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EXHIBIT 99.(P)
CODE OF ETHICS
MERRILL LYNCH INVESTMENT MANAGERS (MLIM)
REGISTERED INVESTMENT COMPANIES
AND THEIR INVESTMENT ADVISERS
AND PRINCIPAL UNDERWRITER
SECTION 1 - BACKGROUND
This Code of Ethics is adopted under Rule 17j-1 under the Investment
Company Act of 1940 ("1940 Act") and Rule 204-2(a) under the Investment Advisers
Act of 1940 and has been approved by the Boards of Directors of each of the MLIM
funds.1 Except where noted, the Code applies to all MLIM employees.
Section 17(j) under the Investment Company Act of 1940 makes it unlawful
for persons affiliated with investment companies, their principal underwriters
or their investment advisers to engage in fraudulent personal securities
transactions. Rule 17j-1 requires each Fund, investment adviser and principal
underwriter to adopt a Code of Ethics that contains provisions reasonably
necessary to prevent an employee from engaging in conduct prohibited by the
principles of the Rule. The Rule also requires that reasonable diligence be used
and procedures be instituted which are reasonably necessary to prevent
violations of the Code of Ethics.
On August 23, 1999, the SEC adopted amendments to Rule 17j-1 which
require greater board oversight of personal trading practices, more complete
reporting of employee securities trading and preclearance of employee purchases
of initial public offerings and private placements. The amendments require,
among other things, that MLIM provide its fund boards annually a written report
that (i) describes issues that arose during the previous year under the Code,
including information about material code violations and sanctions imposed and
(ii) certifies to the board that MLIM has adopted procedures reasonably
necessary to prevent access persons from violating the Code.
SECTION 2 - STATEMENT OF GENERAL FIDUCIARY PRINCIPLES
The Code of Ethics is based on the fundamental principle that MLIM and
its employees must put client interests first. As an investment adviser, MLIM
has fiduciary responsibilities to its clients, including the registered
investment companies
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(1) As applicable herein, MLIM includes all AMG investment advisory affiliates
and the affiliated principal underwriter of investment companies registered
under the 1940 Act.
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(the "Funds") for which it serves as investment adviser. Among MLIM's fiduciary
responsibilities is the responsibility to ensure that its employees conduct
their personal securities transactions in a manner which does not interfere or
appear to interfere with any Fund transactions or otherwise take unfair
advantage of their relationship to the Funds. All MLIM employees must adhere to
this fundamental principle as well as comply with the
specific provisions set forth herein. It bears emphasis that technical
compliance with these provisions will not insulate from scrutiny transactions
which show a pattern of compromise or abuse of an employee's fiduciary
responsibilities to the Funds. Accordingly, all MLIM employees must seek to
avoid any actual or potential conflicts between their personal interest and the
interest of the Funds. In sum, all MLIM employees shall place the interest of
the Funds before personal interests.
SECTION 3 - INSIDER TRADING POLICY
All MLIM employees are subject to MLIM's Insider Trading Policy, which
is considered an integral part of this Code of Ethics. MLIM's Insider Trading
Policy, which is set forth in the MLIM Code of Conduct, prohibits MLIM employees
from buying or selling any security while in the possession of material
nonpublic information about the issuer of the security. The policy also
prohibits MLIM employees from communicating to third parties any material
nonpublic information about any security or issuer of securities. Additionally,
no MLIM employee may use inside information about MLIM activities or the
activities of any Merrill Lynch & Co., Inc. entity to benefit the Funds or to
gain personal benefit. Any violation of MLIM's Insider Trading Policy may result
in sanctions, which could include termination of employment with MLIM. (See
Section 10--Sanctions).
SECTION 4 - RESTRICTIONS RELATING TO SECURITIES TRANSACTIONS
A. GENERAL TRADING RESTRICTIONS FOR ALL EMPLOYEES
The following restrictions apply to all MLIM employees:
1. ACCOUNTS. No employee, other than those employed by Mercury Asset
Management International Ltd. ("MAMI"), may engage in personal
securities transactions other than through an account maintained with
Merrill Lynch, Pierce, Fenner & Smith Incorporated or another Merrill
Lynch broker/dealer entity ("Merrill Lynch") unless written permission
is obtained from the Compliance Director. Similarly, no MAMI employee
may engage in personal securities transactions other than through an
account maintained with Merrill Lynch or The Bank of New York Europe
Limited ("BNYE") unless written permission is obtained from the
Compliance Director.
