EXHIBIT r
The Mallard Fund, Inc.
(the "Fund")
Amended and Restated Code of Ethics (the "Code") Adopted Pursuant
to Rule 17j-1 Under the Investment Company Act of 1940
March 31, 2000
A. PURPOSES
1. The Code has been adopted by the Board of Directors of the Fund in
accordance with Rule 17j-1(c) under the Investment Company Act of 1940
(the "1940 Act") and in accordance with the following general principles:
a. THE DUTY AT ALL TIMES TO PLACE THE INTERESTS OF SHAREHOLDERS
FIRST.
Access Persons, as that term is defined herein, should
scrupulously avoid serving their own personal interests ahead
of shareholders' interests in any decision relating to their
personal investments.
b. THE REQUIREMENT THAT ALL PERSONAL SECURITIES TRANSACTIONS BE
CONDUCTED CONSISTENT WITH THE CODE AND IN SUCH A MANNER AS TO AVOID
ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST OR ANY ABUSE OF AN
INDIVIDUAL'S POSITION OF TRUST AND RESPONSIBILITY.
Access Persons must not only seek to achieve technical
compliance with the Code but should strive to abide by its
spirit and the principles articulated herein.
c. THE FUNDAMENTAL STANDARD THAT INVESTMENT COMPANY PERSONNEL
SHOULD NOT TAKE INAPPROPRIATE ADVANTAGE OF THEIR POSITIONS.
Access Persons must avoid any situation that might compromise,
or call into question, their exercise of fully independent
judgment in the interest of shareholders.
2. Rule 17j-1 under the 1940 Act generally proscribes fraudulent or
manipulative practices with respect to purchases or sales of securities
held or to be acquired by investment companies, if effected by Access
Persons of such companies. The purpose of the Code is to establish
procedures consistent with the 1940 Act and Rule 17j-1 to give effect to
the following general prohibitions as set forth in Rule 17j-1:
a. It shall be unlawful for any affiliated person of or principal
underwriter for a registered investment company, or any affiliated
person of an investment adviser of or principal underwriter for a
registered investment company in connection with the purchase or
sale, directly or indirectly, by such person of a security held or
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to be acquired, as defined in this section, by such registered
investment company.
i. To employ any device, scheme or artifice to defraud such
registered investment company;
ii. To make to such registered investment company any untrue
statement of a material fact or omit to state to such
registered investment company a material fact necessary in
order to make the statements made, in light of the
circumstances under which they are made, not misleading;
iii. To engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any
such registered investment company; or
iv. To engage in any manipulative practice with respect to
such registered investment company.
B. DEFINITIONS
1. "Access Person" means any director, officer, or advisory person of the
Fund.
2. "Advisory Person" means (a) any employee of the Fund (or of any company
in a control relationship to the Fund) who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by the Fund, or
whose functions relate to the making of any recommendations with respect
to such purchases or sales; and (b) any natural person in a control
relationship to the Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale of a
security.
3. "Beneficial Ownership" will be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934
("Exchange Act") in determining whether a person the beneficial owner of a
security for purposes of Section 16 of the Exchange Act and the rules and
regulations thereunder. Access Persons should contact the Designated Fund
Officer regarding any questions they have concerning what constitutes
Beneficial Ownership. See Exhibit A.
4. "Control" will have the same meaning as that set forth in Section
2(a)(9) of the Investment Company Act of 1940 ("1940 Act").
5. "Disinterested Director" means a director of the Fund who is not an
"interested director" of the Fund within the meaning of Section 2(a)(19)
of the 1940 Act.
6. "Purchase or sale of a security" includes, inter alia, the writing of
an option to purchase or sell a security.
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7. "Security" will have the same meaning as set forth in Section 2(a)(36)
of the 1940 Act, except that it shall not include direct obligations of
the Government of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper, high quality short-term debt
instruments, including repurchase agreements, and shares issued by
registered open-end investment companies. Any questions as to whether a
particular investment constitutes a "Security" should be referred to the
Designated Fund Officer.
