<PAGE>
Exhibit 23(p)(1)
----------------
[LEGG MASON LOGO]
LEGG MASON
FUNDS
CODE OF ETHICS
Dated: April 1, 2000
-------------------
(U:Groups\Compliance\IAContracts\Current Contracts\Code of Ethics\Word Version
of 2000 Code)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Topic Page
----- ----
<S> <C>
I. Introduction 1
A. Individuals and Entities Covered by the Code 1
B. Fiduciary Duty 1
1. The Funds Come First 1
2. Avoid Taking Advantage 1
3. Comply with the Code 1
C. Application of the Code to Independent Fund Directors 1
II. Personal Securities Transactions 2
A. Preclearance Requirements for Access Persons 2
1. General Requirement 2
2. Trade Authorization Request Forms 2
3. Review of Form 2
4. Length of Trade Authorization Approval 3
5. No Explanation Required for Refusals 3
B. Execution of Personal Securities Transactions 3
C. Prohibited Transactions 3
1. Always Prohibited Securities Transactions 3
a. Inside Information 3
b. Market Manipulation 4
c. Others 4
2. Generally Prohibited Securities Transactions 4
a. Initial Public Offerings
(Investment Personnel only) 4
b. One Day Blackout
(all Access Persons) 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
c. Seven-Day Blackout
(Portfolio Managers only) 4
d. 60-Day Blackout (Investment
Personnel only) 4
e. Private Placements (Investment
Personnel only) 5
D. Exemptions 5
1. Exemptions from Preclearance and Treatment as
a Prohibited Transaction 5
a. Mutual Funds 5
b. No Knowledge 5
c. Legg Mason, Inc. Stock 6
d. Certain Corporate Actions 6
e. Systematic Investment Plans 6
f. Option-Related Activity 6
g. Commodities, Futures, and Options
on Futures 6
h. Rights 6
i. Miscellaneous 6
2. Exemption from Treatment as a Prohibited Transaction 7
a. Employer of Access Person Does
Not Make Investment Decisions
For the Relevant Fund 7
b. De Minimis Transactions 7
i. Equity Securities 7
ii. Fixed Income Securities 7
c. Options on Broad-Based Indices 7
E. Reporting Requirements 8
1. Initial and Periodic Disclosure of Personal Holdings
by Access Persons 8
2. Transaction and Periodic Statement Reporting
Requirements 8
3. Independent Fund Directors 8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4. Disclaimers 9
5. Availability of Reports 9
III. Fiduciary Duties 9
A. Confidentiality 9
B. Gifts 9
1. Accepting Gifts 9
2. Solicitation of Gifts 10
3. Giving Gifts 10
C. Corporate Opportunities 10
D. Undue Influence 10
E. Service as a Director 10
IV. Compliance with the Code of Ethics 11
A. Code of Ethics Review Committee 11
1. Membership, Voting and Quorum 11
2. Investigating Violations of the Code 11
3. Annual Reports 11
B. Remedies 12
1. Sanctions 12
2. Sole Authority 12
3. Review 12
C. Exceptions to the Code 12
D. Inquiries Regarding the Code 13
V. Definitions 13
"Access Person" 13
"Appropriate Compliance Department" 13
"Batterymarch" 14
"Beneficial Interest" 14
"Brandywine" 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
"Code" 15
"Equivalent Security" 15
"Fund Adviser" 15
"Gray Seifert" 15
"Immediate Family" 15
"Independent Fund Director" 15
"Investment Personnel" and "Investment Person" 15
"Legal and Compliance Department" 15
"Legg Mason Fund" and "Fund" 16
"Lombard Odier" 16
"Portfolio Manager" 16
"Preclearance Officer" 16
"Securities Transaction" 16
"Security" 16
"Western Asset" 16
"Western Asset Limited" 16
VI. Appendices to the Code 16
Appendix 1 - Contact Persons and List of Legg Mason Funds i
Appendix 2 - Acknowledgement of Receipt of Code of Ethics
and Personal Holdings Report iii
Appendix 3 - Trade Authorization Request for Access Persons v
Appendix 4 - Certification of Access Person's Designee vi
Appendix 5 - Acknowledgement of Receipt of Code of Ethics
(Independent Fund Directors) vii
Appendix 6 - Form Letter to Broker, Dealer or Bank viii
Appendix 7 - Certification of No Beneficial Interest ix
</TABLE>
<PAGE>
I. INTRODUCTION
------------
A. Individuals and Entities Covered by the Code. Unless the use of
--------------------------------------------
another Code of Ethics has been approved in writing by the Legal and Compliance
Department, all Access Persons/1/ are subject to the provisions of this Code.
(See Section I.C. for information regarding the application of the Code to
---
Independent Fund Directors).
B. Fiduciary Duty. The Code is based on the principle that Access Persons
--------------
owe a fiduciary duty to the Legg Mason Funds and must avoid activities,
interests and relationships that might interfere with making decisions in the
best interests of any of the Funds.
As fiduciaries, Access Persons must at all times comply with the following
principles:
1. The Funds Come First. Access Persons must scrupulously avoid
--------------------
serving their personal interests ahead of the interests of the
Legg Mason Funds. An Access Person may not induce or cause a
Fund to take action, or not to take action, for the Access
Person's personal benefit, rather than for the benefit of the
Fund. For example, an Access Person would violate this Code by
causing a Fund to purchase a Security the Access Person owned for
the purpose of increasing the price of that Security.
2. Avoid Taking Advantage. Access Persons may not use their
----------------------
knowledge of open, executed, or pending portfolio transactions to
profit by the market effect of such transactions. Receipt of
investment opportunities, perquisites, or gifts from persons
seeking business with a Legg Mason Fund or a Fund Adviser could
call into question the exercise of an Access Person's independent
judgment.
3. Comply With the Code. Doubtful situations should be resolved in
---------------------
favor of the Legg Mason Funds. Technical compliance with the
Code's procedures will not automatically insulate from scrutiny
any Securities Transactions that indicate an abuse of fiduciary
duties.
