Exhibit 16(b)
ROBERT FLEMING, INC.
CODE OF ETHICS
While affirming its confidence in the integrity and good faith of all of
its employees, officers and directors, Robert Fleming, Inc. ("RFI") recognizes
that certain of its personnel have or may have knowledge of present or future
portfolio transactions and, in certain instances, the power to influence
portfolio transactions made by or for an advisory client, and that if such
individuals engage in personal transactions in securities that are eligible for
investment by a client, these individuals could be in a position where their
personal interests may conflict with the interests of the client.
In view of the foregoing and of the provisions of Rule 17j-1 under the
Investment Company Act of 1940 ("1940 Act") and Rule 204-2 under the Investment
Advisers Act of 1940, RFI has determined to adopt this Code of Ethics ("Code")
to specify and prohibit certain types of transactions deemed to create actual
conflicts of interest, the potential for conflicts, or the appearance of
conflicts, and to establish reporting requirements and enforcement procedures.
This Code is intended to be generally consistent with RFI's Investment
Management Compliance Manual. All persons covered by this Code are expected to
be familiar, and to comply, with both the Code and the Manual.
VIOLATIONS OF THIS CODE MAY RESULT IN LAW ENFORCEMENT ACTION AGAINST RFI
AND ITS EMPLOYEES BY THE SECURITIES AND EXCHANGE COMMISSION ("SEC") OR STATE
REGULATORS AND/OR DISCIPLINARY ACTION BY RFI AGAINST ANY EMPLOYEE INVOLVED IN
THE VIOLATION, INCLUDING TERMINATION OF EMPLOYMENT. ALL EMPLOYEES SHOULD READ
THESE REQUIREMENTS CAREFULLY AND BE SURE THAT THEY ARE UNDERSTOOD. ANY QUESTIONS
CONCERNING EITHER DOCUMENT SHOULD BE REFERRED TO THE COMPLIANCE OFFICER.
I. STATEMENT OF GENERAL PRINCIPLES
In recognition of the trust and confidence placed in RFI by its advisory
clients and to give effect to RFI's belief that its operations should be
directed to the benefit of all of its advisory clients, including the Funds, RFI
hereby adopts the following general principles to guide the actions of its
Access Persons. The Code will apply primarily to employees who are employed in
one of the following RFI departments: Fleming Asset Management ("FAM USA") and
Risk Arbitrage ("Arbitrage"). These departments are collectively referred to in
this Code as the Investment Management Group (or "IMG"):
A. The interests of RFI's advisory clients, including the Funds, are
paramount. All personnel must conduct themselves and their operations
to give maximum effect to this tenet by assiduously placing the
clients' interests before their own.
B. All personal securities transactions by Access Persons must be
accomplished so as to avoid even the appearance of a conflict of
interest on the part of such person with the interests of any advisory
client.
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C. All personnel must avoid actions or activities that allow (or appear
to allow) a person to profit or benefit from his or her position with
respect to a client, or that otherwise bring into question the
person's independence or judgment.
D. All personnel must carefully avoid communicating information
concerning the investment decisions made for clients, or the execution
of such decisions, to officers and employees of the RFI who work in
departments other than IMG, or to officers or employees of RFI's
affiliates.
E. The personal investing activities of all personnel must be conducted
in a manner to avoid actual or potential conflicts of interest with
RFI's clients and RFI itself. Employees may not use their positions
with RFI or any investment opportunities they learn of because of
their positions with RFI to the detriment of RFI's clients or RFI.
II. DEFINITIONS
A. "Access Person" shall mean any director or officer of RFI. "Access
Person" also means any employee in the RFI who: (i) in connection with
the management of any advisory client, recommends investments to such
advisory client, participates in the determination of which
recommendations are to be made, or whose principal functions or duties
relate to such determinations; or (ii) in connection with his or her
duties, obtains any information concerning securities recommendations
being made by RFI to an advisory client. The term also includes any of
the following persons who obtain information about securities
recommendations made by RFI before the effective dissemination of the
recommendations (or of information about the recommendations): (i) any
person in a control relationship to RFI; (ii) any affiliated person of
a controlling person; and (iii) any affiliated person of that
affiliate. The Compliance Officer and IMG Department Managers may
determine that additional persons, including persons not employed by
IMG, are to be treated as Access Persons based on their access to
information concerning IMG's investment recommendations to a client.
