION & ALLOCATION PROCEDURES
GUIDING PRINCIPLES
These procedures are adopted in an effort to assure:
1. fair and equitable treatment of accounts both in priority of execution of
orders and in the allocation of securities and the price obtained in the
execution of block orders or trades;
2. timeliness and efficiency in the execution of orders; and
3. accuracy of the records maintained by Standish with respect to trade
execution and maintenance of client account positions.
GENERAL PROCEDURES
Only clients with an existing investment management agreement may utilize
Standish trading desks.
All orders may be executed only based on written (or computer-simulated) trade
tickets.
Modification or cancellation of any client transaction, whether at the direction
of the portfolio manager, analyst, or the trading desk, must be made in writing
on a trade ticket. Absent unavoidable circumstances and subject to the approval
process outlined below, such cancellations or modifications must occur on the
date the trade is placed.
All orders must bear the following information, whether executed or unexecuted:
1. The name of the broker or bank or dealer through whom executed;
2. The terms and conditions of the order or any modification or cancellation,
and any special features of the security;
3. The date and time of trade entry or cancellation;
4. The price at which executed;
5. The time of receipt of report of execution;
6. The name of the person who placed the order and the name of the person(s)
recommending the transaction;
7. The accounts(s) for which entered and the intended allocation of the order
among those accounts;
8. An indication of whether the order is discretionary.
PRIORITY OF ORDER FILL
Orders generally will be processed and executed on a first-in, first-out basis,
in the order received by the trading desk, with the following exceptions:
1. Execution of orders for clients who designate the use of
particular brokers may, and generally will, be delayed until the
execution of client non-broker designated orders has been
completed;
2. A delay in execution of orders may be appropriate when, in the
judgment of the trading desk manager, market conditions in the
security to be purchased or sold make such a delay advisable; or
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 32
<PAGE>
3. A block execution is anticipated. Execution of orders for a
particular security for any client who prohibits the use of block
execution of trades may, and generally will, be delayed until the
execution of any block trade for the security.
BLOCK TRADES
When a trade is placed for more than one advisory client, Standish may, but need
not, aggregate orders or block trade when Standish believes this will result in
more favorable execution. All Standish clients including mutual funds, ERISA
accounts and vehicles in which Standish personnel may have an interest may
participate in a block trade. In addition, orders for the account of Standish's
directors, officers and employees or accounts in which Standish or such persons
may have an interest may be included in a block trade together with Standish
clients but only to the extent permitted by Standish's restrictions on personal
trading and any relevant fund's Code of Ethics. Orders for the account of
Standish's directors, officers and employees or accounts in which Standish or
such persons may have an interest may not be included in a block trade together
with Standish clients unless excepted from various provisions of Standish's
restrictions on personal trading.
Selection of Accounts Participating in a Block Trade:
1. Accounts that have advisory agreements or standing instructions
prohibiting the use of block trades may not participate in the
block.
2. Accounts participating in the block are selected on the basis of
cash availability, increase or decrease in sector/security type
targets, federal and state tax considerations, quality guidelines,
duration adjustments, overall positions in U.S. Treasury
securities, and availability of a good substitution security.
Block trading may not be used as a substitute for individual investment advice
and treatment for client accounts.
ALLOCATIONS
Whenever possible or practical, Standish will use a pre-execution allocation
system. Accordingly, each trade ticket should state the accounts that will
participate in any block trade and the intended allocation of the order among
those accounts. However, it is understood that certain circumstances will make
pre-execution allocation impractical, including but not limited to the following
situations:
1. In a highly volatile market, a portfolio manager of a variety of
client accounts might miss an opportunity if he/she took the time
to examine the liquidity positions and other circumstances of each
client account for the purpose of allocating an order prior to
entry;
2. In the block market and the market for thinly traded securities,
an opportunity may be lost to buy or sell a security if the
commitment could not be made without allocating the securities
among the various accounts; and/or
3. The liquidity position of an account and other circumstances
affecting the allocation decision could change because of
unexpected cash flows, fails to deliver, accounting errors,
oversights as to the applicability of portfolio guidelines or
restrictions or because the security is otherwise unsuitable for
the account.
PRIORITY FOR SPECIALIZED CLIENT ACCOUNTS: Designated client accounts with
specialized or concentrated investment policies may have a priority over other
non-specialized accounts when determining the pre-execution allocation of an
order for a particular security.
HOT ISSUES: Issues that immediately trade at a premium to the IPO price or
declared a "Hot Issue" by the underwriter must be allocated only to
non-restricted accounts as defined by the NASD.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 33
<PAGE>
When an allocation is specified on a trade ticket:
1. If a block order is filled in its entirety, the order must be
allocated in accordance with the intended allocation specified on
the trade ticket.
2. If a block order is partially filled, the order will be allocated
among the accounts specified on the trade ticket and on a pro rata
basis in proportion to the intended allocation specified on the
trade ticket.
In all but extremely rare circumstances, trades that are not allocated
pre-execution will be allocated no later than the close of business on the trade
date. All clients must be fairly and equitably treated by any post-execution
allocation of a trade.
Where appropriate, Standish will allocate fixed income block trades at the
average price of the aggregated order.
Block trades in equity securities which are worked over the course of a day are
allocated at an average execution price and charged the same commission, if any.
Average price account amounts may not be carried overnight without allocation to
client accounts.
REALLOCATIONS
Notwithstanding the foregoing, orders for which a pre-execution allocation was
made on a trade ticket may be reallocated post-execution on a different basis as
follows:
1. ROUND LOTS: A block order may, but need not, be reallocated among
the accounts specified on the trade ticket in order to round an
allocation to a whole lot.
2. DE MINIMIS ALLOCATIONS: When a block order is partially filled, it
may be reallocated among the accounts specified on the trade
ticket because, in the case of equity securities, less than an
appropriate number of shares or, in the case of bonds, less than
an appropriate dollar amount of the bond has been obtained for a
particular account.
3. UNFORESEEN CIRCUMSTANCES. A block order may be reallocated among
either accounts specified on the trade ticket or other accounts
due to unforeseen circumstances, such as those listed above.
If a block order is partially filled and any reallocation is made, no account
that is benefitted by the reallocation may effect any purchase or sale for a
reasonable period of time following the execution of the block trade that would
result in the account receiving or selling (in the case of equity securities)
more shares or (in the case of bonds) a higher dollar amount of the bond than
the number of shares or dollar amount of the bond that it would have received or
sold had the block trade been filled in its entirety.
All accounts must be fairly and equitably treated by any post-execution
reallocation of a trade.
All requests for a post-execution reallocation must be submitted in writing to
the Trading Desk Manager and must explain the reason for the requested
reallocation. (See form attached). All post-execution reallocations must be
approved by the Trading Desk Manager and the Compliance Officer no later than
one hour after the opening of the markets on the trading day following the day
on which the order was executed. Unless managerial approval is otherwise
obtained, no reallocations may be made after such time, except for reallocations
of "Hot Issue" IPOs required by NASD rules.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 34
<PAGE>
TRADES PLACED OFF PREMISES
It may be necessary for trading personnel to place trades away from the
trading desk location, in limited circumstances. It is anticipated that the
following guidelines will be followed:
1. Only officers of Standish specifically designated by the Trading
Committee may place trades off-premises;
2. This practice will be permitted only if there are no substitute
traders on the desk to place the trade (such as after hours);
3. A message will be left promptly after the trade is executed with
the traders own voicemail, as well as the manager of the desk,
setting forth details concerning the trade;
4. A trade ticket for the transaction will be completed as soon as
possible but not later than 24 hours following execution.
ANNUAL REVIEW
Standish shall review on an annual basis these Trade Aggregation and
Allocation Procedures to ensure that they are adequate to prevent any
account from being systematically disadvantaged as a result of the
aggregation of orders.