C. Application of the Code to Independent Fund Directors. This Code
-----------------------------------------------------
applies to Independent Fund Directors and requires Independent Fund Directors to
report certain Securities Transactions in which they have a Beneficial Interest
to the Legal and Compliance Department in accordance with Section II.E.4.
However, provisions of the Code requiring preclearance of trades (Section
II.A.), execution of personal trades through Legg Mason (Section II.B.),
prohibited transactions (Section II.C.), disclosure of personal holdings,
-------------------
/1/ Capitalized words are defined in Section V (Definitions).
1
<PAGE>
transactions and accounts (Sections II.E.1, and 2), receipt of gifts (Section
III.B.), and restrictions on serving as a director of a publicly-traded company
(Section III.E.) do not apply to Independent Fund Directors.
II. PERSONAL SECURITIES TRANSACTIONS
--------------------------------
A. Preclearance Requirements for Access Persons.
---------------------------------------------
1. General Requirement. Except for the transactions specified in
-------------------
Section II.D.1, any Securities Transaction in which an Access
Person has or acquires a Beneficial Interest must be precleared
with a Preclearance Officer.
2. Trade Authorization Request Forms. Prior to entering an order
---------------------------------
for a Securities Transaction that requires preclearance, the
Access Person must complete a Trade Authorization Request form
(Appendix 3) and submit the completed form to a Preclearance
Officer. The form requires Access Persons to provide certain
information and to make certain representations.
In the event an Access Person is unable to complete a Trade
Authorization Request form, the Access Person may designate
another individual to complete the form on his or her behalf.
The Access Person's designee should complete the Trade
Authorization Request form and the Certification of Access
---
Person's Designee (Appendix 4) and submit both forms to a
Preclearance Officer.
Proposed Securities Transactions of a Preclearance Officer that
require preclearance must be submitted to another Preclearance
Officer.
3. Review of Form. After receiving a completed Trade Authorization
--------------
Request form, a Preclearance Officer will (a) review the
information set forth in the form, (b) review information
regarding past, pending, and contemplated transactions by any
relevant Fund, as necessary, and (c) as soon as reasonably
practicable, determine whether to authorize the proposed
Securities Transaction. The granting of authorization, and the
date and time that authorization was granted, must be reflected
on the form. The Preclearance Officer should keep one copy of
the completed form for the Appropriate Compliance Department and
provide one copy to the Access Person seeking authorization.
2
<PAGE>
No order for a securities transaction for which preclearance
authorization is required may be placed prior to the receipt of
written authorization of the transaction by a preclearance
-------
officer. Verbal approvals are not permitted.
4. Length of Trade Authorization Approval. The authorization
--------------------------------------
provided by a Preclearance Officer is effective until the earlier
of (1) its revocation, (2) the close of business on the trading
day after the authorization is granted (for example, if
authorization is provided on a Monday, it is effective until the
close of business on Tuesday), or (3) the moment the Access
Person learns that the information in the Trade Authorization
Request form is not accurate. If the order for the Securities
Transaction is not placed within that period, a new authorization
must be obtained before the Securities Transaction is placed. If
the Securities Transaction is placed but has not been executed
before the authorization expires (as, for example, in the case of
a limit order), no new authorization is necessary unless the
person placing the original order for the Securities Transaction
amends it in any way, or learns that the information in the Trade
Authorization Request form is not accurate.
5. No Explanation Required for Refusals. In some cases, a
------------------------------------
Preclearance Officer may refuse to authorize a Securities
Transaction for a reason that is confidential. Preclearance
Officers are not required to give an explanation for refusing to
authorize any Securities Transaction.
B. Execution of Personal Securities Transactions. Unless an exception is
---------------------------------------------
provided in writing by the Legal and Compliance Department, all transactions in
Securities subject to the preclearance requirements shall be executed through
Legg Mason Wood Walker, Incorporated. Notwithstanding the foregoing,
transactions in Securities subject to the preclearance requirements effected by
employees of Batterymarch, Brandywine, Gray Seifert, Lombard Odier, Western
Asset, and Western Asset Limited may be executed through any broker, dealer,
bank, or mutual fund so long as the requirements of Section II.E.2. (Transaction
Reporting Requirements) are met.
C. Prohibited Transactions.
-----------------------
1. Always Prohibited Securities Transactions. The following
-----------------------------------------
Securities Transactions are prohibited and will not be authorized
under any circumstances:
a. Inside Information. Any transaction in a Security by an
------------------
individual who possesses material nonpublic information
regarding the Security or the issuer of the Security;
3
<PAGE>
b. Market Manipulation. Transactions intended to raise, lower,
-------------------
or maintain the price of any Security or to create a false
appearance of active trading;
c. Others. Any other transaction deemed by the Preclearance
------
Officer to involve a conflict of interest, possible
diversions of corporate opportunity, or an appearance of
impropriety.
2. Generally Prohibited Securities Transactions. Unless exempted by
--------------------------------------------
Section II.D, the following Securities Transactions are
prohibited and will not be authorized by a Preclearance Officer
absent exceptional circumstances. The prohibitions apply only to
the categories of Access Persons specified.