B. "Beneficial ownership" of a security is to be determined in the same
manner as it is for purposes of Section 16 of the Securities Exchange
Act of 1934 and Rule 16a-1(a)(2) thereunder. This means that a person
should generally consider himself or herself the beneficial owner of
any securities in which he or she has a direct or indirect pecuniary
interest. In addition, a person should consider himself or herself the
beneficial owner of securities held by (i) his or her spouse or minor
children, (ii) a relative who shares his or her home, or (iii) other
persons by reason of any contract, arrangement, understanding, or
relationship that provides him or her with sole or shared voting or
investment power over the securities held by such person.
C. The "Compliance Officer" is Larry A. Kimmel.
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D. "Control" shall have 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 a company, unless such power is solely the result of an
official position with such company. Ownership of more than 25% of a
company's outstanding voting securities is presumed to give the holder
of such securities control over the company. This is a rebuttable
presumption, and it may be countered by the facts and circumstances of
a given situation.
E. "Fund" means any investment company registered under the 1940 Act for
which RFI acts as investment adviser or sub-adviser.
F. "High quality short-term debt instrument" means any instrument that
has a maturity at issuance of less than 366 days and that is rated in
one of the two highest rating categories by a nationally recognized
statistical rating organization.
G. The "IMG Department Managers" are Jonathan Simon (FAM USA Large and
Mid Cap), Christopher Jones (FAM USA Small Cap) and Arthur Levy
(Arbitrage).
H. "Investment Personnel" means: (i) any employee of RFI (or of any
company in a control relationship to RFI) 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 an
advisory client; and (ii) any natural person who controls RFI and who
obtains information concerning recommendations made to a client
regarding the purchase or sale of securities by the client.
I. "IPO" (i.e., initial public offering) means an offering of securities
registered under the Securities Act of 1933, the issuer of which,
immediately before registration, was not subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934.
J. "Limited offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2), Section
4(6), Rule 504, Rule 505 or Rule 506 (e.g., private placements).
K. A "personal securities account" means any account in which any
securities are held for the person's direct or indirect benefit.
L. "Purchase or sale of a Security" includes, among other things, the
writing of an option to purchase or sell a Security.
M. "Security" shall have the same meaning as that set forth in Section
2(a)(36) of the 1940 Act, except that it shall not include direct
obligations of the U.S. Government; bankers' acceptances, bank
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certificates of deposit, commercial paper, high quality short-term
debt instruments, including repurchase agreements; and shares of
registered open-end mutual funds.
N. A "Security held or to be acquired" by a client means: (i) any
Security which, within the most recent 15 days, (a) is or has been
held by a client or (b) is being or has been considered by RFI for
purchase by a client; and (ii) any option to purchase or sell, and any
security convertible into or exchangeable for, a Security described in
(i) of this definition.
O. A security is "being considered for purchase" when a security is
identified as such by a particular investment team.
P. A Security is "being purchased or sold" by an advisory client from the
time when a recommendation has been communicated to the person who
places the buy and sell orders for a client until the time when such
program has been fully completed or terminated.
III. GENERAL PROHIBITION AGAINST FRAUD, DECEIT AND MANIPULATION
No Access Person shall, in connection with the purchase or sale, directly
or indirectly, by such person of a Security held or to be acquired by any
advisory client:
A. Employ any device, scheme, or artifice to defraud such client;
B. Make to such client any untrue statement of a material fact or omit to
state to such client a material fact necessary in order to make the
statements made, in light of the circumstances under which they are
made, not misleading;
C. Engage in any act, practice or course of business that would operate
as a fraud or deceit upon such client; or
D. Engage in any manipulative practice with respect to such client.
IV. GENERAL PROHIBITIONS REGARDING PERSONAL SECURITIES TRANSACTIONS
The following prohibitions apply to each Access Person. Spouses of Access
Persons may be subject to conflicting duties or requirements imposed by their
employers or clients. To the extent that spouses' duties to their employers or
clients conflict with the requirements of this Code, spouses should follow the
former. Access Persons whose spouses are subject to such conflicts are expected
to be aware of this potential conflict and to use discretion in discussing
investment activities with their spouses.
