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MASTERWORKS FUNDS INC.
MASTER INVESTMENT PORTFOLIO
MANAGED SERIES INVESTMENT TRUST
Code of Ethics
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This Code of Ethics shall apply to each investment company or an
affiliate that adopts the Code by action of its Board of Directors or
Trustees/1/ (each, a "Company").
1. Purposes
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Rule 17j-1 under the Investment Company Act of 1940, as amended (the
"1940 Act") generally proscribes fraudulent or manipulative practices by
Officers and Directors of the Company (as well as other persons) with respect to
purchases or sales of securities "held or to be acquired"/2/ by the Company. The
purpose of this Code of Ethics is to provide regulations and procedures
consistent with the 1940 Act and Rule 17j-1 designed to prevent violations of
the prohibitions of Rule 17j-1(a):
(a) It shall be unlawful for any affiliated person of or
principal underwriter for a registered investment
company, or any affiliated person of a manager of or
principal underwriter for a registered investment
company, in connection with the purchase or sale,
directly or indirectly, by such person of a security
held or to be acquired, as defined in this section, by
such registered investment company --
(1) To employ any device, scheme or artifice to
defraud such registered investment company;
(2) To make to such registered investment company any
untrue statement of a material fact or omit to
state to such registered investment company a
material fact necessary in order to make the
statements made, in light of the circumstances
under which they are made, not misleading;
(3) To engage in any act, practice, or course of
business which operates or would operate as a
fraud or deceit upon any such registered
investment company; or
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/1/ As used herein, "Director" shall mean a director or trustee, and "Company"
shall mean a corporation or a trust.
/2/ A security is "held or to be acquired" if within the most recent 15 days it
(i) is or has been held by the Company, or (ii) is being held or has been
considered by the Company or its manager(s) for purchase by such Company. A
purchase or sale includes the writing of an option to purchase or sell.
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(4) To engage in any manipulative practice with
respect to such registered investment company.
In addition, the Investment Company Institute (the "ICI") has
suggested that investment companies adopt additional measures to obviate
conflicts, prevent and detect abusive practices, and preserve the confidence of
investors. The policies, prohibitions, and procedures included in this Code of
Ethics substantially conform to the additional measures suggested by the ICI.
2. Company Policies
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It is the Company's policy that no access person (defined below) of
the Company shall engage in any act, practice, or course of conduct that would
violate the provisions of Rule 17j-(a) set forth above. In this regard, each
access person has a duty at all times to place the interests of Company
shareholders first and is required to conduct all personal securities
transactions consistent with the letter and spirit of this Code of Ethics and in
such a manner as to avoid any actual or potential conflicts of interest or any
abuse of the access person's position of trust and responsibility. It is a
fundamental standard that access persons should not take inappropriate advantage
of their positions.
3. Definitions
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(a) "Fund" means each investment portfolio of each Company
covered by this Code.
(b) "Access person" means: (a) any director, officer or
advisory person of a Fund; (b) each employee (if any)
of the Company (or of any company in a control
relationship to the Company) who in connection with
his/her regular duties obtains information about the
purchase or sale of a security by the Company or whose
functions relate to the making of such recommendations;
and (c) any natural person in a control relationship to
the Company who obtains information concerning
recommendations made to the Company with regard to the
purchase or sale of a security. An employee of the
Company's manager, or an entity that controls or is
under common control with the Company's manager, shall
not be deemed to be an "access person" hereunder unless
he or she also serves as a Director or Officer of the
Company, provided the individual is subject to a Code
of Ethics adopted by his or her employer that complies
with the requirements of Rule 17j-1 and substantially
conforms to the policies and procedures suggested by
the ICI.
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(c) "Advisory person" means (i) any employee of the Company
or of any company in a control relationship to the
Company, 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 (ii) any natural person in a
control relationship to the Company who obtains
information concerning recommendations with regard to
the purchase or sale of a security.
(d) A security is "being considered for purchase or sale"
when a recommendation to purchase or sell a security
has been made and communicated and, with respect to the
person making the recommendation, when such person
seriously considers making such a recommendation.