2. ACCOUNTS INCLUDE FAMILY MEMBERS AND OTHER ACCOUNTS. Accounts of
employees include the accounts of their spouses, dependent relatives,
trustee and custodial accounts or any other account in which the
employee has a financial
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interest or over which the employee has investment discretion.
3. PRECLEARANCE. All employees must obtain approval from the Compliance
Director or preclearance delegatee prior to entering any securities
transaction (with the exception of exempted securities as listed in
Section 5) in all accounts. Approval of a transaction, once given, is
effective only for the business day on which approval was requested or
until the employee discovers that the information provided at the time
the transaction was approved is no longer accurate.
4. RESTRICTIONS ON PURCHASES. No employee may purchase any security which
at the time is being purchased, or to the employee's knowledge is being
considered for purchase, by any Fund managed by MLIM. This restriction,
however, does not apply to personal trades of employees which coincide
with trades by any MLIM index fund.
5. RESTRICTIONS ON SALES. No employee may sell any security which at the
time is actually being sold, or to the employee's knowledge is being
considered for sale, by any Fund managed by MLIM. This restriction,
however, does not apply to personal trades of employees which coincide
with trades by any MLIM index fund.
6. RESTRICTIONS ON RELATED SECURITIES. The restrictions and procedures
applicable to the transactions in securities by employees set forth in
this Code of Ethics shall similarly apply to securities that are issued
by the same issuer and whose value or return is related, in whole or in
part, to the value or return of the security purchased or sold or being
contemplated for purchase or sale during the relevant period by the
Fund. For example, options or warrants to purchase common stock, and
convertible debt and convertible preferred stock of a particular issuer
would be considered related to the underlying common stock of that
issuer for purposes of this policy. In sum, the related security would
be treated as if it were the underlying security for the purpose of the
pre-clearance procedures described herein.
7. PRIVATE PLACEMENTS. Employee purchases and sales of "private placement"
securities (including all private equity partnerships, hedge funds,
limited partnership or venture capital funds) must be precleared
directly with the Compliance Director or designee. No employee may
engage in any such transaction unless the Compliance Director or his
designee and the employee's senior manager have each previously
determined in writing that the contemplated investment does not involve
any potential for conflict with the investment activities of the Funds.
If, after receiving the required approval, an employee has any material
role in the subsequent consideration by any Fund of an investment in the
same or
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affiliated issuer, the employee must disclose his or her interest in the
private placement investment to the Compliance Director and the
employee's department head. The decision to purchase securities of the
issuer by a Fund must be independently reviewed and authorized by the
employee's department head.
8. INITIAL PUBLIC OFFERINGS. As set forth in Paragraph A.3. of this Section
4, the purchase by an employee of securities offered in an initial
public offering must be precleared. As a matter of policy, employees
will not be allowed to participate in so-called "hot" offerings as such
term may be defined by Merrill Lynch or appropriate regulators.
9. PROHIBITION ON SHORT-TERM PROFITS. Decision-making employees are
prohibited from profiting on any sale and subsequent purchase, or any
purchase and subsequent sale of the same (or equivalent) securities
occurring within 60 calendars days ("short-term profit"). This holding
period also applies to all permitted options transactions; therefore,
for example, a decision-making employee may not purchase or write an
option if the option will expire in less than 60 days (unless such an
employee is buying or writing an option on a security that the employee
has held more than 60 days). In determining short-term profits, all
transactions within a 60-day period in all accounts related to the
decision-making employee shall be netted regardless of the employee's
intentions to do otherwise (e.g., tax or other trading strategies).
Should a decision-making employee fail to preclear a trade that results
in a short-term profit, the trade would be subject to reversal with all
costs and expenses related to the trade borne by the employee, and the
employee would be required to disgorge the profit. Transactions not
required to be precleared under Section 5 will not be subject to this
prohibition.