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A. FRONT-RUNNING OR SCALPING. Access Persons are not permitted to
"front-run" any securities transaction of a client or RFI, or to
"scalp" by making securities recommendations for clients with the
intent of personally profiting from personal holdings of or
transactions in the same or related securities.
B. TRADING PARALLEL TO OR AGAINST A CLIENT. Access Persons are prohibited
from trading contemporaneously in the same or related securities,
including options and futures contracts, as any client of RFI, either
parallel to the transaction being effected for the client or against
the trade being made or recommended for the client.
C. SHORT SALES OF A SECURITY HELD BY A CLIENT. No Access Person may sell
short any security held in a client's account managed by RFI.
D. USE OF CONFIDENTIAL OR MATERIAL, NON-PUBLIC INFORMATION. An Access
Person may not buy or sell any sell any security if the Access Person
has material, non-public information about the security or the market
for the security obtained in the course of employment with RFI or
otherwise, without first reporting the information to the Compliance
Officer and obtaining the Compliance Officer's prior approval for the
trade. The Compliance Manual includes additional restrictions and
prohibitions regarding confidential and material non-public
information.
V. PROHIBITED PURCHASES AND SALES
A. Subject to Sections VI(C) and VI(D) of this Code, no Access Person may
purchase or sell, directly or indirectly, any Security in which he or
she had or by reason of such transaction acquires any Beneficial
Ownership, within 24 hours (7 days, in the case of Investment
Personnel) before or after the time that the same (or a related)
Security is being purchased or sold by any Fund or other advisory
client. Any profits realized on trades within these proscribed periods
will be disgorged.
1. Exceptions to paragraph A above are permitted under the following
circumstances:
(a) If the client activity in a particular Security is due to a
client-directed inflow and/or withdrawal of funds and there
is no change of weighting in the subject security in the
client's portfolio.
(b) If an Investment Person has liquidated a particular security
from a client's portfolio, then the Investment Person may
also sell that security on the next business day after the
liquidation has been completed.
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(c) If approved by the Compliance Officer (or his designee), an
exception may be granted on a case-by-case basis when no
abuse is involved and the equities of the situation strongly
support an exception to the rule.
2. Access Persons are subject to the blackout periods set forth in
paragraph A above, only with respect to client account activity
which occurs on behalf of the department, either FAM USA or
Arbitrage, for which they are employed. For example, a personal
trade effected by an Access Person of FAM USA that occurs two
calendar days before or after a client trade on behalf of an
Arbitrage account would not be deemed a violation of the
provisions set forth in paragraph A above.
B. No officer, director or employer of RFI may acquire any securities
that are publicly traded in the United States as part of an IPO.
Securities traded publicly outside the United States may be acquired
in an IPO with prior written approval, as provided in Section VI(A).
However, such approval generally will not be granted if the security
in question is eligible for investment by any Fund or other advisory
client.
C. No Access Person shall purchase any security offered in a limited
offering without prior written approval, as provided in Section VI(A).
Such approval generally will not be granted if the security in
question is eligible for investment by any Fund or other advisory
client, and the client has the ability to purchase the security.
D. An Access Person is required to hold all securities for at least sixty
(60) calendar days from purchase before selling the security. For
example, an Access Person who purchases an option on a security may
not exercise the option until at least sixty (60) calendar days have
passed. Profit due to any such short-term trades will be disgorged.
Exceptions to this policy are permitted only with the prior approval
of the Compliance Officer and the individual's Department Manager, and
then only in the case of emergency or extraordinary circumstances.