Standish will receive no additional compensation as remuneration of any
kind as a result of aggregation of trades.
A Reallocation of Trade Form is located at the end of this Handbook.
Adopted: February 28, 1997
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 35
<PAGE>
STANDISH AYER & WOOD, INC.
STANDISH INTERNATIONAL MANAGEMENT CO., LLC
CODE OF ETHICS
A. STATEMENT OF POLICY.
This Code of Ethics is based upon the principle that the officers,
directors and employees of Standish, Ayer & Wood, Inc. and Standish
International Management Co., LLC (each, the "Adviser") owe a fiduciary
duty to the investment companies registered under the Investment
Company Act of 1940 (each a "Fund") and other clients for which the
Adviser acts as investment adviser or subadviser. Accordingly, each
officer, director and employee of the Adviser should conduct personal
trading activities in a manner that does not interfere with a client's
portfolio transactions or take advantage of a relationship with any
client. Persons covered by this Code of Ethics must adhere to these
general principles as well as the Code's specific requirements.
The fundamental position of the Adviser is that in effecting personal
securities transactions personnel of the Adviser must place at all
times the interests of clients ahead of their own pecuniary interests.
All personal securities transactions by these persons must be conducted
in accordance with this Code of Ethics and in a manner to avoid any
actual or potential conflict of interest or any abuse of any person's
position of trust and responsibility. Further, these persons should not
take inappropriate advantage of their positions with or on behalf of a
client. Without limiting the foregoing, it is the intention of the
Adviser that this Code of Ethics not prohibit personal securities
transactions by the Adviser's personnel made in accordance with the
letter and the spirit of the Code.
B. DEFINITIONS.
For purposes of this Code of Ethics, the following definitions will
apply:
1. ACCESS PERSON. The term "ACCESS PERSON" means any director,
officer or advisory person (as defined below) of the Adviser.
2. ACQUISITION. The term "acquisition" or "acquire" includes the
receipt of any gift of COVERED SECURITIES.
3. ADVISORY PERSON. The term "ADVISORY PERSON" means
(a) Every employee or on-site independent contractor of the
Adviser (or of any company in a control relationship to
the Adviser) who, in connection with his or her regular
functions or duties, makes, participates in, or obtains
information regarding, the purchase or sale of COVERED
SECURITIES (as defined below) by a Fund or other client,
or whose functions relate to the making of any
recommendations concerning the purchase or sale of
COVERED SECURITIES by a Fund or other client; and
(b) Every natural person in a control relationship to the
Adviser who obtains information concerning
recommendations made to a Fund concerning the purchase
or sale of a COVERED SECURITY and every other employee
or on-site
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 36
<PAGE>
independent contractor of the Adviser designated as an
Access Person by the CODE OF ETHICS SUPERVISOR.
4. BENEFICIAL OWNERSHIP. The term "BENEFICIAL OWNERSHIP" means a
direct or indirect "pecuniary interest" (as defined in
subparagraph (a)(2) of Rule 16a-1 under the Securities Exchange
Act of 1934 (the "1934 Act")) that is held or shared by a person
directly or indirectly (through any contract, arrangement,
understanding, relationship or otherwise) in a security. While the
definition of "pecuniary interest" in subparagraph (a)(2) of Rule
16a-1 is complex, this term generally means the opportunity
directly or indirectly to profit or share in any profit derived
from a transaction in a security. An indirect pecuniary interest
in securities by a person would be deemed to exist as a result of:
(a) ownership of securities by any of that person's
immediate family members sharing the same household
(including a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother- or
father-in-law, sister- or brother-in-law, and son- or
daughter-in-law);
(b) the person's partnership interest in the portfolio
securities held by a general or limited partnership
which such person controls;
(c) the person's right to receive dividends from a security
if this right is separate or separable from the
underlying securities;
(d) the person's interest in securities held by a trust
under certain circumstances; and
(e) the person's right to acquire securities through the
exercise or conversion of a "derivative security" (which
term excludes (i) a broad-based index option or future,
(ii) a right with an exercise or conversion privilege at
a price that is not fixed, and (iii) a security giving
rise to the right to receive another security only PRO
RATA and by virtue of a merger, consolidation or
exchange offer involving the issuer of the first
security).
5. CODE OF ETHICS SUPERVISOR. The term "CODE OF ETHICS SUPERVISOR"
means the officer of the Adviser designated from time to time by
the Adviser's compliance officer to (a) authorize or deny
permission to purchase or sell COVERED SECURITIES, (b) receive and
review reports of purchases and sales by ACCESS PERSONS and (c)
receive and review other reports that may be required from time to
time. The term "ALTERNATIVE CODE OF ETHICS SUPERVISOR" means the
officer of the Adviser designated from time to time by the Adviser
to perform the duties of the CODE OF ETHICS SUPERVISOR in
connection with personal transactions by the CODE OF ETHICS
SUPERVISOR or in the absence of the CODE OF ETHICS SUPERVISOR.
6. CONFLICTS COMMITTEE. The term "CONFLICTS COMMITTEE" means any
committee designated by the management of the Adviser to resolve
conflicts of interest and oversee and enforce the Adviser's Code
of Ethics (or any successor committee or person that performs
substantially the same functions as the CONFLICTS COMMITTEE).
7. CONTROL. The term "CONTROL" has the same meaning as that set forth
in Section 2(a)(9) of the 1940 Act. Section 2(a)(9) provides that
CONTROL means the power to exercise a controlling influence over
the management or policies of the Adviser, unless such power is
solely the result of an official position with the Adviser.
8. COVERED SECURITY. The term "COVERED SECURITY" means a security as
defined in Section 2(a)(36) of the 1940 Act, except that it does
not include:
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 37
<PAGE>
(a) Direct obligations of the government of the United
States;
(b) Bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements;
(c) Shares issued by open-end management investment
companies registered under the 1940 Act; and
(d) Any other security determined by the Securities and
Exchange Commission ("SEC") or its staff to be excluded
from the definition of "COVERED SECURITY" contained in
Rule 17j-1 under the 1940 Act.
9. DISPOSITION. The term "disposition" or "dispose" includes the
making of any personal or charitable gift of COVERED SECURITIES.
10. FAMILY ACCOUNT. The term "FAMILY ACCOUNT" means any brokerage or
other account containing securities (including but not limited to
COVERED SECURITIES) (1) in which an immediate family member of the
ACCESS PERSON not sharing the same household has BENEFICIAL
OWNERSHIP and (2) over which the ACCESS PERSON exercises direct or
indirect, sole or shared, investment control.
11. FUND. The term "Fund" has the meaning designated in the preamble
hereto.
12. INITIAL PUBLIC OFFERING. The term "INITIAL PUBLIC OFFERING" means
an offering of securities registered under the Securities Act of
1933, as amended (the "1933 Act"), by an issuer, which immediately
before registration, was not subject to reporting requirements of
Section 13 or 15(d) of the 1934 Act.
13. INVESTMENT DECISION MAKER. The term "INVESTMENT DECISION MAKER"
means any portfolio manager of the Adviser and any other ADVISORY
PERSON who assists a portfolio manager in making investment
decisions for a Fund or other client, including, but not limited
to, all analysts of the Adviser or of any company in a control
relationship to the Adviser.
14. LIMITED OR PRIVATE OFFERING. The term "LIMITED OR PRIVATE
OFFERING" means an offering that is exempt from registration under
Section 4(2) or 4(6) of the 1933 Act or Rule 504, 505 or 506
thereunder.
15. 1940 ACT. The term "1940 Act" means the Investment Company Act of
1940 and the rules and regulations thereunder, both as amended
from time to time, and any order or orders thereunder which may
from time to time be applicable to any Fund.