8. "Designated Fund Officer" will mean the Fund officer(s) designated by
the Board of Directors or the President of the Fund as being responsible
for receiving reports or notices and performing such other duties as
required by this Code of Ethics. The Fund shall maintain a record of who
currently serves and, within the last five years, has served as the
Designated Fund Officer.
9. "Investment Personnel" and "Investment Person" mean (1) employees of
the Fund or investment adviser (or of any company in a control
relationship to the Fund or investment adviser) who, in connection with
his or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the Fund,
or (2) any natural person who controls the Fund or investment adviser and
who obtains information concerning recommendations made to the Fund
regarding the purchase or sale of securities by the Fund.
10. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before
the registration, was not subject to the reporting requirements of
Sections 13 or 15(d) of the Securities Exchange Act of 1934.
11. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6)
or pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of
1933.
C. PROHIBITED TRANSACTIONS
1. PURCHASES AND SALES OF A SECURITY. No Access Person of the Fund shall
purchase or sell, directly or indirectly, any Security in which he or she
has, or by reason of such transaction acquires, any direct or indirect
Beneficial Ownership and which, to his or her actual knowledge at the time
of such purchase or sale, is being purchased or sold by the Fund, or which
any Advisory Person of the Fund is actively considering recommending for
purchase or sale. These prohibitions shall continue until the day after
the day on which the Fund determines not to enter into or completes such
recommended purchase or sale. These prohibitions also shall apply to any
purchase or sale by any Access Person of any convertible security, option,
or warrant or any security of a different class of any issuer whose
underlying or other class of securities are being actively considered for
recommendation to, or are currently being purchased or sold by the Fund.
Investment Personnel may not acquire any direct or indirect Beneficial
Ownership of any securities in an Initial Public Offering or in a Limited
Offering.
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2. UNDUE INFLUENCE. No Access Person who owns a particular Security shall
attempt to cause the Fund to purchase, sell or hold the same security in a
manner calculated to create a personal benefit to the Access Person. An
Access Person who participates in an investment decision concerning a
particular Security should disclose to those persons with authority to
make investment decisions for the Fund or to the Designated Fund Officer
the nature of his interest in that Security where such decision could
create a material benefit to the Access Person.
D. EXEMPT PURCHASES AND SALES
The prohibitions of Section C.1. shall not apply to:
1. Purchases or sales effected in any account over which the Access Person
has no direct or indirect influence or control.
2. Purchases or sales of Securities which are not eligible for purchase or
sale by the Fund and are not connected to Securities that the Fund holds
or intends or proposes to acquire.
3. Purchases or sales which are non-volitional on the part of either the
Access Person or the Fund.
4. Purchases which are part of an automatic dividend reinvestment plan.
5. Purchases effected upon the exercise of rights issued by the issuer pro
rata to all holders of a class of its Securities, to the extent that such
rights were acquired from such issuer, and sales of such rights so
acquired.
E. PRIOR CLEARANCE OF TRANSACTIONS
1. Notwithstanding the prohibitions of Section C.1., an Access Person may
effect a purchase or sale of a Security in which he or she has, or by
reason of such transaction acquires, a direct or beneficial interest in a
Security, if he or she obtains prior written clearance from the Designated
Fund Officer or the Board of Directors. In addition, any Investment
Personnel may acquire any direct or indirect Beneficial Ownership in
securities in an Initial Public Offering or Limited Offering, if the
Investment Person obtains prior written clearance from the Designated Fund
Officer or the Board of Directors. The Board of Directors shall adopt
procedures for obtaining prior clearance of transactions. Such procedures
shall provide that prior clearance must be given in writing and shall be
based upon a determination by the Designated Fund Officer or the Board of
Directors (in consultation with such other persons as may be necessary)
that (1) the purchase or sale will not materially affect the liquidity of
the market for the Security or its price, or is clearly not related
economically to the Securities to be purchased, sold or held by the Fund,
and (2) is otherwise consistent with Rule 17j-1 under the 1940 Act. Any
Access Person who effects a purchase or sale after obtaining such prior
written clearance shall be deemed not to be in violation of Section C.1.
by reason of such purchase or sale.
