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EX.99.P(1)
Adopted December 14, 1994 and Amended March 18, 1996,
September, 1997 and December 17, 1997
Flag Investors Funds
Consolidated Code of Ethics
I. General
Rule 17j-1 under the Investment Company Act of 1940 (the "1940 Act")
makes it unlawful for certain persons to engage in "fraudulent" practices in
connection with purchases or sales by those persons of securities when those
securities are held or to be acquired by an investment company. The rule also
requires every investment company and the investment company's investment
advisor and, in certain cases, principal underwriter to adopt a Code of Ethics
containing provisions "reasonably necessary to prevent" such fraudulent
practices by so called "Access Persons."
Flag Investors Communications Fund, Inc. ("Communications"), Flag
Investors International Fund, Inc. ("International"), Flag Investors Emerging
Growth Fund, Inc. ("Emerging Growth"), Flag Investors Short-Intermediate Income
Fund, Inc. ("Short-Intermediate"), Flag Investors Value Builder Fund, Inc.
("Value Builder") Flag Investors Real Estate Securities Fund, Inc. ("Real
Estate") and Flag Investors Equity Partners Fund, Inc. ("Equity Partners") are
investment companies covered by the rule. Communications, International,
Emerging Growth, Short-Intermediate, Value Builder, Real Estate and Equity
Partners are also referred to herein individually as a "Fund," and collectively
as "Funds." Investment Company Capital Corp. ("ICC") is the investment advisor
to Communications, International, Emerging Growth, Short-Intermediate, Value
Builder, Real Estate and Equity Partners. Alex. Brown Investment Management
("ABIM") is the sub-advisor to Communications, Value Builder and Equity
Partners; The Glenmede Trust Company ("Glenmede") is the sub-advisor to
International; Brown Investment Advisory & Trust Company ("Brown Trust") is the
sub-advisor to Emerging Growth and Short-Intermediate; LaSalle Investment
Management (Securities) L.P. ("LaSalle") is the sub-advisor to Real Estate.
ABIM, Glenmede, Brown Trust and LaSalle are referred to herein as the
Sub-Advisors. ICC Distributors, Inc. ("ICC Distributors") is the principal
underwriter for each of the Funds. This document constitutes the Code of Ethics
required by Rule l7j-1.
II. Definitions
For purposes of this Code, the following terms have the meanings, set
forth as follows:
A. "Access Person" means:
1. Every director and officer of a Fund;
2. Every "advisory person" of the Funds and of ICC and the
Sub-Advisors. An advisory person is an employee who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase
or sale of a security by a Fund, or whose functions relate to
the making of any recommendations with respect to such
purchases or sales; and any natural person in a control
relationship with a Fund or the Fund's investment advisor or
sub-advisor who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of a
security;
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3. Any director or officer of ICC or the Sub-Advisors who,
with respect to a Fund for which such entity acts as
investment advisor or sub-advisor, makes any recommendation,
participates in the determination of which recommendation
shall be made, or whose principal function or duties relate to
the determination of which recommendation shall be made; or
who, in connection with his or her duties, obtains any
information concerning securities recommendations being made
by such investment advisor or sub-advisor to the Fund; and
4. Any director or officer of ICC Distributors who in the
ordinary course of his or her business makes, participates in
or obtains information regarding the purchase or sale of
securities for the Funds or whose functions or duties as part
of the ordinary course of his or her business relate to the
making of any recommendation to the Funds regarding any
purchase or sale of securities.
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. 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 his or her spouse, his or her minor children, a relative who
shares his or her home, or other persons by reason of any contract,
arrangement, understanding or relationship that provides him or her
with sole or shared voting or investment power.
C. "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the 1940 Act. Section 2(a)(9) defines "control" as 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 25% or more of a company's
outstanding voting securities is presumed to give the holder thereof
control over the company. Such presumption may be countered by the
facts and circumstances of a given situation.
D. "Covered Persons" means any officer, director or employee of the
Funds, ICC, the Sub-Advisors and ICC Distributors.
E. "Disinterested Director" means a Director of a Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the 1940 Act.
F. "Held or to be acquired" means (i) is or has been held by the Fund,
or (ii) is being or has been considered by such Fund or its investment
advisor or Sub-Advisor for purchase, within the most recent 15 days.