16. PURCHASE. The term "purchase" includes the writing of an option to
purchase.
17. SALE. The term "sale" includes a short sale, the writing of an
option to sell and the making of a gift.
18. SECURITY BEING CONSIDERED FOR PURCHASE OR SALE. 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.
19. SECURITY TO BE HELD OR ACQUIRED. The phrase "SECURITY HELD OR TO
BE ACQUIRED" means any COVERED SECURITY which, within the most
recent 15 days, is or has been held by a Fund or is being or has
been considered by the Adviser for purchase by a Fund or any
option to purchase or sell and any security convertible into, or
exchangeable for, such COVERED SECURITY.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 38
<PAGE>
C. PROHIBITED AND RESTRICTED ACTIVITIES.
While the scope of actions which may violate the Statement of Policy
set forth above cannot be exactly defined, these actions would always
include at least the following prohibited activities.
1. COMPETING WITH CLIENT TRADES. No ACCESS PERSON may, directly or
indirectly, purchase or sell securities if the ACCESS PERSON
knows, or reasonably should know, that these securities
transactions compete in the market with actual or considered
securities transactions for a client, or otherwise personally act
to injure a client's securities transactions.
2. PERSONAL USE OF CLIENT TRADING KNOWLEDGE. No ACCESS PERSON may use
the knowledge about securities purchased or sold by a client or
securities being considered for purchase or sale by a client to
profit personally, directly or indirectly, by the market effect of
such transactions.
3. DISCLOSURE OF CLIENT TRADING KNOWLEDGE. No ACCESS PERSON may,
directly or indirectly, communicate to any person who is not an
ACCESS PERSON any non-public information relating to a client
including, without limitation, the purchase or sale or considered
purchase or sale of a security on behalf of a client, except to
the extent necessary to effectuate securities transactions on
behalf of a client.
4. INITIAL PUBLIC OFFERINGS. No ACCESS PERSON may, directly or
indirectly, purchase any security sold in an INITIAL PUBLIC
OFFERING, unless the CONFLICTS COMMITTEE exempts the purchase
because of special conditions associated with the purchase.
5. LIMITED OR PRIVATE OFFERINGS. No ACCESS PERSON may, directly or
indirectly purchase any security issued pursuant to a LIMITED OR
PRIVATE OFFERING without obtaining prior written approval from the
CONFLICTS COMMITTEE. ACCESS PERSONS who have received
authorization to purchase securities in a LIMITED OR PRIVATE
OFFERING must disclose their BENEFICIAL OWNERSHIP of these
securities when these ACCESS PERSONS are involved in considering
the purchase on behalf of a Fund or other client of securities of
the issuer of the privately placed securities. A decision to
purchase securities of this issuer must be independently reviewed
by an investment person with no personal interest in that issuer.
6. ACCEPTANCE OF GIFTS. No ACCESS PERSON may accept 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 Adviser. The CONFLICTS
COMMITTEE will from time to time specify the value which will be
considered DE MINIMIS for purposes of this restriction.
7. BOARD SERVICE; OUTSIDE EMPLOYMENT. No ACCESS PERSON may serve on
the board of directors or trustees of any organization, whether
publicly traded or otherwise, absent prior written authorization
and determination by the CONFLICTS COMMITTEE that the board
service would be consistent with the interests of the Funds and
other clients of the Adviser. If board service is authorized,
ACCESS PERSONS serving as directors or trustees of issuers may not
take part in an investment decision on behalf of the Funds or
other clients concerning securities of these issuers. Likewise, no
access person may accept any outside employment absent the prior
written authorization of the CONFLICTS COMMITTEE.
8. TRANSACTIONS DURING BLACKOUT PERIOD. NO INVESTMENT DECISION MAKER
may, directly or indirectly, (a) purchase or sell any COVERED
SECURITY in which he or she has any BENEFICIAL OWNERSHIP or (b)
purchase any COVERED SECURITY if that purchase would cause the
INVESTMENT DECISION MAKER to acquire any BENEFICIAL OWNERSHIP, in
each case within a period of seven (7) calendar days before and
after any Fund or other client as to which he or she is an
INVESTMENT DECISION MAKER has purchased or sold such COVERED
SECURITY.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 39
<PAGE>
9. SHORT-TERM TRADING. No ACCESS PERSON may purchase and sell, or
sell and purchase, the same (or equivalent) COVERED SECURITIES
within a 60 calendar day period. The CONFLICTS COMMITTEE may, upon
request, exempt an ACCESS PERSON from this prohibition if the
CONFLICTS COMMITTEE determines that extenuating circumstances
warrant the exemption.
10. DISCLOSURE OF PERSONAL INTEREST. No INVESTMENT DECISION MAKER may
recommend any securities transaction by a Fund or other client
without having previously disclosed any BENEFICIAL OWNERSHIP in
these securities or the issuer thereof to the Adviser, including
without limitation:
(a) That INVESTMENT DECISION MAKER'S Beneficial Ownership of
any securities of the issuer;
(b) Any contemplated transaction by that INVESTMENT DECISION
MAKER in these securities;
(c) Any position with the issuer or its affiliates; and
(d) Any present or proposed business relationship between
the issuer or its affiliates and that INVESTMENT
DECISION MAKER or any party in which the INVESTMENT
DECISION MAKER has a significant interest.
An interested INVESTMENT DECISION MAKER may not participate in a
decision to purchase and sell securities of the issuer on behalf of a
Fund or any other client.
11. "GOOD UNTIL CANCELLED" OR "LIMIT ORDERS." No ACCESS PERSON may
place any "good until cancelled" or "limit" order that does not
expire on the day preclearance is granted.
D. EXEMPT TRANSACTIONS.
The following transactions are exempt from the preclearance
requirements and substantive prohibitions and restrictions of the Code,
BUT ARE NOT EXEMPT FROM ANY REPORTING REQUIREMENTS THAT MAY APPLY UNDER
SECTION H OF THIS CODE.
1. Purchases or sales for an 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 the
ACCESS PERSON;
3. Purchases which are part of an automatic dividend reinvestment
plan, but only to the extent the access person makes no voluntary
adjustment in the rate or type of investment or divestment;
4. Purchases or sales for which the ACCESS PERSON has received prior
written approval from the CODE OF ETHICS SUPERVISOR. Prior
approval will be granted only if a purchase or sale of COVERED
SECURITIES is consistent with the purposes of this Code of Ethics,
Section 17(j) of the 1940 Act and the rules thereunder;
5. Purchases in an INITIAL PUBLIC OFFERING if (a) the offering is
part of the "demutualization" or similar transaction of a mutual
bank, insurance company or similar issuer and the ACCESS PERSON'S
ability to participate is the direct result of the ACCESS PERSON'S
ownership of insurance policies or deposits issued or maintained
by the issuer and (b) the allocation of shares available for
acquisition by the ACCESS PERSON is based on the ACCESS PERSON'S
ownership of these policies or deposits;
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 40
<PAGE>
6. Transactions involving the disposition solely of fractional shares
of equity COVERED SECURITIES; and
7. The RECEIPT of any gift of COVERED SECURITIES.
Subject to applicable law, the CONFLICTS COMMITTEE may, upon
consideration of all of the relevant facts and circumstances, grant a
written exemption from provisions of this Code of Ethics with respect
to any transaction based on a determination that the transaction does
not conflict with the interests of any Fund or client.
E. JOINT PARTICIPATION.
A specific provision of the 1940 Act prohibits ACCESS PERSONS, in the
absence of an order of the SEC, from effecting a transaction in which a
Fund is a "joint or a joint and several participant" with that ACCESS
PERSON. Any transaction which suggests the possibility of a question in
this area should be presented to the CODE OF ETHICS SUPERVISOR and
legal counsel for review.