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F. REPORTING
1. ACCESS PERSONS (OTHER THAN DISINTERESTED DIRECTORS). Every Access
Person of the Fund other than Disinterested Directors shall report to the
Designated Fund Officer the information described in Section F.3. below
with respect to transactions and holdings in any Security in which such
Access Person has or acquires any direct or indirect Beneficial Ownership
in the Security, including, but not limited to, transactions regarding
which clearance has been obtained pursuant to Section E. above; provided,
however, that an Access Person shall not be required to make a report with
respect to purchases and sales effected in any account over which the
Access Person has no direct or indirect influence or control.
2. DISINTERESTED DIRECTORS. A Disinterested Director of the Fund need only
report a transaction in a quarterly transaction report if such director,
at the time of that transaction, knew or, in the ordinary course of
fulfilling his or her official duties as a director of the Fund, should
have known that, during the 15-day period immediately preceding or after
the date of the transaction by the director, such security was or is going
to be purchased or sold by the Fund or such purchase or sale was or is
going to be considered by the Fund. A Disinterested Director is not
required to file an initial or annual holdings report.
3. FORMS OF REPORT.
a. Initial Holdings Report. An initial holdings report shall be made
not later than 10 days after a person becomes an Access Person, and
shall contain the following information:
i. the title, number of shares and principal amount of each
Security in which the Access Person had any direct or indirect
Beneficial Ownership when the person became an Access Person;
ii. the name of any broker, dealer or bank with whom the
Access Person maintained an account in which any securities
were held for the direct or indirect benefit of the Access
Person as of the date the person became an Access Person; and
iii. the date that the report is submitted by the Access
Person.
b. Quarterly Transaction Report. Every quarterly transaction report
shall be made not later than 10-days after the end of the calendar
quarter in which the transaction to which the report relates was
effected, and shall contain the following information with respect
to any transaction during the quarter in a Security in which the
Access Person had any direct or indirect Beneficial Ownership:
i. the date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares, and
the principal amount of each Security involved;
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ii. the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
iii. the price of the Security at which the transaction was
effected; and
iv. the name of the broker, dealer or bank with or through
whom the transaction was effected.
The report also must contain the following information with respect
to any account established by the Access Person in which any
securities were held during the quarter for the direct or indirect
benefit of the Access Person: (i) the name of the broker, dealer or
bank with whom the Access Person established the account; (ii) the
date the account was established; and (iii) the date that the report
is submitted by the Access Person.
c. Annual Holdings Report. By April 30th of each year, an annual
holdings report shall be made and shall contain the following
information (which information must be current as of a date not more
than 30 days before the report is submitted):
i. the title, number of shares and principal amount of each
Security in which the Access Person had any direct or indirect
Beneficial Ownership;
ii. the name of any broker, dealer or bank with whom the
Access Person maintains an account in which any securities are
held for the direct or indirect benefit of the Access Person;
and
iii. the date that the report is submitted by the Access
Person.
d. All reports shall be made on the relevant attached forms. Copies
of confirmation statements or monthly statements of account may be
attached to a signed report in lieu of setting forth the information
otherwise required. An Access Person also may direct his or her
broker, dealer or bank to send to the Designated Fund Officer
duplicate copies of trade confirmations and account statements for
each account in which the Access Person has a Beneficial Ownership,
so long as the information in these confirmations and account
statements provides the information otherwise required.
e. In connection with each report submitted pursuant to the Code,
the person submitting such report shall certify to one of the
following statements: (1) you did not purchase or sell any
securities of closed-end or private investment companies; (2)
although you purchased or sold securities of closed-end or private
investment companies, at the time you had no actual knowledge of the
Fund purchasing or selling the same security; or (3) although you
purchased or sold securities of closed-end or private investment
companies, you did (or did not) obtain pre-clearance of such
transactions from the Fund's Board of Directors.