G. "Investment Personnel" means all Access Persons who occupy the
position of portfolio manager with respect to a Fund, all Access
Persons who provide or supply information and/or advice to any
portfolio manager, or who execute or help execute any portfolio
manager's decisions, and all Access Persons who, in connection with
their regular functions, obtain contemporaneous information regarding
the purchase or sale of a security by a Fund.
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H. "Purchase or sale of a security" means obtaining or disposing of
"beneficial ownership" (see B above) of that security and includes,
among other things, the writing of an option to purchase or sell a
security. A person who has any questions about beneficial ownership
should consult the Secretary of the Fund.
I. "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 securities
issued by the Government of the United States or an agency thereof,
bankers' acceptances, bank certificates of deposit, commercial paper
and registered, unaffiliated open-end investment companies.
J. A security is "being purchased or sold" by a Fund from the time when
a purchase or sale program has been communicated to the person who
places the buy and sell orders for the Fund until the time when such
program has been fully completed or terminated.
III. General Principles
A. Covered Persons
All Covered Persons are subject to the prohibitions of Rule
17j-1 against fraudulent practices and to the general fiduciary
principles as set forth in B and C below. Certain provisions of this
Code of Ethics, for example, the reporting requirements and certain
other requirements and restrictions contained herein apply to narrower
classes of persons, e.g., Access Persons or Investment Personnel.
However, everyone in the ICC, Sub-Advisor and ICC Distributors
organizations should appreciate the need to behave in an ethical manner
with respect to the Funds. In particular, all employees who are
involved in any way with the activities of a Fund should be wary of any
potential conflicts between their duty of loyalty to a Fund and their
own financial interests, particularly with respect to their own
securities trading activities. Employees should take care to preserve
the confidentiality of the Funds' business affairs. Employees who are
not "Access Persons" but who become aware of proposed Fund securities
transactions should not engage in transactions in those same securities
without the permission of the Secretary of the Fund. Otherwise,
employees who are not Access Persons are not limited in their personal
securities transactions by this Code, but such employees are encouraged
to consult with the Secretary of the Fund or with other officers of the
Funds if they have any doubts about the applicability of the Code to
any proposed transaction.
B. Statement of General Fiduciary Principles
The following principles are the policy of the Funds, ICC, he
Sub-Advisors and ICC Distributors and must be followed by all Covered
Persons:
1. It is the duty of all Covered Persons at all times to place
the interests of shareholders first;
2. All personal securities transactions must be conducted
consistent with this Code of Ethics and in such manner as to
avoid any actual or potential conflict of interest or any
abuse of an individual's position of trust and responsibility;
and
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3. Covered Persons must not take inappropriate advantage to
the detriment of shareholders of the Funds of their positions,
or the information they acquire, with or on behalf of the
Funds, ICC, the Sub-Advisors and ICC Distributors.
C. Fraudulent Practices
Rule 17j-1 makes it unlawful for any Covered Person, in
connection with a Fund with which such Covered Person has a
relationship, to:
1. Employ any device, scheme or artifice to defraud the Fund;
2. Make to the Fund any untrue statement of a material fact or
omit to state to the Fund a material fact necessary in order
to make the statements made, in light of the circumstances
under which they are made, not misleading;
3. Engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon the Fund;
or
4. Engage in any manipulative practice with respect to the
Fund.
IV. Restrictions on Personal Transactions
A. Preclearance
As set forth below, Access Persons, Investment Personnel and,
in certain instances, Covered Persons are required to "preclear"
personal securities transactions. These preclearance requirements and
procedures should be reasonably designed to identify any prohibition or
limitation applicable to the proposed transaction.
1. A Disinterested Director of a Fund shall not purchase or
sell a security that the Director knows is to be sold or
acquired by the Fund, without first obtaining written
authorization of the Fund's Secretary;
2. Covered Persons who, in connection with their regular
functions or duties do not make or participate in decisions
regarding the purchase or sale of securities for a Fund,
obtain information (other than publicly available information)
regarding such purchases or sales, or make or participate in
the making of recommendations in connection with such
purchases or sales, shall not purchase or sell a security that
the Covered Person knows is to be sold or acquired by the
Fund, without first obtaining written authorization of the
Fund's Secretary; and
3. Access Persons shall not purchase or sell a security (other
than on behalf of the Fund) without first obtaining written
authorization of the Fund's Secretary.