F. DUPLICATE BROKERAGE CONFIRMATIONS AND STATEMENTS.
Each ACCESS PERSON must direct the ACCESS PERSON'S brokers to supply to
the CODE OF ETHICS SUPERVISOR, on a timely basis and not less
frequently than every calendar quarter, duplicate copies of
confirmations of and account statements reflecting all COVERED
SECURITIES transactions and holdings (1) in which the ACCESS PERSON has
or acquires a direct or indirect BENEFICIAL OWNERSHIP interest and (2)
that are included in a FAMILY ACCOUNT, in each case whether or not one
of the exemptions listed in Section D above applies.
G. PRECLEARANCE PROCEDURES FOR TRANSACTIONS IN SECURITIES.
1. Every ACCESS PERSON must request and obtain preclearance from the
CODE OF ETHICS SUPERVISOR before effecting any personal securities
transactions in COVERED SECURITIES in or as to which the ACCESS
PERSON both: (a) has or acquires a BENEFICIAL OWNERSHIP AND (b)
has direct or indirect, sole or shared, investment control, except
for exempt transactions described in Section D above. The ACCESS
PERSON must submit to the CODE OF ETHICS SUPERVISOR a preclearance
request on a form designated by the CODE OF ETHICS SUPERVISOR from
time to time for each purchase or sale of a COVERED SECURITY on
behalf of such ACCESS PERSON prior to the execution of such
transaction.
3. The CODE OF ETHICS SUPERVISOR will compare the proposed
transaction to the daily Restricted List maintained by the
Adviser. Preclearance will be denied if: (a) the COVERED SECURITY
is being considered for purchase or sale by a Fund or other client
or (b) there is an order pending for a Fund or other client with
respect to such COVERED SECURITY. The transaction may not be
effected unless the CODE OF ETHICS SUPERVISOR pre-clears the
transaction in writing or orally (and subsequently confirming the
oral preclearance in writing). Preclearance is valid only for the
trading day on which it is issued.
H. REPORTING REQUIREMENTS.
Every ACCESS PERSON subject to this Section H must submit to the CODE
OF ETHICS SUPERVISOR, on forms designated by the CODE OF ETHICS
SUPERVISOR, the following reports as to (1) all COVERED SECURITIES and
brokerage accounts in which the ACCESS PERSON has, or by reason of a
transaction, acquires BENEFICIAL OWNERSHIP, whether or not the ACCESS
PERSON had any direct or indirect control over the COVERED SECURITIES
or accounts and (2) all FAMILY ACCOUNTS, IN EACH CASE, INCLUDING
REPORTS COVERING SECURITIES EXEMPTED BY SECTION D.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 41
<PAGE>
1. INITIAL HOLDINGS REPORTS. Not later than 10 days after an ACCESS
PERSON becomes an ACCESS PERSON, the following information:
(a) The title, number of shares and principal amount of each
COVERED SECURITY (i) in which the ACCESS PERSON had any
direct or indirect BENEFICIAL OWNERSHIP and (ii) that
was included in a FAMILY ACCOUNT when the ACCESS PERSON
became an ACCESS PERSON;
(b) The name of any broker, dealer or bank with whom the
ACCESS PERSON maintained (i) an account containing
securities (including but not limited to COVERED
SECURITIES) in which the ACCESS PERSON had any direct or
indirect BENEFICIAL OWNERSHIP or (ii) a FAMILY ACCOUNT,
each as of the date the ACCESS PERSON became an ACCESS
Person; and
(c) The date the report is being submitted by the ACCESS
PERSON.
2. QUARTERLY TRANSACTION REPORTS. Not later than 10 days after the
end of each calendar quarter, the following information:
(a) COVERED SECURITIES TRANSACTIONS. With respect to any
acquisition or disposition during the calendar quarter
of a COVERED SECURITY (x) in which the ACCESS PERSON had
any direct or indirect BENEFICIAL Ownership and (y) that
was included in a FAMILY ACCOUNT:
(i) The date of the acquisition or disposition,
the title, the interest rate and maturity
date (if applicable), the number of shares
and the principal amount of each COVERED
SECURITY;
(ii) The nature of the acquisition or disposition
(i.e., purchase, sale, gift or any other type
of acquisition or disposition);
(iii) The price of the COVERED SECURITY at which
the acquisition or disposition was effected;
(iv) The name of the broker, dealer or bank with
or through which the acquisition or
disposition was effected; and
(v) The date the report is submitted by the
ACCESS PERSON to the CODE OF ETHICS
SUPERVISOR.
However, if no reportable transactions in any COVERED
SECURITIES were effected during a calendar quarter, the
affected ACCESS PERSON must submit to the CODE OF ETHICS
SUPERVISOR, within ten calendar days after the end of the
quarter, a report stating that no reportable COVERED
SECURITIES transactions were effected.
(b) BROKERAGE ACCOUNTS. With respect to (i) any account
established by the ACCESS PERSON containing securities
(including but not limited to COVERED SECURITIES) in
which the person had a direct or indirect BENEFICIAL
OWNERSHIP and (ii) a FAMILY ACCOUNT during the quarter:
(1) The name of the broker, dealer or bank with
whom the ACCESS PERSON established the
account;
(2) The date the account was established; and
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 42
<PAGE>
(3) The date the report is being submitted by the
ACCESS PERSON.
3. ANNUAL HOLDINGS REPORTS. By a date specified by the CODE OF ETHICS
SUPERVISOR and as of a date within 30 days before this reporting
deadline, the following information:
(a) The title, number of shares and principal amount of each
COVERED SECURITY (i) in which the ACCESS PERSON had any
direct or indirect BENEFICIAL OWNERSHIP and (ii) that
was included in a FAMILY ACCOUNT;
(b) The name of any broker, dealer or bank with whom the
ACCESS PERSON maintained (i) an account containing
securities in which the ACCESS PERSON had any direct or
indirect BENEFICIAL OWNERSHIP and (ii) a FAMILY ACCOUNT;
and
(c) The date the report is being submitted by the ACCESS
PERSON.
4. Every report concerning a COVERED SECURITIES transaction that
would be prohibited by Section C if an exemption were not
available under Section D must identify the exemption relied upon
and describe the circumstances of the transaction.
5. Notwithstanding subparagraph 2 of this Section H, an ACCESS PERSON
need not make quarterly transaction reports pursuant to this Code
of Ethics if the reported information would duplicate information
reported pursuant to Rule 204-2(a)(12) under the Investment
Advisers Act of 1940 (the "Advisers Act").
6. Any report submitted by an ACCESS PERSON in accordance with this
Code may contain a statement that the report will not be construed
as an admission by that person that he or she has any direct or
indirect BENEFICIAL OWNERSHIP in any COVERED SECURITY to which the
report relates. The existence of any report will not by itself be
construed as an admission that any event reported thereon
constitutes a violation of this Code.
7. To the extent consistent with Rule 17j-1 under the 1940 Act, and
Rule 204-2(a)(12) under the Advisers Act, the CODE OF ETHICS
SUPERVISOR may approve other alternative reporting procedures from
time to time.
8. With respect to transactions or holdings required to be reported
under Section H.1-3 of this Code of the type described in Section
D.1-3 as to reportable information which an ACCESS PERSON does not
reasonably have access to, or which is not known by an ACCESS
PERSON, on the date such report is required to be submitted, such
ACCESS PERSON shall nevertheless:
(a) file the required report in a timely manner;
(b) indicate in the report, to the extent then known to the
ACCESS PERSON, that certain data concerning reportable
transactions or holdings is unavailable or unknown,
describing the circumstances resulting in its being
unavailable or unknown; and
(c) submit a supplemental report containing such information
promptly upon his or her having access to such
information.