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4. DISCLAIMER OF BENEFICIAL OWNERSHIP. Any report pursuant to this Section
F. shall not be construed as an admission by the person making such report
that he or she has any direct or indirect Beneficial Ownership in the
Security to which the report relates.
5. REPORTING OBLIGATIONS. The transaction and holdings reports are
designed to comply with the requirements of the 1940 Act and rules
thereunder. Once informed by the Designated Fund Officer of the duty to
submit reports under this Code, an Access Person has a continuing
obligation to file such reports in a timely manner until such time as
notified otherwise. Information supplied on the reports is available for
inspection by the Securities and Exchange Commission at any time during
the five-year period following the end of the fiscal year in which each
report is made.
G. VIOLATIONS AND SANCTIONS
1. The Designated Fund Officer is responsible for investigating any
suspected violation of the Code pursuant to procedures adopted by the
Board of Directors.
2. Upon determining that there has been a violation of this Code of
Ethics, the President or the Board of Directors of the Fund may impose
such sanctions as deemed appropriate including, among other things, a
letter of censure or suspension or termination of the employment of the
violator.
H. BOARD APPROVAL
1. The Board (including a majority of disinterested directors) shall
approve any material change to the Code within six months of such a
change. Prior to approving any such change, the Board must receive a
certification from the Fund that it has adopted procedures reasonably
necessary to prevent Access Persons from violating the Code.
2. The Board (including a majority of disinterested directors) shall
approve any investment adviser's code of ethics, and any material changes
thereto within six months of being advised of such a change. Prior to
approving an investment adviser's code of ethics or any material
amendments thereto, the Board must receive a certification from the
adviser that it has adopted procedures reasonably necessary to prevent
Access Persons from violating the code.
I. APPLICABILITY OF OTHER CODES OF ETHICS
1. To the extent that the Board of Directors of the Fund determines that
any investment adviser's code of ethics satisfies applicable legal
standards, Access Persons, Advisory Persons, and Investment Personnel who
are personnel of the investment adviser shall be governed by the adviser's
code of ethics in lieu of this Code.
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EXHIBIT A
DEFINITION OF BENEFICIAL OWNERSHIP
The term "beneficial ownership" of securities would include not only
ownership of securities held by an access person for his or her own benefit,
whether in bearer form or registered in his or her own name or otherwise, but
also ownership of securities held for his or her benefit by others (regardless
of whether or how they are registered) such as custodians, brokers, executors,
administrators, or trustees (including trusts in which he or she has only a
remainder interest), and securities held for his or her account but pledged, or
securities owned by a partnership which he or she should regard as a personal
holding corporation. Correspondingly, this term would exclude securities held by
an access person for the benefit of someone else.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which an access person is a legatee or beneficiary
unless there is a specific legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as
"beneficially" owned by an access person where such person enjoys "benefits
substantially equivalent to ownership." The SEC has said that although the final
determination of beneficial ownership is a question to be determined in the
light of the facts of the particular case, generally a person is regarded as the
beneficial owner of securities held in the name of his or her spouse and their
minor children. Absent special circumstances such relationship ordinarily
results in such person obtaining benefits substantially equivalent to ownership,
e.g., application of the income derived from such securities to maintain a
common home, to meet expenses which such person otherwise would meet from other
sources, or the ability to exercise a controlling influence over the purchase,
sale or voting of such securities.
An access person also may be regarded as the beneficial owner of
securities held in the name of another person, if by reason of any contact,
understanding, relationship, agreement or other arrangement, he obtains
therefrom benefits substantially equivalent to those of ownership. Moreover, the
fact that the holder is a relative or relative of a spouse and sharing the same
home as an access person may in itself indicate that the access person would
obtain benefits substantially equivalent to those of ownership from securities
held in the name of such relative. Thus, absent countervailing facts, it is
expected that securities held by relatives who share the same home as an access
person will be treated as being beneficially owned by the access person.
An access person also is regarded as the beneficial owner of securities
held in the name of a spouse, minor children or other person, even though he
does not obtain therefrom the aforementioned benefits of ownership, if he can
vest or revest title in himself at once or at some future time.
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