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B. Exemptions
The requirements of paragraph A above shall not apply to the
following transactions:
1. Purchases or sales over which the person had no direct or
indirect influence or control;
2. Purchases or sales which are non-volitional on the part of
either the person or the Fund;
3. Purchases which 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; or
5. Transactions in shares of any investment company.
Where a person has fiduciary responsibility which makes it
inappropriate, in the view of such person, to obtain prior
authorization with respect to a transaction, such person may complete
the transaction but must promptly notify the Secretary of the Fund or
another appropriate person.
C. Blackout Periods
No Access Person may execute securities transactions on a day
during which any Fund in the Access Person's complex has a pending
"buy" or "sell" order in the same security until that order is executed
or withdrawn. No Investment Personnel may buy or sell a security within
seven calendar days before and three calendar days after the Fund,
which the Investment Personnel manages, trades in that security. Access
Persons and Investment Personnel of ICC, ABIM and Brown Trust
(collectively Asset Management) would be exempt from the blackout
provisions of this Section IV.C. provided that: 1) the market
capitalization of a particular security exceeds $2 billion; and 2)
orders of the respective business unit of Asset Management do not
exceed ten (10) percent of the daily average trading volume for the
prior fifteen (15) days.
D. Prohibition Against Participation in IPOs
No Investment Personnel may acquire securities as a part of an
initial public offering by the issuer.
E. Private Placements
Investment Personnel may acquire securities in a private
placement only after prior approval by the Secretary of the Fund. The
Secretary of the Fund will consider the following factors, among
others, in determining whether to grant approval of the acquisition in
a private placement by Investment Personnel:
1. Whether the opportunity is being offered to the Investment
Personnel by virtue of his or her position with the Fund;
2. Whether the transaction appears upon reasonable inquiry and
investigation to present no reasonable likelihood of harm to
the Funds and which is otherwise in accordance with Rule
l7j-l; and
3. Whether the security offered in the private placement is a
security that is eligible for purchase, and should be made
available for purchase, by any of the Funds.
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F. Ban on Short-Term Trading Profits
No Investment Personnel may profit in the purchase and sale,
or sale and purchase, of the same (or equivalent) securities within 60
calendar days. Any profits realized on such short-term trades will be
disgorged to the benefit of the appropriate Fund, if practical.
V. Compliance Procedures
A. Reporting Requirements
1. Every Access Person shall report(1) to the Secretary of
the Fund the following information with respect to
transactions in any security in which such Access Person(2)
has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in a security, whether or not
the security is held or to be acquired by the Fund:
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(1) Any such report may contain a statement that the report shall not be
construed as an admission by the person making the report that he has any
direct or indirect beneficial ownership in the security to which the report
relates.
(2) No report is required if such person is a Disinterested Director, and such
person would be required to make such report solely by reason of being a
director, except where such director knew or, in the ordinary course of
fulfilling his official duties as a director of the Fund, should have known
that during the 15-day period immediately preceding or after the date of the
transaction in a security by the director, such security is or was purchased
or sold, or considered for purchase or sale by the Fund.
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a. The date of the transaction, title and number of
shares, and the principal amount of each security
involved;
b. The nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
c. The price at which the transaction was effected;
d. The name of the broker, dealer or bank with or
through whom the transaction was effected; and
e. The date the report was signed.
2. Every report shall be made not later than ten days after
the end of the calendar quarter in which the transaction to
which the report relates was effected, and shall be in the
form of Appendix A hereto. In the event no reportable
transaction occurred during the quarter, the report should be
so noted and returned signed and dated.
3. Notwithstanding the provisions of Section 1 hereof, no
person shall be required to make a report with respect to
transactions effected for any account over which such person
does not have any direct or indirect influence or control.
B. Disclosure of Personal Holdings
Each Access Person must disclose to the Secretary of the Fund,
all personal securities holdings - irrespective of trading activity -
upon commencement of employment or within two weeks of receipt of this
Code of Ethics. Each Access Person must revise the list of such
holdings thereafter on an annual basis.
