CODE OF ETHICS CONTEMPLATED BY SECTION 406 OF THE SARBANES-OXLEY ACT OF 2002 FOR
PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS
October 29, 2003
I. Covered Officers/Purpose of the Code
This Code of Ethics (this "Code") contemplated by Section 406 of the
Sarbanes-Oxley Act of 2002 has been adopted by Western Asset/Claymore U.S.
Treasury Inflation Protected Securities Fund (the "Fund") and applies to the
Fund's Principal Executive Officer, Principal Financial Officer and Principal
Accounting Officer (the "Covered Officers," each of whom is identified in
Exhibit A) for the purpose of promoting:
honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
full, fair, accurate, timely and understandable disclosure in reports and
documents that the Fund files with, or submits to, the Securities and Exchange
Commission ("SEC") and in other public communications made by the Fund;
compliance with applicable laws and governmental rules and regulations;
the prompt internal reporting of violations of the Code to an appropriate
person or persons identified in the Code; and
accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business ethics and
should be sensitive to situations that may give rise to conflicts of interest.
II. Covered Officers Should Handle Ethically Actual or Apparent Conflicts of
Interest
Overview. A "conflict of interest" occurs when a Covered Officer's private
interest interferes with the interests of, or his or her service to, the Fund.
For example, a conflict of interest would arise if a Covered Officer, or a
member of the Covered Officer's family, receives improper personal benefits as a
result of the Covered Officer's position with the Fund.
Certain conflicts of interest arise out of the relationships between Covered
Officers and the Fund and already are subject to conflict of interest provisions
in the Investment Company Act of 1940 (including the regulations thereunder, the
"1940 Act") and the Investment Advisers Act of 1940 (including the regulations
thereunder, the "Investment Advisers Act"). For example, Covered Officers may
not engage in certain transactions (such as the purchase or sale of portfolio
securities or other property) with the Fund because of their status as
"affiliated persons" of the Fund. The compliance programs and procedures of the
Fund and its investment adviser (the "Adviser") and other service providers are
designed to prevent, or identify and correct, violations of many of those
provisions, although they are not designed to provide absolute assurance as to
those matters. This Code does not, and is not intended to, repeat or replace
these programs and procedures, and such conflicts fall outside of the parameters
of this Code. See also Section V of this Code.
Although typically not presenting an opportunity for improper personal benefit,
conflicts may arise from, or as a result of, the contractual relationship
between the Fund and the Adviser, or the Fund and any other service provider to
the Fund of which the Covered Officers are also officers or employees
(including, without limitation, Legg Mason Fund Adviser, Inc. and Claymore
Securities, Inc.). As a result, this Code recognizes that the Covered Officers
will, in the normal course of their duties (whether for the Fund, for the
Adviser, for such other service provider or any combination thereof), be
involved in establishing policies and implementing decisions that will have
different effects on the Adviser or such other service provider, on the one
hand, and the Fund, on the other hand. The participation of the Covered Officers
in such activities is inherent in the contractual relationships between the Fund
and its service providers and is consistent with the performance by the Covered
Officers of their duties as officers of the Fund. Thus, if performed in
conformity with the provisions of the 1940 Act, the Investment Advisers Act,
other applicable law and the Fund's constitutional documents, such activities
will be deemed to have been handled ethically for purposes of this Code. In
addition, it is recognized by the Fund's Board of Trustees ("Board") that the
Covered Officers may also be officers or employees of one or more other
investment companies covered by this or other codes and that such service, by
itself, does not give rise to a conflict of interest.
Other conflicts of interest are covered by the Code, even if such conflicts of
interest are not the subject of provisions of the 1940 Act and the Investment
Advisers Act. The following list provides examples of conflicts of interest
under the Code, but Covered Officers should keep in mind that these examples are
not exhaustive. The overarching principle is that the personal interest of a
Covered Officer should not be placed improperly before the interest of the Fund,
unless the personal interest has been disclosed to and approved by other
officers of the Fund or the Fund's Board or a committee of the Fund's Board that
has no such personal interest.
* * * *
Each Covered Officer must not:
use his or her personal influence or personal relationships improperly to
influence investment decisions or financial reporting by the Fund whereby the
Covered Officer would benefit personally to the detriment of the Fund;
cause the Fund to take action, or fail to take action, for the individual
personal benefit of the Covered Officer rather than the benefit of the Fund; or
retaliate against any other Covered Officer or any employee of the Fund or its
service providers for reports of potential violations that are made in good
faith.