I. INITIAL AND ANNUAL CERTIFICATION OF COMPLIANCE.
1. Each ACCESS PERSON, within ten (10) days after becoming an ACCESS
PERSON, must certify, on a form designated by the CODE OF ETHICS
SUPERVISOR, that the ACCESS PERSON:
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 43
<PAGE>
(a) Has received, read and understands this Code of Ethics
and recognizes that the ACCESS PERSON is subject hereto;
(b) Will comply with all the requirements of this Code of
Ethics; and
(c) Has disclosed to the CODE OF ETHICS SUPERVISOR all
holdings of COVERED SECURITIES and all accounts required
to be disclosed pursuant to the requirements of this
Code of Ethics.
2. Each ACCESS PERSON must also certify annually (by a date specified
by and on the form designated by the CODE OF ETHICS SUPERVISOR)
that the ACCESS PERSON:
(a) Has received, read and understand this Code of Ethics
and recognizes that the ACCESS PERSON is subject hereto;
(b) Has complied with all the requirements of this Code of
Ethics; and
(d) Has disclosed or reported all personal securities
transactions, holdings and accounts required to be
disclosed or reported in compliance with the
requirements of this Code of Ethics.
J. CONFIDENTIALITY.
All information obtained from any ACCESS PERSON hereunder normally will
be kept in strict confidence by the Adviser, except that reports of
transactions and other information obtained hereunder may be made
available to the Securities and Exchange Commission or any other
regulatory or self-regulatory organization or other civil or criminal
authority to the extent required by law or regulation or to the extent
considered appropriate by senior management of the Adviser in light of
all the circumstances. In addition, in the event of violations or
apparent violations of the Code, this information may be disclosed to
affected clients.
K . IDENTIFICATION OF AND NOTICE TO ACCESS PERSONS.
The CODE OF ETHICS SUPERVISOR will identify all persons who are
considered to be "ACCESS PERSONS" and INVESTMENT DECISION MAKERS and
inform these persons of their respective duties and provide these
persons with copies of this Code of Ethics.
L. REVIEW OF REPORTS.
The CODE OF ETHICS SUPERVISOR will review the information to be
compiled under this Code of Ethics in accordance with such review
procedures as the CODE OF ETHICS SUPERVISOR and CONFLICTS COMMITTEE may
from time to time determine to be appropriate in light of the purposes
of this Code of Ethics.
M. SANCTIONS.
Any violation of this Code of Ethics will result in the imposition of
such sanctions as the CONFLICTS COMMITTEE may deem appropriate under
the circumstances, which may include, but are not limited to, a
warning, disgorgement of profits obtained in connection with a
violation, the imposition of fines, suspension, demotion, termination
of employment or referral to civil or criminal authorities.
N. RECORDKEEPING REQUIREMENTS.
The Adviser will maintain and preserve:
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 44
<PAGE>
1. In an easily accessible place, a copy of this Code of Ethics (and
any prior code of ethics that was in effect at any time during the
past five years) for a period of five years;
2. In an easily accessible place, a record of any violation of this
Code of Ethics (and any prior code of ethics that was in effect at
any time during the past five years) and of any action taken as a
result of such violation for a period of five years following the
end of the fiscal year in which the violation occurs;
3. A copy of each report (or computer printout) submitted under this
Code of Ethics for a period of five years, provided that for the
first two years such reports must be maintained and preserved in
an easily accessible place;
4. In an easily accessible place, a list of all persons who are, or
within the past five years were, required to make or required to
review, reports pursuant to this Code of Ethics;
5. A copy of each report provided to any Fund as required by
paragraph (c)(2)(ii) of Rule 17j-1 under the 1940 Act or any
successor provision for a period of five years following the end
of the fiscal year in which the report is made, provided that for
the first two years such record will be preserved in an easily
accessible place; and
6. A written record of any decision, and the reasons supporting any
decision, to approve the purchase by an ACCESS PERSON of any
security in an INITIAL PUBLIC OFFERING or in a LIMITED OR PRIVATE
OFFERING for a period of five years following the end of the
fiscal year in which the approval is granted.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 45
<PAGE>
EXHIBIT A
REPORT OF SECURITY TRANSACTIONS
To: , Compliance Officer
FROM:
The following is a record of every transaction in a Security in which I had or
by reason of which I acquired, any direct or indirect beneficial ownership
during the calendar quarter ended:
<TABLE>
<CAPTION>
NAME, DESCRIPTION OF
SECURITY AND AMOUNT PRICE PER SHARE/UNIT NAME OF BROKER,
OF SHARES/UNITS PURCHASED/SOLD DATE DEALER OR BANK
---------------------------- ------------------------ ---------- ------------------
<S> <C> <C> <C>
</TABLE>
Note: This Report shall not be construed as an admission by me that I
have acquired direct or indirect beneficial ownership in the
securities involved in those transactions that have been marked
with an asterisk (*). Such Transactions are reported pursuant to
the Code of Ethics of Standish, Ayer & Wood Investment Trust,
Standish, Ayer & Wood Master Trust, Standish, Ayer & Wood Domestic
Master Portfolio, Standish, Ayer & Wood, Inc., Standish
International Management Company, L.P. and Standish Fund
Distributors, L.P. in order to meet the requirements of Section
17(j) of the Investment Company Act of 1940 and Rule 17j-1
thereunder.
Date: Signature:
---------------------------------- -----------------------
PLEASE RETURN THIS REPORT NO LATER THAN 10 DAYS AFTER THE END OF EACH CALENDAR
QUARTER.
<PAGE>
APPENDIX
EXAMPLES OF BENEFICIAL OWNERSHIP
"Beneficial ownership" of a security has been addressed by the Securities and
Exchange Commission in a number of releases and encompasses many diverse
situations, including the following:
1. Securities held by you for your own benefit, whether bearer form,
registered in your name, or otherwise.
2. Securities held by others for your benefit (regardless of whether or how
they are registered), such as securities held for you by a custodian,
broker, relative, executor or administrator.
3. Securities held for your account by a pledgee.
4. Securities held by a trust in which you have an income or remainder
interest, unless you only interest is to receive principal if (i) some
other remainderman dies before distribution, or (ii) some other person by
will directs a distribution of trust property or income to you.
5. Securities held by you as trustee or co-trustee, if either you or a member
of your immediate family (i.e., your spouse, children and their
descendants, step-children, parents and their ancestors, and step-parents
[treating a legal adoption as a blood relationship]) have an income or
remainder interest in the trust.
6. Securities held by a trust of which you are the settlor, if you have the
power to revoke the trust without obtaining the consent of all the
beneficiaries.
7. Securities held by any partnership in which you are a partner.
8. Securities held by a personal holding company controlled by you alone or
jointly with others.
9. Securities held in the name of your spouse unless you are legally
separated.
10. Securities held in the name of your minor child or in the name of any
relative of yours or of your spouse (including an adult child) who is
presently sharing your home, even if the securities were not received from
you and the dividends are not actually used for the maintenance of your
home.
11. Securities held in the name of another person (other than those listed in
examples 9 and 10 above), if by reason of any contract, understanding,
relationship, agreement or other arrangement, you obtain benefits
substantially equivalent the those of ownership.
12. Securities held in the name of any person other than yourself, even though
you do not obtain benefits substantially equivalent to those of ownership
(as described in example 11 above), if you can vest or revest title in
yourself.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 47
<PAGE>
CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT
As amended and restated May 1999
THE CODE OF ETHICS
- Members of the Association for Investment Management and Research
shall:
- Act with integrity, competence, dignity, and in an ethical manner when
dealing with the public, clients, prospects, employers, employees, and
fellow members.
- Practice and encourage others to practice in a professional and ethical
manner that will reflect credit on members and their profession.
- Strive to maintain and improve their competence and the competence of
others in the profession.
- Use reasonable care and exercise independent professional judgment.