a. Initial Public Offerings (Investment Personnel only). Any
-----------------------------------------------------
purchase of a Security by Investment Personnel in an initial
public offering (other than a new offering of a registered
open-end investment company);
b. One Day Blackout (all Access Persons). Any purchase or sale
-------------------------------------
of a Security by an Access Person on any day during which
any Fund has a pending buy or sell order, or has effected a
buy or sell transaction, in the same Security (or Equivalent
Security);
c. Seven-Day Blackout (Portfolio Managers only). Any purchase
--------------------------------------------
or sale of a Security by a Portfolio Manager within seven
calendar days of a purchase or sale of the same Security (or
Equivalent Security) by a Fund managed by that Portfolio
Manager. For example, if a Fund trades a Security on day
one, day eight is the first day the Portfolio Manager may
trade that Security for an account in which he or she has a
Beneficial Interest;
d. 60-Day Blackout (Investment Personnel only). (1) Purchase
--------------------------------------------
of a Security in which an Investment Person thereby acquires
a Beneficial Interest within 60 days of a sale of the
Security (or an Equivalent Security) in which such
Investment Person had a Beneficial Interest, and (2) sale of
a Security in which an Investment Person has a Beneficial
Interest within 60 days of a purchase of the Security (or an
Equivalent Security) in which such Investment Person had a
Beneficial Interest, if, in either case, a Fund held the
same Security at any time during the 60 days; unless the
Investment Person agrees to give up all profits
4
<PAGE>
on the transaction to a charitable organization specified in
accordance with Section IV.B.I. Of course, Investment
Personnel must place the interests of the Funds first; they
may not avoid or delay purchasing or selling a security for
a Fund in order to profit personally; and
e. Private Placements (Investment Personnel only). Acquisition
----------------------------------------------
of a Beneficial Interest in Securities in a private
placement by Investment Personnel is strongly discouraged. A
Preclearance Officer will give permission only after
considering, among other facts, whether the investment
opportunity should be reserved for a Fund and whether the
opportunity is being offered to the person by virtue of the
person's position as an Investment Person. Investment
Personnel who have acquired a Beneficial Interest in
Securities in a private placement are required to disclose
their Beneficial Interest to the Appropriate Compliance
Department. If the Investment Person is subsequently
involved in a decision to buy or sell a Security (or an
Equivalent Security) from the same issuer for a Fund, then
the decision to purchase or sell the Security (or an
Equivalent Security) must be independently authorized by a
Portfolio Manager with no personal interest in the issuer.
D. Exemptions.
----------
1. Exemptions from Preclearance and Treatment as a Prohibited
----------------------------------------------------------
Transaction. The following Securities Transactions are exempt
------------
from the preclearance requirements set forth in Section II.A.
and the prohibited transaction restrictions set forth in
Section II.C.:
a. Mutual Funds. Any purchase or sale of a Security issued by
------------
any registered open-end investment companies (including but
not limited to the Legg Mason Funds);
b. No Knowledge. Securities Transactions where the Access
------------
Person has no knowledge of the transaction before it is
completed (for example, Securities Transactions effected for
an Access Person by a trustee of a blind trust, or
discretionary trades involving an investment partnership or
investment club, in connection with which the Access Person
is neither consulted nor advised of the trade before it is
executed);
5
<PAGE>
c. Legg Mason, Inc. Stock. Any purchase or sale of Legg Mason,
----------------------
Inc. stock.
d. Certain Corporate Actions. Any acquisition of Securities
-------------------------
through stock dividends, dividend reinvestments, stock
splits, reverse stock splits, mergers, consolidations, spin-
offs, or other similar corporate reorganizations or
distributions generally applicable to all holders of the
same class of Securities;
e. Systematic Investment Plans. Any acquisition of a security
---------------------------
pursuant to a systematic investment plan that has previously
been approved pursuant to the Code. A systematic investment
plan is one pursuant to which a prescribed investment will
be made automatically on a regular, predetermined basis
without affirmative action by the Access Person.
f. Options-Related Activity. Any acquisition or disposition
------------------------
of a security in connection with an option-related
Securities Transaction that has been previously approved
pursuant to the Code. For example, if an Access Person
receives approval to write a covered call, and the call is
later exercised, the provisions of Sections II.A. and II.C.
are not applicable to the sale of the underlying security.
g. Commodities, Futures, and Options on Futures. Any
--------------------------------------------
Securities Transaction involving commodities, futures
(including currency futures and futures on securities
comprising part of a broad-based, publicly traded market
based index of stocks) and options on futures.
h. Rights. Any acquisition of Securities through the exercise
------
of rights issued by an issuer pro rata to all holders of a
--- ----
class of its Securities, to the extent the rights were
acquired in the issue; and
i. Miscellaneous. Any transaction in the following: (1)
-------------
bankers acceptances, (2) bank certificates of deposit, (3)
commercial paper, (4) repurchase agreements, (5) Securities
that are direct obligations of the U.S. Government, and (6)
other Securities as may from time to time be designated in
writing by the Code of Ethics Review Committee on the ground
that the risk of abuse is minimal or non-existent.
6
<PAGE>
2. Exemption from Treatment as a Prohibited Transaction. The
----------------------------------------------------
following Securities Transactions are exempt from the prohibited
transaction restrictions that are set forth in Section II.C. They
are not exempt from the preclearance requirements set forth in
Section II.A:
a. Employer of Access Person Does Not Make Investment
--------------------------------------------------
Decisions For the Relevant Fund. The prohibitions in
-------------------------------
Sections II.C.2.b, c, and d are not applicable to any
Securities Transaction effected by an Access Person if the
employer of the Access Person is not the Fund Adviser that
makes investment decisions for the relevant Fund. For
example, an employee of Western Asset may effect a
Securities Transaction without regard to transactions that
are open, executed, or pending for a Fund managed by
Batterymarch so long as the Western Asset employee does not
have actual knowledge of any open, executed, or pending
transactions for the Fund managed by Batterymarch. A
Security Transaction effected by an Access Person who has
actual knowledge of an open, executed, or pending portfolio
transaction by any Fund is not exempt from the prohibitions
of Sections II.C.2.b, c, and d. Employees of more than one
Fund Adviser must take into account the transactions of
Funds managed by each of their employers.
b. De Minimis Transactions. The prohibitions in
-----------------------
Section II.C.2.b and c are not applicable to the following
transactions:
i. Equity Securities. Any equity Security Transaction,
-----------------
or series of related transactions, effected over a
thirty (30) calendar day period, involving 1000 shares
or less in the aggregate if the issuer of the Security
is listed on the New York Stock Exchange or has a
market capitalization in excess of $1 billion.
ii. Fixed-Income Securities. Any fixed income Security
-----------------------
Transaction, or series of related transactions,
effected over a thirty (30) calendar day period,
involving $100,000 principal amount or less in the
aggregate.
c. Options on Broad-Based Indices. The prohibitions in
------------------------------
Section II.C.2. b, c, and d are not applicable to any
Securities Transaction involving options on certain broad-
based indices designated by the Legal and Compliance
Department. The
7
<PAGE>
broad-based indices designated by the Legal and Compliance
Department may be changed from time to time and presently
consist of the S&P 500, the S&P 100, NASDAQ 100, Nikkei 300,
NYSE Composite, and Wilshire Small Cap indices.