B. ADDITIONAL TRADING RESTRICTIONS FOR DECISION-MAKING EMPLOYEES
The following additional restrictions apply to decision-making employees
(i.e., employees who recommend or determine which securities transactions a Fund
undertakes). The Compliance Department will retain and keep current a list of
decision-making employees.
1. NOTIFICATION. A decision-making employee must notify the Compliance
Department or preclearance designee of any intended transactions in a
security for his or her own personal account which is owned or
contemplated for purchase or sale by a Fund for which the employee has
decision-making authority.
2. BLACKOUT PERIODS. A decision-making employee may not buy or sell a
security within 7 calendar days either before or after a purchase or
sale of the same or related security by a Fund or portfolio management
group for which the
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employee has decision-making authority. For example, if a Fund trades a
security on day 0, day 8 is the first day the manager, analyst or
portfolio management group member of that Fund may trade the security
for his or her own account.
3. ESTABLISHING POSITIONS COUNTER TO FUND POSITIONS. No decision-making
employee may establish a long position in a personal account in a
security if a Fund for which the employee is a decision-making employee
holds a put option on such security (aside from a put purchased for
hedging purposes where the fund holds the underlying security), has
written a call option on such security, or otherwise maintains a
position that would benefit from a decrease in the value of the
underlying security (e.g., a short sale other than a short sale
"against-the-box").
No decision-making employee may purchase a put option or write a call
option where a Fund for which such person has decision-making
responsibilities holds a long position in the underlying security.
No decision-making employee may short sell any security where a Fund for
which the employee has decision-making authority holds a long position
in the same security or where such Fund otherwise maintains a position
in respect of which the Fund would benefit from an increase in the value
of the security.
4. PURCHASING AN INVESTMENT FOR A FUND THAT IS A PERSONAL HOLDING. A
decision-making employee may not purchase an investment for a Fund that
is also a personal holding of the employee or any other account covered
by this Code of Ethics, or the value of which is materially linked to a
personal holding, unless the decision-making employee has obtained prior
approval from the employee's senior manager.
5. INDEX FUNDS. The restrictions of this Section 4.B. do not apply to
purchases and sales of securities by decision-making employees which
coincide with trades by any MLIM index fund.
C. TRADING RESTRICTIONS FOR DISINTERESTED DIRECTORS OF THE MLIM FUNDS
The following restrictions apply only to disinterested directors of the
MLIM Funds (i.e., any director who is not an "interested person" of a MLIM fund
within the meaning of Section 2(a)(10) of the 1940 Act):
1. RESTRICTIONS ON PURCHASES. No disinterested director may purchase any
security which, to the director's knowledge at the time, is being
purchased or is being considered for purchase by any Fund managed by
MLIM.
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2. RESTRICTIONS ON SALES. No disinterested director may sell any security
which, to the director's knowledge at the time, is being sold or is
being considered for sale by any Fund managed by MLIM.
3. RESTRICTIONS ON TRADES IN SECURITIES RELATED IN VALUE. The restrictions
applicable to the transactions in securities by disinterested directors
shall similarly apply to securities that are issued by the same issuer
and whose value or return is related, in whole or in part, to the value
or return of the security purchased or sold by the Fund (see Section
4.A.6.).
SECTION 5 - EXEMPTED TRANSACTIONS/SECURITIES
MLIM has determined that the following securities transactions do not
present the opportunity for improper trading activities that Rule 17j-1 is
designed to prevent; therefore, the restrictions set forth in Section 4 of this
Code (including preclearance, prohibition on short-term profits and blackout
periods) shall not apply.
Exempted transactions/securities may not be executed/held in brokerage
accounts maintained outside of Merrill Lynch.
THE REPORTING REQUIREMENTS LISTED IN SECTION 6 OF THIS CODE, HOWEVER,
SHALL APPLY TO THE SECURITIES AND TRANSACTION TYPES SET FORTH IN PARAGRAPHS F-J
OF THIS SECTION.
A. Purchases or sales in an account over which the employee has no direct or
indirect influence or control (e.g., an account managed on a fully
discretionary basis by an investment adviser or trustee).
B. Purchases or sales of direct obligations of the U.S. Government.
C. Purchases or sales of open-end investment companies (including money market
funds), variable annuities and unit investment trusts. (However, unit
investment trusts traded on a stock exchange (e.g., MITS, SPDRS, DIAMONDS,
NASDAQ 100, etc.) must be precleared.)