C. Records of Securities Transactions
Access Persons must direct each brokerage firm or bank at
which such person maintains a securities account to supply to the
Secretary of the Fund, on a timely basis, duplicate copies of
confirmations of all personal securities transactions and copies of
periodic statements for all securities accounts.
D. Certification of Compliance with Code of Ethics
Access Persons must certify annually that they have read and
understand this Code of Ethics and recognize that they are subject to
the Code and that they have complied with the Code and its reporting
requirements.
E. Post-Trade Monitoring
Each Fund must implement procedures to monitor personal
investment activity by Access Persons after preclearance has been
granted in order to identify patterns of personal securities trading
occurring before Fund trades.
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VI. Additional Restrictions
A. Prohibition Against Receiving Gifts
No Access Person may accept any gift or other thing of more
than de minimis value from any person or entity that does business with
or on behalf of the Funds, ICC, the Sub-Advisors and ICC Distributors.
B. Prohibition Against Serving as Director
No Investment Personnel may serve on the board of directors of
a publicly traded company, absent prior authorization from the
Secretary of the Fund based upon a determination that the board service
would be consistent with the interests of the Fund and its
shareholders. If such authorization is granted, the Investment
Personnel that is serving as a director must be isolated from those
making investment decisions through a "Chinese Wall" or other
procedures.
VII. Review and Enforcement
A. General
Access Persons who have supervisory responsibility should take
reasonable steps to protect against violations of Rule 17j-1 by
employees for whom they are responsible. Supervisors are not expected
to guarantee the conduct of their employees, but should be alert to
possible problems. In addition, Access Persons who become aware of
violations of Rule 17j-1 or actions inconsistent with this Code are
expected to take steps to correct such problems. Depending on the
gravity of the situation, it may be appropriate for an Access Person to
bring a problem to the attention of the Chairman of a Fund. The
Chairman may agree to handle such matters in confidence, subject to the
right of the Board of Directors to obtain information about any
activities of the Chairman.
B. Review
The Secretary of each Fund shall notify all Access Persons of
their obligations under Rule 17j-1 and the Code. The Secretary of the
Fund shall review all reports and shall promptly consider all requests
made by Access Persons of ICC, the Sub-Advisors and ICC Distributors
pursuant to the provisions of the Code. If problems arise, the
Secretary of each Fund may attempt to resolve those problems
informally, but he or she has the authority to recommend sanctions to
the Chairman of the Fund or to the Board of Directors where
appropriate. The Secretary of the Fund will make a quarterly report to
the Board of Directors concerning all reports received. Subject to the
authority of the Board of Directors, the Secretary of each Fund shall
have broad discretion to administer the Code so as to achieve its
purposes and prevent the problems that Rule 17j-1 was designed to
resolve.
C. Enforcement
1. The Secretary of the Fund shall compare all reported
personal securities transactions with completed portfolio
transactions of the Funds and a list of securities being
considered for purchase or sale by the Funds to determine
whether a violation of this Code may have occurred. Before
making any determination that a violation has been committed
by any person, the Secretary of the Fund shall give such
person an opportunity to supply additional explanatory
material.
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2. If the Secretary of the Fund determines that a violation of
this Code may have occurred, he or she shall submit his or her
written determination, together with the confidential monthly
report and any additional explanatory material provided by the
individual, to the Chairman of the Fund and outside counsel,
who shall make an independent determination as to whether a
violation has occurred.
3. If the Chairman and outside counsel find that a violation
has occurred, the Chairman shall impose upon the individual
such sanctions as he or she deems appropriate and shall report
the violation and the sanction imposed to the Board of
Directors of the Fund.
4. No person shall participate in a determination of whether
he or she has committed a violation of the Code or of the
imposition of any sanction against himself or herself. If a
securities transaction of the Chairman is under consideration,
the President shall act in all respects in the manner
prescribed herein for the Chairman.
In the event the Secretary of a Fund is absent or unable to serve, the
Treasurer or Vice Presidents of the Funds, respectively, shall assume
the responsibilities and perform the obligations of the Secretary of
each Fund under this Code.