E. Reporting Requirements
----------------------
1. Initial and Periodic Disclosure of Personal Holdings by Access
--------------------------------------------------------------
Persons. Within ten (10) days of being designated as an Access
-------
Person and thereafter on an annual basis (during the month of
April), an Access Person (except an Independent Fund Director)
must acknowledge receipt and review of the Code and disclose all
Securities in which such Access Person has a Beneficial Interest
on the Acknowledgement of Receipt of Code of Ethics and Personal
Holdings Report (Appendix 2).
2. Transaction and Periodic Statement Reporting Requirements. An
---------------------------------------------------------
Access Person (except an Independent Fund Director) must arrange
for the Appropriate Compliance Department to receive directly
from any broker, dealer, or bank that effects any Securities
Transaction in which the Access Person has or acquires a
Beneficial Interest, duplicate copies of each confirmation for
each such transaction and periodic statements for each account in
which such Access Person has a Beneficial Interest. Unless a
written exception is granted by a Preclearance Officer, an Access
Person must also arrange for the Appropriate Compliance
Department to receive directly from any mutual fund that effects
any Securities Transaction in which the Access Person has or
acquires a Beneficial Interest duplicate copies of periodic
statements for each account in which such Access Person has a
Beneficial Interest. Attached as Appendix 6 is a form of letter
that may be used to request such documents from such entities.
If an Access Person opens an account at a broker, dealer, bank,
or mutual fund that has not previously been disclosed, the Access
Person must immediately notify the Appropriate Compliance
Department in writing of the existence of the account and make
arrangements to comply with the requirements set forth herein.
If an Access Person is not able to arrange for duplicate
confirmations and periodic statements to be sent, the Access
Person must immediately notify the Appropriate Compliance
Department.
8
<PAGE>
3. Independent Fund Directors. Within ten (10) days of being
--------------------------
designated an Independent Fund Director and thereafter on an
annual basis, an Independent Fund Director must acknowledge
receipt and review of the Code of Ethics on the Acknowledgement
of Receipt of Code of Ethics (Appendix 5). Each Independent Fund
Director must also report to the Appropriate Compliance
Department any Securities Transaction in which the Independent
Fund Director has or acquires a Beneficial Interest if the
Independent Fund Director knew, or in the ordinary course of
fulfilling his or her duty as a director of a Fund should have
known, that during the 15-day period immediately preceding or
after the date of the transaction such Security (or an Equivalent
Security) was or would be purchased or sold by the Fund, or such
purchase or sale was or would be considered by the Fund.
4. Disclaimers. Any report of a Securities Transaction for the
-----------
benefit of a person other than the individual in whose account
the transaction is placed may contain a statement that the report
should not be construed as an admission by the person making the
report that he or she has any direct or indirect beneficial
ownership in the Security to which the report relates.
5. Availability of Reports. All information supplied pursuant to
-----------------------
this Code may be made available for inspection to the Board of
Directors of each Fund Adviser employing the Access Person, the
Board of Directors of each Legg Mason Fund, the Chairman of the
Board and the Vice Chairman of Legg Mason, Inc., the Code of
Ethics Review Committee, the Legal and Compliance Department,
Preclearance Officers, the Access Person's department manager (or
designee), any party to which any investigation is referred by
any of the foregoing, the Securities Exchange Commission, any
self-regulatory organization of which Legg Mason Wood Walker,
Incorporated is a member, any state securities commission, and
any attorney or agent of the foregoing or of the Legg Mason
Funds.
III. FIDUCIARY DUTIES
----------------
A. Confidentiality. Access Persons are prohibited from revealing
---------------
information relating to the investment intentions, activities or portfolios of
the Funds, except to persons whose responsibilities require knowledge of the
information.
B. Gifts. The following provisions on gifts apply to all Investment
-----
Personnel.
1. Accepting Gifts. On occasion, because of their position with the
---------------
Legg Mason Funds, Investment Personnel may be offered, or may
receive
9
<PAGE>
without notice, gifts from clients, brokers, vendors, or other
persons not affiliated with such entities. Acceptance of
extraordinary or extravagant gifts is not permissible. Any such
gifts must be declined or returned in order to protect the
reputation and integrity of the Legg Mason Funds and the Fund
Advisers. Gifts of a nominal value (i.e., gifts whose reasonable
----
value is no more than $100 a year), and customary business meals,
entertainment (e.g., sporting events), and promotional items
----
(e.g., pens, mugs, T-shirts) may be accepted.
-----
If an Investment Person receives any gift that might be
prohibited under this Code, the Investment Person must
immediately inform the Appropriate Compliance Department.
2. Solicitation of Gifts. Investment Personnel may not solicit
---------------------
gifts or gratuities.
3. Giving Gifts. Investment Personnel may not personally give gifts
------------
with an aggregate value in excess of $100 per year to persons
associated with securities or financial organizations, including
exchanges, other member organizations, commodity firms, news
media, or clients of the firm.
C. Corporate Opportunities. Access Persons may not take personal
-----------------------
advantage of any opportunity properly belonging to any Fund or Fund Adviser.
For example, an Investment Person should not acquire a Beneficial Interest in a
Security of limited availability without first offering the opportunity to
purchase such Security to the Fund Adviser for the relevant Fund.
D. Undue Influence. Access Persons may not cause or attempt to cause
---------------
any Fund to purchase, sell or hold any Security in a manner calculated to create
any personal benefit to the Access Person. If an Access Person stands to benefit
materially from an investment decision for a Fund, and the Access Person is
making or participating in the investment decision, then the Access Person must
disclose the potential benefit to those persons with authority to make
investment decisions for the Fund (or, if the Access Person in question is a
person with authority to make investment decisions for the Fund, to the
Appropriate Compliance Department). The person to whom the Access Person reports
the interest, in consultation with the Appropriate Compliance Department, must
determine whether or not the Access Person will be restricted in making or
participating in the investment decision.