STANDARDS OF PROFESSIONAL CONDUCT
------------------------------
STANDARD I: FUNDAMENTAL RESPONSIBILITIES
Members shall:
A. Maintain knowledge of an comply with all applicable laws, rules, and
regulations (including AIMR's Code of Ethics and Standards of Professional
Conduct) of any government, governmental agency, regulatory organization,
licensing agency, or professional association governing the members'
professional activities.
B. Not knowingly participate or assist in any violation of such laws, rules, or
regulations.
------------------------------
STANDARD II: RELATIONSHIPS WITH AND RESPONSIBLITES TO THE PROFESSION
A. USE OF PROFESSIONAL DESIGNATION.
1. AIMR members may reference their membership only in a dignified and
judicious manner. The use of the reference may be accompanied by an accurate
explanation of the requirements that have been met to obtain membership in
these organizations.
2. Those who have earned the right to use the Chartered Financial Analyst
designation may use the marks "Chartered Financial Analyst" or "CFA" and are
encouraged to do so, but only in a proper, dignified, and judicious manner.
The use of the designation may be accompanied by an accurate explanation of
the requirements that have been met to obtain the right to use the
designation.
3. Candidates in the CFA Program, as defined in the AIMR Bylaws, may
reference their participation in the CFA Program, but the reference must
clearly state that an individual is a candidate in the CFA Program and cannot
imply that the candidate has achieved any type of partial designation.
B. PROFESSIONAL MISCONDUCT.
1. Members shall not engage in any professional conduct involving dishonesty,
fraud, deceit, or misrepresentation or commit any act that reflects adversely
on their honesty, trustworthiness, or professional competence.
2. Members and candidates shall not engage in any conduct or commit any act
that compromises the integrity of the CFA designation or the integrity or
validity of the examinations leading to the award of the right to use the CFA
designation.
C. PROHIBITION AGAINST PLAGIARISM. Members shall not copy or use, in
substantially the same form as the original material prepared by another
without acknowledging and identifying the name of the author, publisher, or
source of such material. Members may use, without acknowledgment, factual
information published by recognized financial and statistical reporting
services or similar sources.
------------------------------
STANDARD III: RELATIONSHIPS WITH AND RESPONSIBILITIES TO THE EMPLOYER
A. OBLIGATION TO INFORM EMPLOYER OF CODE AND STANDARDS.
Members shall:
1. Inform their employer in writing, through their direct supervisor, that
they are obligated to comply with the Code and Standards and are subject to
disciplinary sanctions for violations thereof.
2. Deliver a copy of the Code and Standards to their employer if the employer
does not have a copy.
B. DUTY TO EMPLOYER. Members shall not undertake any independent practice that
could result in compensation or other benefit in competition with their
employer unless they obtain written consent from both their employer and the
persons or entities for whom they undertake independent practice.
C. DISCLOSURE OF CONFLICTS TO EMPLOYER. Members shall:
1. Disclose to their employer all matters, including beneficial ownership of
securities or other investments, that reasonably could be expected to
interfere with their duty to their employer or ability to make unbiased and
objective recommendations.
2. Comply with any prohibitions on activities imposed by their employer if a
conflict of interest exists.
Disclosure of Additional Compensation Arrangements.
Members shall disclose to their employer in writing all monetary compensation
or other benefits that they receive for their services that are in addition
to compensation or benefits conferred by a member's employer.
E. RESPONSIBILITIES OF SUPERVISORS. Members with supervisory responsibility,
authority, or the ability to influence the conduct of others shall exercise
reasonable supervision over those subject to their supervision or authority
to prevent any violation of applicable statutes, regulations, or provisions
of the Code and Standards. In so doing, members are entitled to rely on
reasonable procedures designed to detect and prevent such violations.
<PAGE>
STANDARD IV: RELATIONSHIPS WITH AND RESPONSIBILITIES TO CLIENTS AND PROSPECTS
A.INVESTMENT PROCESS.
A.1 REASONABLE BASIS AND REPRESENTATIONS. Members shall:
a. Exercise diligence and thoroughness in making investment recommendations
or in taking investment actions.
b. Have a reasonable and adequate basis, supported by appropriate research
and investigation, for such recommendations or actions.
c. Make reasonable and diligent efforts to avoid any material
misrepresentation in any research report or investment recommendation.
d. Maintain appropriate records to support the reasonableness of such
recommendation or actions.
A.2 RESEARCH REPORTS. Members shall:
a. Use reasonable judgment regarding the inclusion or exclusion of relevant
factors in research reports.
b. Distinguish between facts and opinions in research reports.
c. Indicate the basic characteristics of the investment involved when
preparing for public distribution a research report that is not directly
related to a specific portfolio or client.
A.3 INDEPENDENCE AND OBJECTIVITY. Members shall use reasonable care and
judgment to achieve and maintain independence and objectivity in making
investment recommendation or taking investment action.
B. INTERACTIONS WITH CLIENTS AND PROSPECTS.
B.1 FIDUCIARY DUTIES. In relationships with clients, members shall use
particular care in determining applicable fiduciary duty and shall comply with
such duty as to those persons and interests to whom the duty is owned. Members
must act for the benefit of their clients and place their clients' interests
before their own.
B.2 PORTFOLIO INVESTMENT RECOMMENDATIONS AND ACTIONS.
Members shall:
a. Make a reasonable inquiry into a client's financial situation, investment
experience, and investment objectives prior to making any investment
recommendations and shall update this information as necessary, but no less
frequently than annually, to allow the members to adjust their investment
recommendations to reflect changed circumstances.
b. Consider the appropriateness and suitability of investment recommendations
or actions for each portfolio or client. In determining appropriateness and
suitability, members shall consider applicable relevant factors, including the
needs and circumstances of the portfolio or client, the basic characteristics
of the investment involved, and the basic characteristics of the total
portfolio. Members shall not make a recommendation unless they reasonably
determine that the recommendation is suitable to the client's financial
situation, investment experience, and investment objectives.
c. Distinguish between facts and opinions in the presentation of investment
recommendations.
d. Disclose to clients and prospects the basic format and general principles
of the investment processes by which securities are selected and portfolios
are constructed and shall promptly disclose to clients and prospects any
changes that might significantly affect those processes.
B.3 FAIR DEALING. Members shall deal fairly and objectively with all clients and
prospects when disseminating investment recommendations, disseminating material
changes in prior investment recommendations, and taking investment action.
B.4 PRIORITY OF TRANSACTIONS. Transactions for clients and employers shall have
priority over transactions in securities or other investments of which a member
is the beneficial owner so that such personal transactions do not operate
adversely to their clients' or employer's interests. If members make a
recommendation regarding the purchase or sale of a security or other investment,
they shall give their clients and employer adequate opportunity to act on the
recommendation before acting on their own behalf. For purposes of the Code and
Standards, a member is a "beneficial owner" if the member has
a. a direct or indirect pecuniary interest in the securities;
b. the power to vote or direct the voting of the shares of the securities or
investments;
c. the power to dispose or direct the disposition of the security or
investment.
B.5 PRESERVATION OF CONFIDENTIALITY. Members shall preserve the confidentiality
of information communicated by clients, prospects, or employers concerning
matters within the scope of the client-member, prospect-member, or
employer-member relationship unless the member receives information concerning
illegal activities on the part of the client, prospect, or employer.
B.6 PROHIBITION AGAINST MISREPRESENTATION.
Members shall not make any statements, orally or in writing, that misrepresent
a. the services that they or their firms are capable of performing;
b. their qualifications or the qualifications of their firm;
c. the member's academic or professional credentials.
Members shall not make or imply, orally or in writing, any assurances or
guarantees regarding any investment except to communicate accurate information
regarding the terms of the investment instrument and the issuer's obligations
under the instrument.