D. Purchases or sales of bank certificates, bankers acceptances, commercial
paper and other high quality short-term debt instruments, including
repurchase agreements.
E. Merrill Lynch common stock which is purchased and sold within any Merrill
Lynch employee benefit plan and stock purchased and sold through similar
such employer-sponsored plans in which a spouse of a MLIM employee may
participate.
F. Purchases or sales which are non-volitional on the part of the employee
(e.g., an in-the-money option that is automatically exercised by a broker; a
security that is called away as a result of an exercise of an option; or a
security that is sold by
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a broker, without employee consultation, to meet a margin call not met by
the employee).
G. Purchases which are made by reinvesting cash dividends pursuant to an
automatic dividend reinvestment plan.
H. 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.
I. Purchases or sales of commodities, futures (including currency futures and
futures on broad-based indices), options on futures and options on
broad-based indices. (Currently, "broad-based indices" include only the S&P
100, S&P 500, FTSE 100 and Nikkei 225.)
J. The receipt of a bona fide gift of securities. (Donations of securities,
however, require preclearance.)
SECTION 6 - REPORTING BY EMPLOYEES
The requirements of this Section 6 apply to all MLIM employees. The
requirements will also apply to all transactions in the accounts of spouses,
dependent relatives and members of the same household, trustee and custodial
accounts or any other account in which the employee has a financial interest or
over which the employee has investment discretion. The requirements do not apply
to securities acquired for accounts over which the employee has no direct or
indirect control or influence. All employees whose accounts are maintained at
Merrill Lynch or BNYE are deemed to have automatically complied with the
requirements of this Section 6 B. and C. as to reporting executed transactions
and personal holdings. Transactions and holdings in such accounts are
automatically reported to the Compliance Department through automated systems.
Employees who have approved accounts outside of Merrill Lynch or BNYE
are deemed to have complied with the requirements of this Section 6 B. and C.
provided that the Compliance Department receives duplicate statements and
confirmations directly from their brokers.
Employees who effect reportable transactions outside of a brokerage
account (e.g., optional purchases or sales through an automatic investment
program directly with an issuer) will be deemed to have complied with this
requirement by preclearing transactions with the Compliance Department and by
reporting their holdings annually on the "Personal Securities Holdings" form, as
required by the Compliance Department.
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A. INITIAL HOLDINGS REPORT. Each new MLIM employee will be given a copy of this
Code of Ethics upon commencement of employment. All new employees must
disclose their personal securities holdings to the Compliance Department
within 10 days of commencement of employment with MLIM. (Similarly,
securities holdings of all new related accounts must be reported to the
Compliance Department within 10 days of the date that such account becomes
related to the employee.) With respect to exempt securities referred to in
Section 5 which do not require preclearance/reporting, employees must
nonetheless initially report those exempt securities defined in Section
5.F.-J. (This reporting requirement does not apply to holdings that are the
result of transactions in exempt securities as defined in Section 5.A.-E.)
Initial holdings reports must identify the title, number of shares, and
principal amount with respect to each security holding. Within 10 days of
commencement of employment, each employee shall file an Acknowledgement
stating that he or she has read and understands the provisions of the Code.
B. RECORDS OF SECURITIES TRANSACTIONS. All employees must preclear each
securities transaction (with the exception of exempt transactions in Section
5) with the Compliance Department or preclearance designee. At the time of
preclearance, the employee must provide a complete description of the
security and the nature of the transaction. As indicated above, employees
whose accounts are maintained at Merrill Lynch or BNYE or who provide
monthly statements directly from their brokers/dealers are deemed to have
automatically complied with the requirement to report executed transactions.
C. ANNUAL HOLDINGS REPORT. All employees must submit an annual holdings report
reflecting holdings as of a date no more than 30 days before the report is
submitted. As indicated above, employees whose accounts are maintained at
Merrill Lynch or BNYE or who provide monthly statements directly from their
brokers/dealers are deemed to have automatically complied with this
requirement.
With respect to exempt securities referred to in Section 5 which do not
require preclearance/reporting, employees must nonetheless annually report
the holdings of those exempt securities that are defined in Section 5.F.-J.