VI. PRE-APPROVAL OF TRANSACTIONS
A. Except as provided in Section VI(C), each Access Person must obtain
prior approval for each proposed transaction in a Security. In
addition, persons seeking approval under Section V(B) or (C) above
shall do so in accordance with this paragraph A. Each Access Person
should obtain clearance from the appropriate investment team and the
respective trading desk, and then seek approval from the person listed
below as his or her primary supervisor. If that person is unavailable,
the Access Person then must obtain approval from one of the
supervisor's alternates. No transaction in any Security shall be
effected without the prior written approval of the primary or
alternate supervisor.
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In determining whether to grant approval, the primary and alternate supervisors
shall refer to Section VI(D), below.
Primary Alternate
Supervisor Supervisors Access Persons
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Jonathan Simon Christopher Jones FAM USA Large and Mid Cap managers
Arthur Levy and analysts, and traders
Larry Kimmel
Sharon Devlin
Christopher Jones Jonathan Simon FAM USA Small Cap managers, analysts,
Arthur Levy traders and marketing staff
Larry Kimmel
Sharon Devlin
Arthur Levy Larry Kimmel All other IMG staff, including Jonathan
Sharon Devlin Simon and Christopher Jones
Larry Kimmel Sharon Devlin Arthur Levy
B. In determining whether to grant approval for the purchase of a
security offered in a limited offering or a security traded publicly
outside the United States in an IPO, the primary or alternate
supervisor shall take into account, among other factors, whether the
investment opportunity should be reserved for a Fund or other advisory
client, whether the opportunity is being offered to the person by
virtue of his or her position with RFI, and whether it is possible for
the client to purchase the security.
C. The pre-approval requirements of Section VI(A) shall not apply to the
following transactions:
1. Purchases or sales over which the Access Person has no direct or
indirect influence or control.
2. Purchases or sales that are non-volitional on the part of the
Access Person, including purchases or sales upon exercise of puts
or calls written by the Access Person and sales from a margin
account pursuant to a bona fide margin call.
3. Purchases that are part of an automatic dividend reinvestment
plan.
4. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
NOTE: THESE EXCEPTIONS TO THE PRE-APPROVAL REQUIREMENT OF SECTION
VI(A) SHALL NOT APPLY TO REQUESTS FOR APPROVAL TO PURCHASE OR ACQUIRE
A SECURITY IN A LIMITED OFFERING OR THAT IS TRADED PUBLICLY OUTSIDE
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THE UNITED STATES IN AN IPO IN ACCORDANCE WITH SECTION V(B) OR (C)
ABOVE.
D. The following transactions generally shall be approved by the
Compliance Officer:
1. Transactions which appear upon reasonable inquiry and
investigation to present no reasonable likelihood of harm to any
advisory client, including any Fund, and which are otherwise in
accordance with Rule l7j-l. Such transactions would normally
include purchases or sales of up to 1,000 shares of a Security
that is being considered for purchase or sale by a Fund or other
client (but not then being purchased or sold) if the issuer has a
market capitalization of over $1 billion.
2. Purchases or sales of Securities that are not eligible for
purchase or sale by any advisory client, including any Fund, as
determined by reference to the applicable laws, rules or
regulations, the investment objectives and policies and
investment restrictions of the Fund or other client and any
undertakings made to regulatory authorities.
3. Purchases or sales of Securities that the client is financially
or otherwise unable to purchase or sell.
4. Transactions that the officers of the IMG, as a group and after
consideration of all the facts and circumstances, determine to be
in accordance with Section III and to present no reasonable
likelihood of harm to a Fund or other client.
VII. ADDITIONAL RESTRICTIONS AND REQUIREMENTS
A. During any calendar year, no Access Person shall accept or receive any
gift of more than $100 in aggregate value from any person or entity
that does business with or on behalf of RFI or a Fund. All Access
Persons must record all gifts received or given on their respective
Departmental log.
B. No Investment Personnel shall accept a position as a director, trustee
or general partner of a publicly-traded company, private company or
partnership unless the acceptance of such position has been approved
by the Compliance Officer and Department Managers consistent with the
interests of RFI and all advisory clients, including the Funds.