There are some conflict of interest situations that, if material, should always
be approved by the Chief Legal Officer of the Fund. These conflict of interest
situations are listed below:
service on the board of directors or governing board of a publicly traded
entity;
the receipt of any non-nominal gifts from persons or entities who have or are
seeking business relationships with the Fund;
the receipt of any entertainment from any company with which the Fund has
current or prospective business dealings unless such entertainment is
business-related, reasonable in cost, appropriate as to time and place, and not
so frequent as to raise any question of impropriety;
any ownership interest in, or any consulting or employment relationship with,
any entities doing business with the Fund (other than the Adviser or its
affiliates or, to the extent that such interest or relationship is disclosed to
the Board before such officer is elected, any other Fund service provider or its
affiliates). This restriction shall not apply to or otherwise limit the
ownership of publicly traded securities so long as the Covered Person's
ownership does not exceed 2% of the outstanding securities of the relevant
class.
a direct or indirect financial interest in commissions, transaction charges or
spreads paid by the Fund for effecting portfolio transactions or for selling or
redeeming shares other than an interest arising from the Covered Officer's
employment with the Adviser or its affiliates (or, to the extent that such
employment is disclosed to the Board before such officer is elected, with any
other Fund service provider or its affiliates). This restriction shall not apply
to or otherwise limit the ownership of publicly traded securities so long as the
Covered Person's ownership does not exceed 2% of the outstanding securities of
the relevant class.
III. Disclosure and Compliance
each Covered Officer should not knowingly misrepresent, or cause others to
misrepresent, facts about the Fund to others, whether within or outside the
Fund, including to the Fund's Board and auditors, and to governmental regulators
and self-regulatory organizations;
each Covered Officer should, to the extent appropriate within his or her area
of responsibility, consult with other officers and employees of the Fund and the
Adviser and, as applicable, other Fund service providers or with counsel to the
Fund with the goal of promoting full, fair, accurate, timely and understandable
disclosure in the reports and documents the Fund files with, or submits to, the
SEC and in other public communications made by the Fund (which, for sake of
clarity, does not include any sales literature, omitting prospectuses, or
"tombstone" advertising prepared by the Fund's principal underwriter(s)); and
it is the responsibility of each Covered Officer to promote compliance with
the standards and restrictions imposed by applicable laws, rules and
regulations.
IV. Reporting and Accountability
Each Covered Officer must:
upon adoption of the Code (or thereafter as applicable, upon becoming a
Covered Officer), affirm in writing to the Fund that he or she has received,
read and understands the Code;
provide full and fair responses to all questions asked in the Fund's periodic
Trustee and Officer Questionnaire as well as with respect to any supplemental
request for information; and
notify the Chief Legal Officer of the Fund promptly if he or she knows of any
material violation of this Code.
The Chief Legal Officer of the Fund is responsible for applying this Code to
specific situations in which questions are presented under it and has the
authority to interpret this Code in any particular situation. However, any
approvals or waivers sought by the Chief Legal Officer, other than those
expressly contemplated herein, will be considered by the audit committee (the
"Committee").
The Fund will follow these procedures in investigating and enforcing this Code:
the Chief Legal Officer will take all appropriate action to investigate any
potential material violations reported to him, which actions may include the use
of internal or external counsel, accountants or other personnel;
if, after such investigation, the Chief Legal Officer believes that no
material violation has occurred, the Chief Legal Officer is not required to take
any further action;
any matter that the Chief Legal Officer believes is a material violation will be
reported to the Committee;
if the Committee concurs that a material violation has occurred, it will
inform and make a recommendation to the Board, which will consider appropriate
action, which may include review of, and appropriate modifications to,
applicable policies and procedures; notification to appropriate personnel of the
Adviser or other applicable service provider or its board; or a recommendation
to dismiss the Covered Officer;
the Committee will be authorized to grant waivers, as it deems appropriate;
any changes to or waivers of this Code will, to the extent required, be
disclosed as provided by SEC rules.
V. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Fund for purposes of
Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to
registered investment companies thereunder. Insofar as other policies or
procedures of the Fund or the Adviser or other Fund service providers govern or
purport to govern the behavior or activities of the Covered Officers who are
subject to this Code, they are superseded by this Code to the extent that they
conflict with the provisions of this Code. The Fund's and its Adviser's and
service providers' codes of ethics under Rule 17j-1 under the 1940 Act and the
Adviser's and other service providers' more detailed compliance policies and
procedures are separate requirements applying to the Covered Officers and
others, and are not part of this Code.
VI. Amendments
Any amendments to this Code, other than amendments to Exhibit A, must be
approved or ratified by a majority vote of the Board.
VII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will be
considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than to the Board of Trustees of the Fund or the board
or counsel for any other registered investment company for which a Covered
Person serves in a similar capacity or as otherwise authorized by the Board.
VIII. Internal Use
The Code is intended solely for the internal use by the Fund and does not
constitute an admission, by or on behalf of the Fund, as to any fact,
circumstance or legal conclusion.
Exhibit A
Persons Covered by this Code of Ethics
Principal Executive Officer Principal Financial Principal Accounting
Officer Officer
Randolph L. Kohn and any Marie K. Karpinski and Marie K. Karpinski and
successor President or any successor Treasurer any successor Treasurer
Chief Executive Officer of or Principal Financial or Principal Financial
the Fund and Accounting Officer and Accounting Officer