(This reporting requirement, however, does not apply to exempt securities as
defined in Section 5.A.-E.)
D. ANNUAL CERTIFICATION OF COMPLIANCE. All MLIM employees must certify annually
to the Compliance Department that (1) they have read and understand and
agree to abide by this Code of Ethics; (2) they have complied with all
requirements of the Code of Ethics, except as otherwise notified by the
Compliance Department that they have not complied with certain of such
requirements; and (3) they have reported all transactions required to be
reported under the Code of Ethics.
E. REVIEW OF TRANSACTIONS AND HOLDINGS REPORTS. All transactions reports and
holdings reports will be reviewed by appropriate management or compliance
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personnel according to procedures established by the Compliance Department.
SECTION 7 - REPORTING BY DISINTERESTED DIRECTORS OF MLIM FUNDS
A disinterested director of a Fund need only report a transaction in a
security if the director, at the time of that transaction, knew or, in the
ordinary course of fulfilling the official duties of a director of such Fund,
should have known that, during the 15-day period immediately preceding the date
of the transaction by the director, the security was purchased or sold by the
Fund or was being considered for purchase or sale by the Fund. In reporting such
transactions, disinterested directors must provide: the date of the transaction,
a complete description of the security, number of shares, principal amount,
nature of the transaction, price, commission, and name of broker/dealer through
which the transaction was effected.
As indicated in Section 6.D. for MLIM employees, disinterested directors
are similarly required to certify annually to the Compliance Department that (1)
they have read and understand and agree to abide by this Code of Ethics; (2)
they have complied with all requirements of the Code of Ethics, except as
otherwise reported to the Compliance Department that they have not complied with
certain of such requirements; and (3) they have reported all transactions
required to be reported under the Code of Ethics.
SECTION 8 - APPROVAL AND REVIEW BY BOARDS OF DIRECTORS
The Board of Directors of each MLIM Fund, including a majority of
directors who are disinterested directors, must approve this Code of Ethics.
Additionally, any material changes to this Code must be approved by the Board of
Directors within six months after adoption of any material change. The Board of
Directors must base its approval of the Code and any material changes to the
Code on a determination that the Code contains provisions reasonably necessary
to prevent employees from engaging in any conduct prohibited by Rule 17j-1.
Prior to approving the Code or any material change to the Code, the Board of
Directors must receive a certification from the Fund, the Investment Adviser or
Principal Underwriter that it has adopted procedures reasonably necessary to
prevent employees from violating the Code of Ethics.
SECTION 9 - REVIEW OF MLIM ANNUAL REPORT
At least annually, the Fund, the Investment Adviser and the Principal
Underwriter must furnish to the Fund's Board of Directors, and the Board of
Directors must consider, a written report that (1) describes any issues arising
under this Code of Ethics or procedures since the last report to the Board of
Directors, including, but not limited to, information about material violations
of the Code of Ethics or procedures and sanctions imposed in response to the
material violations and (2) certifies that the Fund, Investment Adviser and
Principal Underwriter have adopted procedures reasonably necessary to prevent
employees from violating this Code of Ethics.
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SECTION 10 - SANCTIONS
Potential violations of the Code of Ethics must be brought to the
attention of the Compliance Director or his designee and are investigated. Upon
completion of the investigation, if necessary, the matter will be reviewed by
the Code of Ethics Review Committee and the employee's senior manager. The Code
of Ethics Review Committee will make a determination as to whether any sanction
should be imposed. Sanctions will include, but are not limited to, a letter of
caution or warning, reversal of a trade, fine or other monetary penalty,
disgorgement of a profit or absorption of costs associated with a trade,
suspension of personal trading privileges, suspension of employment (with or
without compensation), and termination of employment.
SECTION 11 - EXCEPTIONS
An exception to any of the policies, restrictions or requirements set
forth herein may be granted only upon a showing by the employee to the Code of
Ethics Review Committee that such employee would suffer extreme financial
hardship should an exception not be granted. Should the subject of the exception
request involve a transaction in a security, a change in the employee's
investment objectives, tax strategies, or special new investment opportunities
would not constitute acceptable reasons for a waiver.
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