E. Service as a Director. No Investment Person may serve on the board of
---------------------
directors of a publicly-held company (other than the Fund Advisers, their
affiliates, and the Funds) absent prior written authorization by the Code of
Ethics Review Committee. This
10
<PAGE>
authorization will rarely, if ever, be granted and, if granted, will normally
require that the affected Investment Person be isolated, through a Chinese Wall
or other procedures, from those making investment decisions related to the
issuer on whose board the Investment Person sits.
IV. COMPLIANCE WITH THE CODE OF ETHICS
----------------------------------
A. Code of Ethics Review Committee
-------------------------------
1. Membership, Voting and Quorum. The Code of Ethics Review
-----------------------------
Committee is comprised of the individuals identified in Appendix
1. The Committee shall vote by majority vote with two members
serving as a quorum. Vacancies may be filled and, in the case of
extended absences or periods of unavailability, alternates may be
selected, by a majority vote of the remaining members of the
Committee; provided, however, that at least one member of the
-------- -------
Committee shall also be a member of the Legal and Compliance
Department.
2. Investigating Violations of the Code. The Appropriate Compliance
------------------------------------
Department is responsible for investigating any suspected
violation of the Code and shall report the results of each
investigation to the Code of Ethics Review Committee. The Code
of Ethics Review Committee is responsible for reviewing the
results of any investigation of any reported or suspected
violation of the Code. Any violation of the Code by an Access
Person will be reported to the Boards of Directors of the
relevant Legg Mason Funds no less frequently than each quarterly
meeting.
3. Annual Reports. The Code of Ethics Review Committee will review
--------------
the Code at least once a year, in light of legal and business
developments and experience in implementing the Code, and will
report to the Board of Directors of each Legg Mason Fund:
a. Summarizing existing procedures concerning personal
investing and any changes in the procedures made during the
past year;
b. Identifying any violation requiring significant remedial
action during the past year; and
c. Identifying any recommended changes in existing restrictions
or procedures based on its experience under the Code,
evolving
11
<PAGE>
industry practices, or developments in applicable laws or
regulations.
B. Remedies
--------
1. Sanctions. If the Code of Ethics Review Committee determines
---------
that an Access Person has committed a violation of the Code, the
Committee may impose sanctions and take other actions as it deems
appropriate, including a letter of caution or warning, suspension
of personal trading rights, suspension of employment (with or
without compensation), fine, civil referral to the Securities and
Exchange Commission, criminal referral, and termination of the
employment of the violator for cause. The Code of Ethics Review
Committee may also require the Access Person to reverse the
transaction in question and forfeit any profit or absorb any loss
associated or derived as a result. The amount of profit shall be
calculated by the Code of Ethics Review Committee and shall be
forwarded to a charitable organization selected by the Code of
Ethics Review Committee. No member of the Code of Ethics Review
Committee may review his or her own transaction.
2. Sole Authority. The Code of Ethics Review Committee has sole
--------------
authority, subject to the review set forth in Section IV.B.3
below, to determine the remedy for any violation of the Code,
including appropriate disposition of any monies forfeited
pursuant to this provision. Failure to promptly abide by a
directive to reverse a trade or forfeit profits may result in the
imposition of additional sanctions.
3. Review. Whenever the Code of Ethics Review Committee determines
------
that an Access Person has committed a violation of this Code that
merits remedial action, it will report no less frequently than
quarterly to the Boards of Directors of the applicable Legg Mason
Funds, information relating to the investigation of the
violation, including any sanctions imposed. The Boards of
Directors of the relevant Legg Mason Funds may modify such
sanctions as they deem appropriate. Such Boards shall have
access to all information considered by the Code of Ethics Review
Committee in relation to the case. The Code of Ethics Review
Committee may determine whether or not to delay the imposition of
any sanctions pending review by the applicable Board of
Directors.
C. Exceptions to the Code. Although exceptions to the Code will rarely,
----------------------
if ever, be granted, the Appropriate Compliance Department may grant exceptions
to the requirements of the Code on a case by case basis if the Appropriate
Compliance Department finds that the proposed conduct involves negligible
opportunity for abuse. All such exceptions must be in
12
<PAGE>
writing and must be reported as soon as practicable to the Code of Ethics Review
Committee and to any relevant Funds' Board of Directors at their next regularly
scheduled meeting after the exception is granted.
D. Inquiries Regarding the Code. The Appropriate Compliance Department
----------------------------
will answer any questions about this Code or any other compliance-related
matters.
V. DEFINITIONS
------------
When used in the Code, the following terms have the meanings set forth
below:
"Access Person" means:
-------------
(1) every director or officer of a Legg Mason Fund or a Fund Adviser;
(2) every employee of a Fund Adviser (or employee of a company in a
control relationship with any of the foregoing), who in connection
with his or her regular functions, makes, participates in, or obtains
information regarding the purchase or sale of a Security by a Fund;
(3) every natural person in a control relationship with a Legg Mason Fund
or a Fund Adviser who obtains information concerning recommendations
made to a Fund with regard to the purchase or sale of a Security,
prior to its dissemination or prior to the execution of all resulting
trades;
(4) any director, officer or employee of Legg Mason Wood Walker,
Incorporated who in the ordinary course of his or her business makes,
participates in or obtains information regarding the purchase or sale
of Securities for any of the Legg Mason Funds, or whose functions or
duties as a part of the ordinary course of his or her business relate
to the making of any recommendation to such investment company
concerning the purchase or sale of Securities; and
(5) such other persons as the Legal and Compliance Department shall
designate.
Any uncertainty as to whether an individual is an Access Person should be
brought to the attention of the Legal and Compliance Department. Such questions
will be resolved in accordance with, and this definition shall be subject to,
the definition of "Access Person" found in Rule 17j-1(e) (1) promulgated under
the Investment Company Act of 1940, as amended.