VIII. Records
The Funds shall maintain records in the manner and to the extent set
forth below, which records may be maintained on microfilm under the conditions
described in Rule 31a-2 under the 1940 Act and shall be available for
examination by representatives of the Securities and Exchange Commission.
A. A copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved in an
easily accessible place;
B. A record of any violation of this Code and of any action taken as a
result of such violation shall be preserved in an easily accessible
place for a period of not less than five years following the end of the
fiscal year in which the violation occurs;
C. A copy of each report made by a director pursuant to this Code shall
be preserved for a period of not less than five years from the end of
the fiscal year in which it is made, the first two years in an easily
accessible place; and
D. A list of all persons who are, or within the past five years have
been, required to make reports pursuant to this Code shall be
maintained in an easily accessible place.
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IX. Investment Advisor's, Sub-Advisor's and Principal Underwriter's Code of
Ethics
A. The procedures for clearance and reporting of personal
securities transactions set forth in sections IV and V hereof shall not
apply to any Access Person who is subject to substantially similar
requirements under procedures established by ICC, the Sub-Advisors and
ICC Distributors.
B. Each of ICC, the Sub-Advisors and ICC Distributors shall:
1. Submit to the Board of Directors of the Fund a copy of its
code of ethics adopted pursuant to Rule 17j-1;
2. Promptly report to the Fund in writing any material
amendments to such Code;
3. Promptly furnish to the Fund upon request copies of any
reports made pursuant to such Code by any person who is an
Access Person as to the Fund; and
4. Immediately furnish to the Fund, without request, all
material information regarding any violation of such Code by
any person who is an Access Person as to the Fund.
X. Miscellaneous
A. Confidentiality. All reports of securities transactions and
any other information filed with the Funds pursuant to this Code shall
be treated as confidential.
B. Interpretation of Provisions. The Board of Directors may from
time to time adopt such interpretations of this Code as it deems
appropriate.
C. Periodic Review and Reporting. The Chairman of each Fund shall
report to the Board of Directors at least annually as to the operation,
and any violations, of this Code and shall address in any such report
the need (if any) for further changes or modifications to this Code.
Adopted this 14th day
of December, 1994.
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APPENDIX A
FLAG INVESTORS FUNDS
Transaction Report
To: The Secretary, FLAG INVESTORS FUNDS
From: _______________________________________________________________
This Transaction Report (the "Report") is submitted pursuant to the
Code of Ethics of the Flag Investors Funds (the "Funds"), and supplies, on the
table on the reverse side, information with respect to a transaction in any
security in which I may be deemed to have, or by reason of such transaction
acquire, any direct or indirect beneficial ownership interest, whether or not
such security is a security held or to be acquired by any one or more of the
Funds for the calendar quarter ended ______________ 20 .* I understand that I
may have beneficial ownership of securities of which certain other persons are
the record owners as well as securities of which I am the record owner, and I
have included transactions in such securities in this Report where applicable. I
also understand that:
(i) If I am a "Disinterested" Director of the Funds, I am required to
report a transaction in a security only in such cases as I knew or, in the
ordinary course of fulfilling my official duties as a Director of the Fund,
should have known that, during the 15-day period immediately preceding or after
the date of my purchase or sale, the security was purchased or sold, or was
considered for purchase or sale by a Fund or its investment advisor for such
Fund; and
(ii) I am not required to include in this Report transactions effected
for any account over which I do not have any direct or indirect influence or
control.
I hereby certify that:
1. I am fully familiar with the Code of Ethics of the Fund;
2. To the best of my knowledge, the information furnished in this
Report is complete, true and correct; and
3. If, during the month indicated, I have obtained, through the
acquisition of securities or otherwise, ownership of 1/2% or more of the
outstanding voting securities of any issuer, I have reported such fact to the
Fund.
_________________________________________________
Date Signature
*If you had no reportable transactions during the quarter, please enter "none"
in the table on the next page.
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<TABLE>
<CAPTION>
Date of Shares or Nature of Broker
Trans- Title of Principal Trans- Price Dealer
action Issuer Securities Amount action* Per Unit Or Bank**
------- ------------ ---------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
* Purchase, sale or other type of disposition or acquisition.
** Indicate in this column if you wish to disclaim beneficial ownership of any
security listed in this report.
