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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;
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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;
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.
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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.
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
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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
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.
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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.
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;
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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.
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
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(1) Any such report may contain a statement that the report shall not be
construced 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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acquires, any direct or indirect beneficial ownership in a security,
whether or not the security is held or to be acquired by the Fund:
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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_____________________
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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<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Date of Shares or Nature of Broker
Trans- Title of Principal Trans- Price Dealer
action Issuer Securities Amount action* Per Unit Or Bank**
------- ---------- ---------- --------- --------- -------- -------
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* 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.