"Appropriate Compliance Department" for an employee means the compliance
---------------------------------
department of that employee's immediate employer. For dual employees, the
compliance
13
<PAGE>
department of one employer will be designated as the Appropriate Compliance
Department.
"Batterymarch" means Batterymarch Financial Management, Inc.
------------
"Beneficial Interest" means the opportunity, directly or indirectly,
-------------------
through any contract, arrangement, understanding, relationship or otherwise, to
profit, or share in any profit derived from, a transaction in the subject
Securities.
An Access Person is deemed to have a Beneficial Interest in the following:
(1) any Security owned individually by the Access Person;
(2) any Security owned jointly by the Access Person with others (for
example, joint accounts, spousal accounts, UTMA accounts,
partnerships, trusts and controlling interests in corporations);
and
(3) any Security in which a member of the Access Person's Immediate
Family has a Beneficial Interest if:
a. the Security is held in an account over which the Access
Person has decision making authority (for example, the
Access Person acts as trustee, executor, or guardian); or
b. the Security is held in an account for which the Access
Person acts as a broker or investment adviser
representative.
In addition, an Access Person is presumed to have a Beneficial Interest in
any Security in which a member of the Access Person's Immediate Family has a
Beneficial Interest if the Immediate Family member resides in the same household
as the Access Person. This presumption may be rebutted if the Access Person is
able to provide the Legal and Compliance Department with satisfactory assurances
that the Access Person has no material Beneficial Interest in the Security and
exercises no control over investment decisions made regarding the Security.
Access Persons may use the form attached as Appendix 7 (Certification of No
Beneficial Interest) in connection with such requests.
Any uncertainty as to whether an Access Person has a Beneficial Interest in
a Security should be brought to the attention of the Legal and Compliance
Department. Such questions will be resolved in accordance with, and this
definition shall be subject to, the definition of "beneficial owner" found in
Rules 16a-1(a) (2) and (5) promulgated under the Securities Exchange Act of
1934, as amended.
"Brandywine" means Brandywine Asset Management, Inc.
----------
14
<PAGE>
"Code" means this Code of Ethics, as amended.
----
"Equivalent Security" means any Security issued by the same entity as the
-------------------
issuer of a subject Security, including options, rights, stock appreciation
rights, warrants, preferred stock, restricted stock, phantom stock, bonds, and
other obligations of that company or security otherwise convertible into that
security. Options on securities are included even if, technically, they are
issued by the Options Clearing Corporation or a similar entity.
"Fund Adviser" means any entity that acts as a manager, adviser or sub-
------------
adviser to a Legg Mason Fund, including, but not limited to, Bartlett & Co.,
Batterymarch Financial Management, Inc., Brandywine Asset Management, Inc.,
Gray, Seifert & Co., Inc., Legg Mason Capital Management, Inc., Legg Mason Fund
Adviser, Inc., LM Institutional Advisors, Inc., LMM LLC, Lombard Odier
International Portfolio Management Limited, Western Asset Management Company,
and Western Asset Management Company Limited.
"Gray Seifert" means Gray, Seifert & Co., Inc.
------------
"Immediate Family" of an Access Person means any of the following persons:
----------------
child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
stepparent father-in-law
Immediate Family includes adoptive relationships and other relationships
(whether or not recognized by law) that the Legal and Compliance Department
determines could lead to the possible conflicts of interest, diversions of
corporate opportunity, or appearances of impropriety which this Code is intended
to prevent.
"Independent Fund Director" means an independent director of a Legg Mason
-------------------------
Fund.
"Investment Personnel" and "Investment Person" mean each Portfolio Manager
-------------------- -----------------
and any Access Person who, in connection with his or her regular functions or
duties, provides information and advice to a Portfolio Manager or who helps
execute a Portfolio Manager's decisions.
"Legal and Compliance Department" means the Legal and Compliance Department
-------------------------------
of Legg Mason Wood Walker, Incorporated and the persons designated in Appendix
1, as such Appendix shall be amended from time to time. See also "Appropriate
Compliance Department."
15
<PAGE>
"Legg Mason Fund" and "Fund" mean an investment company registered under
--------------- ----
the Investment Company Act of 1940 (or a portfolio or series thereof, as the
case may be) that is sponsored by Legg Mason, including, but not limited to, the
funds listed in Appendix 1.
"Lombard Odier" means Lombard Odier International Portfolio Management
-------------
Limited.
"Portfolio Manager" means a person who has or shares principal day-to-day
-----------------
responsibility for managing the portfolio of a Fund.
"Preclearance Officer" means the person designated as a Preclearance
--------------------
Officer in Appendix 1 hereof or such person's designee.
"Securities Transaction" means a purchase or sale of Securities in which an
----------------------
Access Person has or acquires a Beneficial Interest.
"Security" includes stock, notes, bonds, debentures, and other evidences of
--------
indebtedness (including loan participations and assignments), limited
partnership interests, investment contracts, and all derivative instruments of
the foregoing, such as options and warrants. "Security" does not include
futures or options on futures, but the purchase and sale of such instruments are
nevertheless subject to the reporting requirements of the Code.
"Western Asset" means Western Asset Management Company.
-------------
"Western Asset Limited" means Western Asset Management Company Limited.
---------------------
VI. APPENDICES TO THE CODE
----------------------
The following appendices are attached to and are a part of the Code:
Appendix 1. Contact Persons and List of Legg Mason Funds;
--------------------------------------------
Appendix 2. Acknowledgement of Receipt of Code of Ethics and Personal
---------------------------------------------------------
Holdings Report;
---------------
Appendix 3. Trade Authorization Request for Access Persons;
----------------------------------------------
Appendix 4. Certification of Access Person's Designee;
-----------------------------------------
Appendix 5. Acknowledgement of Receipt of Code of Ethics (Independent Fund
---------------------------------------------------------------
Directors);
----------
16
<PAGE>
Appendix 6. Form Letter to Broker, Dealer, Bank, or Mutual Fund.
