AMERICAN EXPRESS FUNDS
PREFERRED MASTER TRUST GROUP
(THE AXP FUNDS)
CODE OF ETHICS
FOR
PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS
I. Purpose of the Code; Covered Officers
This code of ethics ("Code") for the AXP Funds (collectively, "Funds," and
each, "Fund") applies to the Funds' Principal Executive Officer and Principal
Financial Officer (the "Covered Officers," each of whom is identified in Exhibit
A) for the purpose of promoting, in connection with his or her duties:
o honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o full, fair, accurate, timely, and understandable disclosure in reports
and documents that a Fund files with, or submits to, the Securities
and Exchange Commission ("SEC") and in other public communications
made by the Funds;
o compliance with laws and governmental rules and regulations applicable
to the conduct of the Funds' business and their financial reporting;
o the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
o 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 actual as
well as apparent conflicts of interest.
II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of
Interest
A "conflict of interest" occurs when a Covered Officer's private interest
interferes with the interests of, or his or her service to, the Funds. For
example, a conflict of interest would arise if a Covered Officer, or a member of
his or her family, receives improper personal benefits as a result of his or her
position with the Funds.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Funds and already are subject to conflict of interest
provisions in the Investment Company Act of 1940 ("Investment Company Act") and
the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example,
Covered Officers may not individually engage in certain transactions, such as
the purchase or sale of securities or other property, with the Funds because of
their status as "affiliated persons" of the Funds. The compliance programs and
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procedures of the Funds and of American Express Financial Corporation ("AEFC"),
the investment adviser to the Funds, are designed to prevent, or identify and
correct, violations of these provisions. 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.
Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Funds and AEFC, of which the Covered Officers are also officers or
employees. As a result, this Code recognizes that the Covered Officers will, in
the normal course of their duties, whether formally for the Funds or for AEFC,
or for both, be involved in establishing policies and implementing decisions
that will have different effects on AEFC and the Funds. The participation of the
Covered Officers in such activities is inherent in the contractual relationship
between the Funds and AEFC and is consistent with the performance by the Covered
Officers of their duties as officers of the Funds. Thus, if performed in
conformity with the provisions of the Investment Company Act and the Investment
Advisers Act, such activities will be deemed to have been handled ethically.
Other conflicts of interest are covered by the Code, even if such conflicts
of interest are not subject to provisions in the Investment Company 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 Funds.
Each Covered Officer must:
o not use his or her personal influence or personal relationships
improperly to influence investment decisions or financial reporting by
the Funds whereby the Covered Officer would benefit personally to the
detriment of the Funds;
o not cause the Funds to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the
benefit of the Funds;
o not use material non-public knowledge of portfolio transactions made
or contemplated for the Company to trade personally or cause others to
trade personally in contemplation of the market effect of such
transactions;
III. Disclosure and Compliance
o Each Covered Officer should familiarize himself or herself with the
disclosure requirements generally applicable to the Funds;
o Each Covered Officer should not knowingly misrepresent, or cause
others to misrepresent, facts about the Funds to others, whether
within or outside the Funds, including to the Funds' directors and
auditors, and to governmental regulators and self-regulatory
organizations;
o Each Covered Officer should, to the extent appropriate within his or
her area of responsibility, consult with other officers and employees
of the Funds and AEFC with the goal of promoting full, fair, accurate,
timely, and understandable disclosure in the reports
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and documents the Funds file with, or submit to, the SEC and in other
public communications made by the Funds; and
o 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:
o upon adoption of the Code (or thereafter as applicable, upon becoming
a Covered Officer), affirm in writing to the Board that he or she has
received, read, and understands the Code;
o annually thereafter affirm to the Board that he or she has complied
with the requirements of the Code;
o not retaliate against any other Covered Officer or any employee of
AEFC or its affiliated persons for reports of potential violations
that are made in good faith; and
o notify the general counsel of the Funds ("Funds General Counsel")
promptly if he or she knows of any violation of this Code. Failure to
do so is itself a violation of this Code.
The Funds General Counsel 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 a Covered Officers will be considered by the Board
Effectiveness Committees (the "Committees").
The Funds will follow these procedures in investigating and enforcing this
Code:
o The Funds General Counsel will take all appropriate action to
investigate any potential violations reported to him;
o If, after such investigation, the Funds General Counsel believes that
no violation has occurred, he or she is not required to take any
further action;
o Any matter that the Funds General Counsel believes is a violation will
be reported to the Committees;
o If the Committees concur that a violation has occurred, they will
inform the Board, and the Board will consider appropriate action,
which may include review of, and appropriate modifications to,
applicable policies and procedures; notification to appropriate
personnel of the investment adviser or its board; or a recommendation
to dismiss the Covered Officer;
o The Committees will be responsible for granting waivers, as
appropriate; and
o 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 Funds 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 Funds, AEFC, or any
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affiliate of AEFC govern or purport to govern the activities of the Covered
Officers, they are superseded by this Code to the extent that they overlap or
conflict with the provisions of this Code. AEFC's code of ethics under Rule
17j-1 under the Investment Company Act is a separate requirement applying to the
Covered Officers and others, and is 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 each Fund's Board, including a
majority of its independent directors.
Date: July, 2003
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Exhibit A
Persons Covered by this Code of Ethics
Paula R. Meyer
President
Jeffrey P. Fox
Treasurer
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