VIII. REPORTING AND COMPLIANCE OBLIGATIONS
A. The Compliance Officer shall create and thereafter maintain a list of
all Access Persons.
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B. Each Access Person must maintain his or her personal securities
accounts at Bear Stearns (for accounts in the United States) or an
affiliate of RFI (for accounts outside the United States). Exceptions
to this policy may be granted by the Compliance Officer for special
situations (i.e., a managed account). Each Access Person must direct
each such brokerage firm or other financial institution to promptly
send duplicate copies of each account statement and brokerage
confirmation to the Compliance Officer.
C. Every Access Person shall report to the Compliance Officer the name of
any publicly-traded company (or any company anticipating a public
offering of its equity securities) and the total number of its shares
beneficially owned by him or her if such total ownership is more than
5% of the company's outstanding shares.
D. Every Access Person who owns any securities acquired in a limited
offering shall disclose such ownership to the Compliance Officer if
such person is involved in any subsequent consideration of an
investment in the issuer of those securities by a Fund or other
advisory client. RFI's decision to recommend the purchase of such
issuer's securities to any Fund or other advisory client will be
subject to independent review by Investment Personnel with no personal
interest in the issuer.
E. Reports.
1. INITIAL HOLDINGS REPORTS: Every Access Person must provide to the
Compliance Officer a complete listing of all Securities owned by
such person, as well as all personal securities accounts, within
ten (10) days of becoming an Access Person. Such reports need not
show transactions effected for, or Securities held in, personal
securities accounts over which the person has no direct or
indirect influence or control. An Initial Holdings Report Form is
attached as Appendix I.
2. ANNUAL HOLDINGS REPORTS: On an annual basis, each Access Person
must submit to the Compliance Officer a listing of all Securities
beneficially owned by such person, as well as all personal
securities accounts. The list must be current as of a date no
more than thirty (30) days before the report is submitted and
must be received within thirty (30) days of the end of the
calendar year. Such reports need not show transactions effected
for, or Securities held in, personal securities accounts over
which the person has no direct or indirect influence or control.
An Annual Holdings Report Form is attached at Appendix II.
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3. QUARTERLY REPORTS:
a. Each Access Person shall report all transactions in
Securities in which the person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership. Reports shall be filed with the Compliance
Officer quarterly. Each Access Person must also report any
personal securities accounts established during the quarter.
The Compliance Officer shall submit confidential quarterly
reports with respect to his or her own personal Securities
transactions and personal securities accounts established to
an officer designated to receive his or her reports, who
shall act in all respects in the manner prescribed herein
for the Compliance Officer. Such reports need not show
transactions effected for, or Securities held in, personal
securities accounts over which the person has no direct or
indirect influence or control.
b. Every report shall be made no later than ten 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 (a Quarterly Report Form is included
as Appendix III):
(i) The date of the transaction, the title, the interest
rate and maturity (if applicable), the number of
shares and principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(iii) The price of the Security at which the transaction was
effected;
(iv) The name of the broker, dealer or bank with or through
which the transaction was effected;
(v) The date the report is submitted by the Access Person;
and
(vi) With respect to any personal securities account
established during the quarter, the broker, dealer or
bank with whom the account was established, and the
date the account was established.
c. In the event the Access Person has no reportable items
during the quarter, the report should be so noted and
returned signed and dated.
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d. An Access Person need not submit a quarterly report if the
report would duplicate information in broker trade
confirmations or account statements received by the
Compliance Officer, provided that all required information
is contained in the broker trade confirmations or account
statements and is received by the Compliance Officer no
later than 10 days after the end of the calendar quarter.
4. Any of these reports may contain a statement that the report
shall not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership in
the security to which the report relates.
5. Access to reports of personal securities transactions, holdings
and accounts, and duplicate confirmations and personal securities
account statements will be restricted to the Compliance Officer
and such other persons as RFI may designate to assist the
Compliance Officer with review of the reports. Department
Managers will be given monthly reports of the personal securities
transactions of persons under their supervision. All such
materials will be kept confidential, subject to the right of
inspection by the SEC or other government agencies, and RFI's
senior management and Board of Directors.