---------------------------------------------------
Appendix 7. Certification of No Beneficial Interest.
----------------------------------------
17
<PAGE>
Appendix 1
CONTACT PERSONS AND LIST OF LEGG MASON FUNDS
PRECLEARANCE OFFICERS
Andrew J. Bowden
Neil P. O'Callaghan
Suzanne E. Peluso
Jennifer W. Murphy (Legg Mason Fund Adviser, Inc.)
Philip E. Sachs (Legg Mason Capital Management, Inc.)
Ilene S. Harker (Western Asset Management Company)
Francis X. Tracy (Batterymarch Financial Management, Inc.)
Thomas A. Steele (Bartlett & Co.)
Denise Justice (Bartlett & Co.)
DESIGNEES OF PRECLEARANCE OFFICER
Nancy E. McColgan (Legg Mason Capital Management, Inc.)
Nancy Dennin (Legg Mason Fund Adviser, Inc.)
Jean C. Collins (Bartlett & Co.)
Donna Preishoff (Bartlett & Co.)
LEGAL AND COMPLIANCE DEPARTMENT
Andrew J. Bowden
Neil P. O'Callaghan
Frank R. Walker Jr.
CODE OF ETHICS REVIEW COMMITTEE
Andrew J. Bowden
Edward A. Taber, III
Neil P. O'Callaghan
Philip E. Sachs
Jennifer W. Murphy
LEGG MASON FUNDS
Bartlett Basic Value Fund
Bartlett Value International Fund
Batterymarch Emerging Markets Portfolio
i
<PAGE>
Batterymarch International Equity Portfolio
Batterymarch U.S. MidCapitalization Equity Portfolio
Batterymarch U.S. Small Capitalization Equity Portfolio
Legg Mason American Leading Companies Trust
Legg Mason Balanced Trust
Legg Mason Cash Reserve Trust
Legg Mason Classic Valuation Fund
Legg Mason Emerging Markets Trust
Legg Mason Europe Fund
Legg Mason Financial Services Fund
Legg Mason Focus Trust
Legg Mason Global Income Trust
Legg Mason High Yield Portfolio
Legg Mason International Equity Trust
Legg Mason Investment Grade Income Portfolio
Legg Mason Market Neutral Trust
Legg Mason Maryland Tax-Free Income Trust
Legg Mason Opportunity Trust
Legg Mason Pennsylvania Tax-Free Income Trust
Legg Mason Special Investment Trust, Inc.
Legg Mason Tax Exempt Trust, Inc.
Legg Mason Tax-Free Intermediate-Term Income Trust
Legg Mason Total Return Trust, Inc.
Legg Mason U.S. Government Intermediate-Term Portfolio
Legg Mason U.S. Government Money Market Portfolio
Legg Mason U.S. Small-Cap Value Trust
Legg Mason Value Trust, Inc.
LM Balanced Institutional Portfolio
LM Value Institutional Portfolio
LM Special Investment Institutional Portfolio
LM Total Return Institutional Portfolio
Western Asset Core Portfolio
Western Asset Core Plus Portfolio
Western Asset Enhanced Equity Portfolio
Western Asset Global Strategic Income Portfolio
Western Asset Government Money Market Portfolio
Western Asset High Yield Portfolio
Western Asset Intermediate Portfolio
Western Asset Intermediate Plus Portfolio
Western Asset Money Market Portfolio
Western Asset Non-U.S. Fixed Income Portfolio
ii
<PAGE>
Appendix 2
ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS AND
PERSONAL HOLDINGS REPORT
I acknowledge that I have received the Code of Ethics dated April 1, 2000 and
represent that:
1. I have read the Code of Ethics and I understand that it applies to me and to
all Securities in which I have or acquire any Beneficial Interest. I have
read the definition of "Beneficial Interest" and understand that I may be
deemed to have a Beneficial Interest in Securities owned by members of my
Immediate Family and that Securities Transactions effected by members of my
Immediate Family may therefore be subject to this Code.
2. In accordance with Section II.A. of the Code, I will obtain prior written
authorization for all Securities Transactions in which I have or acquire a
Beneficial Interest, except for transactions exempt from preclearance under
Section II.D.1 of the Code.
3. In accordance with Section II.E.2. of the Code of Ethics, I will report all
non-exempt Securities Transactions in which I have or acquire a Beneficial
Interest.
4. I agree to disgorge and forfeit any profits on prohibited transactions in
accordance with the requirements of the Code.
5. I will comply with the Code of Ethics in all other respects.
6. In accordance with Section II.E.1. of the Code, the following is a list of
all Securities in which I have a Beneficial Interest:
/1/ Provide the information requested below for each account that you
maintain with a broker, dealer, bank, or mutual fund. Indicate "None" if
appropriate.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
NAME OF BROKER, DEALER,
BANK, OR MUTUAL FUND ACCOUNT TITLE ACCOUNT NUMBER
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Attach a separate sheet if necessary)
/2/ Attach the most recent account statement for each account identified
above that is not maintained at Legg Mason Wood Walker, Incorporated.
---
iii
<PAGE>
/3/ If you own Beneficial Interests in Securities that are not listed on an
---
attached account statement or in an account maintained at Legg Mason
Wood Walker, Incorporated, list them below. Include private equity
investments. Indicate "None" if appropriate.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
NAME OF
BROKER, DEALER, ACCOUNT ACCOUNT NAME OF SECURITY NUMBER OF
BANK, OR TITLE NUMBER SHARES/PRINCIPAL
MUTUAL FUND AMOUNT
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>
(Attach separate sheet if necessary)
7. (Investment Personnel Only) In accordance with Section III.E. of the Code,
the following is a list of publicly-held companies (other than Fund
Advisers, their affiliates, and the Funds) on which I serve as a member of
the board of directors. Indicate "NA" or "None" if appropriate.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
NAME OF COMPANY BOARD MEMBER SINCE
---------------------------------------------------------------------------------------------------------------------