B.7 DISCLOSURE OF CONFLICTS TO CLIENTS AND PROSPECTS. Members shall disclose to
their clients and prospects all matters, including beneficial ownership of
securities or other investments, that reasonably could be expected to impair the
member's ability to make unbiased and objective recommendations.
B.8 DISCLOSURE OF REFERRAL FEES. Members shall disclose to clients and prospects
any consideration or benefit received by the member or delivered to others for
the recommendation of any services to the client or prospect.
------------------------------
STANDARD V: RELATIONSHIPS WITH AND RESPONSIBILITIES TO THE INVESTING PUBLIC
A.PROHIBITION AGAINST USE OF MATERIAL NONPUBLIC INFORMATION. Members who
possess material nonpublic information related to the value of a security
shall not trade or cause others to trade in that security if such trading
would breach a duty or if the information was misappropriated or relates to a
tender offer. If members receive material nonpublic information in
confidence, they shall not breach that confidence by trading or causing
others to trade in securities to which such information relates. Members
shall make reasonable efforts to achieve public
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 49
<PAGE>
dissemination of material nonpublic information disclosed in breach of a duty.
B.PERFORMANCE PRESENTATION.
1. Members shall not make any statements, orally or in writing, that
misrepresent the investment performance that they or their firms have
accomplished or can reasonably be expected to achieve.
2. If members communicate individual or firm performance information directly
or indirectly to clients or prospective clients, or in a manner intended to be
received by clients or prospective clients, members shall make every
reasonable effort to assure that such performance information is a fair,
accurate, and complete presentation of such performance.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 50
<PAGE>
REPORTING ACCOUNTS FORM
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
INVESTMENT CONTROL ACCOUNT WITH BENEFICIAL INTEREST
(requires preclearance and reporting)
Account Title/Name Account Number Brokerage Firm Representative
------------------ -------------- -------------- --------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------
NO INVESTMENT CONTROL ACCOUNT WITH BENEFICIAL INTEREST
(requires reporting only)
Account Title/Name Account Number Brokerage Firm Representative
------------------ -------------- -------------- --------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------
INVESTMENT CONTROL ACCOUNT FOR IMMEDIATE FAMILY MEMBER(S) & FINANCIAL
DEPENDENTS LIVING OUTSIDE FAMILY RESIDENCE
(requires reporting only)
Account Title/Name Account Number Brokerage Firm Representative
------------------ -------------- -------------- --------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
I certify and confirm that as of this date, the above listing is complete
and correct. I will update this information as it changes. In addition, I
hereby give my permission for the release of any records maintained by the
brokers listed above directly to the Compliance Officer at Standish Ayer &
Wood, Inc. without my prior written consent.
------------------------ -------------------------------------------
DATE SIGNATURE OF EMPLOYEE
-------------------------------------------
NAME OF EMPLOYEE (PRINT NAME)
</TABLE>
<PAGE>
EMPLOYEE CLEARANCE TO TRADE FORM
You may not enter into transactions for your personal account until you receive
approval in writing to do so.** This clearance must be returned to the Code of
Ethics Supervisor for appropriate records retention. THIS CLEARANCE IS GOOD FOR
THE DATE OF APPROVAL ONLY.
<TABLE>
<S> <C>
For account in the name of: (Print) Brokerage Firm:
------------------------ --------------------
Name of Security: Name of Security:
--------------------- --------------------
Symbol: Symbol:
--------------------- --------------------
Type of Transaction: Type of Transaction:
--------------------- --------------------
Number of Shares: Number of Shares:
--------------------- --------------------
Name of Security: Name of Security:
--------------------- --------------------
Symbol: Symbol:
--------------------- --------------------
Type of Transaction: Type of Transaction:
--------------------- --------------------
Number of Shares: Number of Shares:
--------------------- --------------------
</TABLE>
I affirm that none of the proposed transactions are Initial Public
Offerings (except municipals) and that I am not in possession of
material non-public information concerning the securities listed above.
----------- ----------------- ----------- -------------------------
Date Your Signature Extension Compliance Authorization
** Exceptions: Open-end mutual funds, money market funds, direct obligations of
the U.S. Government securities, automatic dividend/capital gain activity and
disposition of fractional shares may be entered into without pre-approval.
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 52
<PAGE>
INVESTMENT CONTROL ACCOUNTS HOLDINGS FORM
FOR HOLDINGS AS OF
---------------
Name of Employee:
---------------------------------------------
(please print)
Currently, I have: (check one)
--------------------------------------------------------------------------------
NO securities in investment control accounts / /
--------------------------------------------------------------------------------
Securities in investment control accounts / /
--------------------------------------------------------------------------------
If you checked that you have securities in investment control accounts, fill in
the section below or attach your most recent brokerage statement(s).
<TABLE>
<CAPTION>
Type of Security
(i.e, stock, bond, Principal Number of
Name of Security Symbol option, etc.) Amount Shares
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
The above list and attachments represent a complete inventory of holdings in all
my investment control accounts.
Signature:
----------------------------
Date:
----------------------------
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 53
<PAGE>
STANDISH, AYER & WOOD, INC.
BROKER CONTACT LETTER
--------------------------------------------------------------------------------
EMPLOYEE - complete this section (please print) and return this form to my
office for submission to your brokerage firm.
Brokerage Firm Name:
-----------------------------------------------
Brokerage Firm Address:
-----------------------------------------------
Account Name: Account Number:
------------------------ ----------------
Account Name: Account Number:
------------------------ ----------------
Employee:
--------------------------------------------------------------
Employee (signature):
------------------------------------------------------
--------------------------------------------------------------------------------
To Whom It May Concern:
Pertaining to the brokerage information listed above, Standish, Ayer &
Wood, Inc. a registered investment advisor, allows its employees to
maintain brokerage accounts with the firm of their choice. Standish
requires duplicate copies of trade confirmations and monthly account (at a
minimum calendar quarter) statements listing transactions and holdings for
these account(s) sent to:
STANDISH, AYER & WOOD, INC.
ATTENTION: CODE OF ETHICS SUPERVISOR
POST OFFICE BOX 9117
BOSTON, MA 02205-9117
Standish, Ayer & Wood, Inc. Authorization:
----------------------------
Code of Ethics Supervisor
Date:
----------------------------
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 54
<PAGE>
QUARTERLY REPORT OF PERSONAL SECURITIES TRANSACTIONS
(DUE WITHIN 10 CALENDAR DAYS AFTER
THE CLOSE OF EACH CALENDAR QUARTER)
<TABLE>
<CAPTION>
<S><C>
You must report transactions in all You do not need to report transactions in:
accounts in which you have direct, a) open-end mutual funds, d) automatic dividend or
indirect or no investment control or b) money market funds, capital gain activity,
influence and a beneficial interest, c) direct obligations of the e) disposition of fractional
including investment clubs. In addition, U.S. Government, shares, or
you must report transactions for
immediate family members not residing in
your household over which you have
direct or indirect investment control.
If you have a question as to what
constitutes beneficial interest, please
see the Code of Ethics Compliance
Supervisor for clarification
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
TRADE DATE ACTION SECURITY CUSIP AMOUNT QUANTITY ACCOUNT NAME FIRM
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
List transactions in accounts over which you have direct or indirect
investment control and a pecuniary beneficial interest below:
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
List transactions in accounts over which you have no investment control, but
have a pecuniary beneficial interest; and any non-volitional actions for
accounts with investment control and a pecuniary beneficial interest below:
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
List transactions in accounts belonging to immediate family members (or
financial dependents) not residing in your household and over which you have
direct or indirect investment control but have no beneficial interest below:
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
I hereby certify that the above listing is complete, and these transaction were, to the best Standish, Ayer & Wood, Inc.
of my knowledge, in compliance with SA&W's "Rules for Security Transactions" as well as Standish International Management
SA&W's Code of Ethics. Co. L.P.