IX. REVIEW AND ENFORCEMENT
A. The Compliance Officer's Duties and Responsibilities. The Compliance
Officer shall notify each person who becomes an Access Person and who
is required under this Code of Ethics of their reporting requirements
no later than 10 days before the first quarter in which such person is
required to begin reporting.
B. The Compliance Officer will continuously monitor personal trades to
determine whether a violation of this Code may have occurred. Before
determining that a person has violated the Code, the Compliance
Officer shall give such person an opportunity to supply additional
explanatory material.
C. If the Compliance Officer determines that a violation has occurred, or
believes that a Code violation may have occurred, the Compliance
Officer must submit a written report regarding the possible violation,
together with any confirmations, account statements or other reports
and any additional explanatory material provided by the Access Person,
to the Access Person's primary supervisor, as indicated at Section
VI(A) and legal counsel for RFI, who shall make an independent
determination as to whether a violation has occurred. If the primary
supervisor is unavailable or is unable to review the transaction, the
alternate supervisor shall act in all respects in the manner
prescribed herein for the primary supervisor.
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D. If the primary or alternate supervisor finds that a violation has
occurred, the supervisor shall impose upon the individual such
sanctions as he deems appropriate.
X. ANNUAL WRITTEN REPORTS TO THE BOARD
At least annually, RFI will provide written reports to the Funds' Board of
Directors as follows:
A. ISSUES ARISING UNDER THE CODE. The reports must describe any issue(s)
that arose during the previous year under the codes or procedures
thereto, including any material code or procedural violations, and any
resulting sanction(s). RFI may report to the Board more frequently as
it deems necessary or appropriate and shall do so as requested by the
Board.
B. CERTIFICATION. Each report must be accompanied by a certification to
the Board that RFI has adopted procedures reasonably necessary to
prevent its Access persons from violating this Code of Ethics.
XI. RECORDKEEPING
The Adviser will maintain the records set forth below. These records will
be maintained in accordance with the 1940 Act and the following requirements.
They will be available for examination by representatives of the Securities and
Exchange Commission and other regulatory agencies.
A. A copy of this Code and any other code adopted by RFI under Rule
17j-1, which is, or at any time within the past five years has been,
in effect will be preserved in an easily accessible place.
B. A record of any Code violation and of any sanctions taken will be
preserved in an easily accessible place for a period of at least five
years following the end of the fiscal year in which the violation
occurred.
C. A copy of each Quarterly Report, Initial Holdings Report, and Annual
Holdings Report submitted under this Code, including any information
provided in lieu of any such reports made under the Code, will be
preserved for a period of at least five years from the end of the
fiscal year on which it is made, for the first two years in an easily
accessible place.
D. A record of all persons, currently or within the past five years, who
are or were required to submit reports under this Code, or who are or
were responsible for reviewing these reports, will be maintained in an
easily accessible place.
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E. A copy of each annual report required by Section X of this Code must
be maintained for at least five years from the end of the fiscal year
in which it is made, for the first two years in any easily accessible
place.
F. A record of any decision, and the reasons supporting the decision, to
approve the acquisition of securities acquired in an IPO or a limited
offering, for at least five years after the end of the fiscal year in
which the approval is granted.
XII. MISCELLANEOUS
A. CONFIDENTIALITY. All reports and other confirmations and reports of
Securities transactions, and any other information filed with RFI
pursuant to this Code, shall be treated as confidential, provided such
reports and information may be produced to the Securities and Exchange
Commission and other regulatory agencies.
B. INTERPRETATION OF PROVISIONS. RFI may from time to time adopt such
interpretations of this Code as it deems appropriate.
C. COMPLIANCE CERTIFICATION. Within 10 days of becoming an Access Person,
and each year thereafter, each such person must complete the
Compliance Certification, attached as Appendix IV.
Adopted September 25, 1997; amended July 27, 1999 and May 4, 2000
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