<S> <C>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
8. I certify that the information on this form is accurate and complete.
----------------------------------
Access Person's Name
---------------------------------- -----------------------------
Access Person's Signature Date
iv
<PAGE>
Appendix 3
TRADE AUTHORIZATION REQUEST FOR ACCESS PERSONS
<TABLE>
<S> <C>
1. Name of Access Person:
------------------------------------------------
2. Account Title:
------------------------------------------------
3. Account Number:
------------------------------------------------
4. Name of Security:
------------------------------------------------
5. Maximum number of shares or units to
be purchased or sold or amount of bond:
------------------------------------------------
6. Name and phone number of broker to
effect transaction:
------------------------------------------------
7. Check applicable boxes: Purchase [ ] Sale [ ] Market Order [ ] Limit Order [ ]
</TABLE>
9. In connection with the foregoing transaction, I hereby make the following
representations and warranties:
(a) I do not possess any material nonpublic information regarding the
Security or the issuer of the Security.
(b) I am not aware that any Legg Mason Fund has an open order to buy or
sell the Security or an Equivalent Security.
(c) By entering this order, I am not using knowledge of any open,
executed, or pending transaction by a Legg Mason Fund to profit by the
market effect of such Fund transaction.
(d) (Investment Personnel Only). The Security is not being acquired in an
initial public offering.
(e) (Investment Personnel Only). The Security is not being acquired in a
private placement or, if it is, I have reviewed Section II.C.3. of the
Code and have attached hereto a written explanation of such
transaction.
(f) (Investment Personnel Only). If I am purchasing the Security, and if
the same or an Equivalent Security has been held within the past 60
days by any Fund managed by my immediate employer, I have not directly
or indirectly (through any member of my Immediate Family, any account
in which I have a Beneficial Interest or otherwise) sold the Security
or an Equivalent Security in the prior 60 days.
(g) (Investment Personnel Only) If I am selling the Security, and if the
same or an Equivalent Security has been held within the past 60 days
by any Fund managed by my immediate employer, I have not directly or
indirectly (through any member of my Immediate Family, any account in
which I have a Beneficial Interest or otherwise) purchased the
Security or an Equivalent Security in the prior 60 days.
(h) I believe that the proposed trade fully complies with the requirements
of the Code.
----------------------------------- ------------------- -------------------
Access Person's Signature Date Time
TRADE AUTHORIZATION
(to be completed by Preclearance Officer)
----------------------------------- ------------------- -------------------
Authorized By Date Time
v
<PAGE>
Appendix 4
CERTIFICATION OF ACCESS PERSON'S DESIGNEE
The undersigned hereby certifies that the Access Person named on the attached
Trade Authorization Request for Access Persons (a) directly instructed me to
complete the attached form on his or her behalf, (b) to the best of my
knowledge, was out of the office at the time of such instruction and has not
returned, and (c) confirmed to me that the representations and warranties
contained in the attached Form are accurate.
________________________________
Access Person's Designee
________________________________
Print Name
________________________________
Date
vi
<PAGE>
Appendix 5
ACKNOWLEDGEMENT OF RECEIPT OF CODE OF ETHICS
(Independent Fund Directors)
I acknowledge that I have received the Code of Ethics dated April 1, 2000 and
represent that:
1. I have read the Code of Ethics and I understand that it applies to me
and to all Securities in which I have or acquire any Beneficial
Interest. I have read the definition of "Beneficial Interest" and
understand that I may be deemed to have a Beneficial Interest in
Securities owned by members of my Immediate Family and that Securities
Transactions effected by members of my Immediate Family may therefore
be subject to this Code.
2. I will report all Securities Transactions required to be reported
under Section II.E.3 of the Code in which I have or acquire a
Beneficial Interest.
3. I will comply with applicable provisions of the Code of Ethics in
all other respects.
------------------------------------------
Director's Signature
------------------------------------------
Print Name
------------------------------------------
Dated
vii
<PAGE>
Appendix 6
FORM OF LETTER TO BROKER, DEALER, BANK, OR MUTUAL FUND
(Date)
(Name
and Address)
Subject: Account #
----------------------------
Dear :
--------------------------------
My employer, ___________________________________, is an investment adviser
to, or principal underwriter of, an investment company. Pursuant to my
employer's Code of Ethics and Rule 17j-1 under the Investment Company Act of
1940, please send duplicate confirmations of individual transactions as well as
duplicate periodic statements for the referenced account directly to:
(Name and Address of Individual Responsible
for Reviewing Periodic Holdings and Transaction Reports)
Thank you for your cooperation. If you have any questions, please contact
me or (Name of Individual Responsible for Reviewing Periodic Holdings and
Transaction Reports) at _______________________________.
Sincerely,
(Name of Access Person)
viii
<PAGE>
Appendix 7
CERTIFICATION OF NO BENEFICIAL INTEREST
I have read the Code of Ethics and I understand that it applies to me and to all
Securities in which I have or acquire any Beneficial Interest. I have read the
definition of "Beneficial Interest" and understand that I may be deemed to have
a Beneficial Interest in Securities owned by members of my Immediate Family and
that Securities Transactions effected by members of my Immediate Family may
therefore be subject to this Code.
The following accounts are maintained by one or more members of my Immediate
Family who reside in my household:
<TABLE>
<CAPTION>
Brokerage Firm
Relationship of Immediate (Include Legg Mason
Account Name Family Member Account Number Accounts)
------------ ------------------------- -------------- ------------------
<S> <C> <C> <C>
</TABLE>
I certify that with respect to each of the accounts listed above (initial
appropriate boxes):
[ ] I do not own individually or jointly with others any of the
securities held in the account.
[ ] I do not possess or exercise decision making authority over the
account.
[ ] I do not act as a broker or investment adviser representative for the
account.
I agree that I will notify the Legal and Compliance Department immediately if
any of the information I have provided in this certification becomes inaccurate
or incomplete.
-----------------------------------------------
Access Person's Signature
-----------------------------------------------
Print Name
-----------------------------------------------
Date
ix