Standish, Ayer & Wood Investment
Signature Trust
------------------------------------------------------------------ Standish Fund Distributors, L.P.
</TABLE>
<PAGE>
FORM OF PRIOR APPROVAL
INVESTMENTS IN PRIVATE PLACEMENTS AND PRIVATE OFFERINGS
Note: Initial commitments for investments in private securities require
prior approval of the Conflicts Committee. Please allow sufficient
time for the Committee to consider your request (at least 48 hours).
This form will also be used for initial commitments of Standish
Ventures, which will be completed by the Administrative Partner for
Standish Ventures activity.
Your Name (print):
------------------------------------------------
Today's Date:
-----------------------------------------------------
Name of Private Offering:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Amount of
Expected Date of Investment: Investment/Commitment: $
-------------- -----------
Percent of Issue:
--------------
Please explain the nature of the offering and how you learned of this
opportunity:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Should this investment opportunity be reserved for any of the Standish Mutual
Funds?
Yes No
------------------ ---------
Explain:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
I understand that, if approved (a) this is a reportable transaction on my
Quarterly Report form and (b) if this security is ever subsequently considered
for purchase by the Standish Mutual Funds, I will disclose my interest in this
security.
------------------------ ----------------------
Your Signature Approval
<PAGE>
APPLICATION FOR PRIOR APPROVAL OF OUTSIDE AFFILIATIONS
ALL OUTSIDE BUSINESS AFFILIATIONS MUST BE APPROVED BY BOTH THE CONFLICTS
COMMITTEE AND THE EXECUTIVE COMMITTEE. TO SIMPLIFY THE REVIEW PROCESS, PLEASE
ANSWER THE FOLLOWING QUESTIONS.
<TABLE>
<CAPTION>
<S><C>
Employee Name (print):
------------------------------------
Name of Organization:
------------------------------------
Expected amount of compensation:
------------------------------------
What will your role be in this organization (i.e. member, consultant,
independent contractor, part-time employment); please explain in detail.
What is the primary business of this organization?
Yes No
Is this a non-profit organization?
---------- -----------
If you answered NO to the above question, are its shares publicly traded?
---------- -----------
If you answered YES to the above question, what is the name and symbol of the
publicly traded firm? In addition, you must provide the name of a contact at the
firm who can provide their internal policies related to securities
trading issues, restrictions on training and preclearance.
---------- -----------
Will your role benefit SA&W clients or serve the community?
---------- -----------
Will you be providing ANY financial or investment advice to this firm or
organization?
---------- -----------
Is this organization, in any way, connected to the investment business?
---------- -----------
I hereby certify that the above information is correct:
--------------------------------------------------------------------------------
signature
--------------------------------------------------------------------------------
DO NOT WRITE BELOW THIS LINE
Approvals:
Conflicts Committee Executive Committee
By: By:
----------------------------------- -----------------------------------
</TABLE>
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 58
<PAGE>
CODE OF ETHICS
SPECIAL EXEMPTION FORMS
--------------------------------------------------------------------------------
OFF-SITE INDEPENDENT CONTRACTORS
I attest that my status at Standish, Ayer & Wood, Inc., exempts me from Code
of Ethics requirements because I meet all of the following criteria:
I work off-site as an on-call contractor (no established hours);
I do not have access to the AS400 or Standish server;
I do not have voice mail, e-mail or a permanent seating assignment;
I have the Compliance Officer's written approval for this exemption.
I will notify the Compliance Officer immediately and fully comply with
Standish, Ayer & Wood, Inc. Code of Ethics requirements should any of the
above elements change.
------------------------------- --------------------------------------
Name (print) Date
------------------------------- --------------------------------------
Your Signature Compliance Officer Signature
--------------------------------------------------------------------------------
CONTRACTOR AFFIRMATION FORM
Code of Ethics Compliance
I HEREBY AFFIRM THAT DURING THE INTERVIEWING PROCESS, I WAS INFORMED ABOUT
STANDISH'S PERSONAL TRADING RULES. I WILL ABIDE BY THE CODE OF ETHICS OF
STANDISH, AYER & WOOD, INC., INCLUDING THE POLICIES AND PROCEDURES FOR PERSONAL
SECURITIES TRANSACTIONS. ON COMMENCEMENT OF MY ENGAGEMENT, I WILL NOT EXECUTE
ANY PERSONAL TRADES UNTIL I HAVE BEEN TRAINED IN STANDISH'S CODE OF ETHICS.
---------------------------
Signature
---------------------------
Print Name
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 59
<PAGE>
LONG-TERM EXTENDED LEAVE OR RETIRED EMPLOYEES
I attest that my status at Standish, Ayer & Wood, Inc., exempts me from Code
of Ethics requirements because I meet all of the following criteria:
I am on long-term extended leave or I am retired from Standish;
I do not have access to the AS400 or the Standish server;
I am not assigned an Standish email address;
I do not render investment management services or advice to Standish clients;
I am not involved in security research or selection;
I have the Compliance Officer's written approval for this exemption.
I will notify the Compliance Officer immediately and fully comply with
Standish, Ayer & Wood, Inc. Code of Ethics requirements should any of the
above elements change.
------------------------------ ----------------------------------
Name (print) Date
------------------------------ ----------------------------------
Your Signature Compliance Officer Signature
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 60
<PAGE>
STANDISH, AYER & WOOD, INC.
CODE OF ETHICS
CERTIFICATION OF INTENT NOT TO TRADE
I, _________________________________, do hereby certify that I
have no intention of executing any trades for my personal account in
any covered securities (as defined in the Code of Ethics) during the
period beginning _______________________ and ending
____________________, while I am on _____________________________ leave
from Standish, Ayer & Wood, Inc. ("SAW"), and that it is also my
intention to preclude others from making any trade in which I am deemed
to have or acquire a beneficial ownership in a covered security during
this time. IF I ADHERE TO THIS INTENT, I WILL NOT BE DISCIPLINED FOR
LATE SUBMISSION OF MY QUARTERLY REPORT OF PERSONAL SECURITY
TRANSACTIONS DURING MY ABSENCE PROVIDED THAT BROKERAGE CONFIRMS AND
STATEMENTS FOR ALL ACCOUNTS IN WHICH I AM DEEMED TO HAVE A BENEFICIAL
OWNERSHIP BE SENT TO SAW ON A TIMELY BASIS AND THIS WILL CONSTITUTE MY
QUARTERLY REPORTING.
I agree that in the event I should decide to execute trades in a
covered security or if trades in a covered security in which I am deemed to have
a beneficial ownership are to occur during my leave from SAW for the above
period, I will be responsible for obtaining pre-clearance of said trades from
the Code of Ethics Supervisor.
I agree that in the event I should decide to execute trades in a
covered security or if trades in a covered security in which I am deemed to have
a beneficial ownership are to occur during my leave from SAW for the above
period, I will be responsible for contacting the Code of Ethics Supervisor with
an address and telephone number of where I may be contacted so that the
Quarterly Report within which the period above falls may be forwarded to me for
execution and timely filing.
I agree that if I do not adhere to the certifications above, that I
will be subject to disciplinary fines levied for failure to preclear trades and
late filing of any and/or all reports in accordance with SAW's Code of Ethics.
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Signature Date
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 61
<PAGE>
REALLOCATION OF TRADE
After Trade Execution
Client Accounts Involved:
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Trade Date
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Settlement Date
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Security
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Amount
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Price at Trade Date
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Current Price
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Reasons for reallocation after trade execution:
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Name of responsible trader:
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Approvals:
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Trading Desk Manager Compliance Officer
CODE OF ETHICS & GENERAL COMPLIANCE HANDBOOK 62