(e) "Beneficial ownership" shall be interpreted with
reference to the definition contained in the provisions
of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, as such
provision may be interpreted by the Securities and
Exchange Commission./3/
(f) "Control" shall have the same meaning as that set forth
in Section 2(a)(9) of 1940 Act.
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/3/ You will be treated as the "beneficial owner" of a security under this
policy only if two tests are met with respect to a transaction in the security:
(1) You have or you share voting power and/or investment power with
respect to the security. (This is the same test for reporting beneficial
ownership of securities for the proxy statements of public companies, and
includes, among other things, securities which you have the right to acquire
within 60 days.)
(2) You have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly
or indirectly, to profit, or to share the profit, from the transaction.
(b) An indirect pecuniary interest is any nondirect financial
interest, but is specifically defined in the rules to include securities held by
members of your immediate family sharing the same household; securities held by
a partnership of which you are a general partner; securities held by a trust of
which you are the settler if you can revoke the trust, or a beneficiary if you
have or share investment control with the Trustee/Director; and equity
securities which may be acquired upon exercise of an option or other right, or
through conversion.
Unless both tests are satisfied, you are not the beneficial owner.
For interpretive guidance on either of the two tests, you should
consult the Company's designated compliance person. A report shall 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.
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(g) "Disinterested Director" means a Director of the
Company who is not an "interested person" of the
Company within the meaning of Section 2(a)(19) of the
1940 Act.
(h) "Investment personnel" means any access person of the
Company who is either a portfolio manager (who makes
decisions about fund investments) or a person who
assists in the investment process (includes analysts
and traders). Other access persons who may from time to
time obtain information about the purchase or sale of a
security by the Company are not investment personnel
for purposes of this Code of Ethics.
(i) "Manager" means an adviser, subadviser or any affiliate
that serves as manager to any Fund of the Company.
(j) "Purchase or sale of a security" includes, inter alia,
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the writing of an option to purchase or sell a
security.
(k) A "non-exempt security" is any security other than
shares of registered open-end investment companies,
money-market instruments, securities issued by the U.S.
Government, or short-term securities guaranteed by the
U.S. Government or issued or guaranteed by its agencies
or instrumentalities.
(l) "Short-term trading" is defined as a purchase and sale,
or sale and purchase, of the same (or equivalent)
securities, which both occur within any 60-day period.
4. Prohibited Purchases and Sales
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(a) No access person shall purchase or sell, directly or
indirectly, any "non-exempt security" where he or she
has, or by reason of such transactions acquires or
disposes of, any direct or indirect beneficial
ownership, and where he or she knows or should have
known, at the time of such purchase or sale, that the
non-exempt security:
(i) is being considered for purchase or sale by a Fund; or
(ii) is being purchased or sold by a Fund.
(b) Investment personnel are prohibited from purchasing any
non-exempt security in an initial public offering.
Investment personnel are prohibited from purchasing any
non-exempt
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security in a private placement unless they obtain the
prior written approval of the Company's designated
compliance person, who shall consult with investment
personnel who have no personal interest in the issuer
prior to granting such approval.
(c) Any profits realized by investment personnel from short-
term trading of a non-exempt security shall be
disgorged to the Company.
(d) Investment personnel are prohibited from receiving any
gift or item valued at more than $100 per donor per
year from any person or entity that does business with
or on behalf of the Company.
(e) Investment personnel are prohibited from serving on the
board of directors of a company whose stock is publicly
traded, absent prior authorization from the Company's
designated compliance person based upon a determination
that the board service would be consistent with the
interests of the Company and its shareholders.
(f) Investment personnel must review the manager's
Restricted Trading List prior to making any personal
trade. The Restricted Trading List is updated daily and
should be reviewed on the day the order for the
personal trade is placed.
(g) No access person shall recommend any securities
transaction by a Fund without having disclosed his or
her interest, if any, in such securities or the issuer
thereof, including without limitation (i) his or her
direct or indirect beneficial ownership of any
securities of such issuer; (ii) any contemplated
transaction by such person in such securities; (iii)
any position with such issuer or its affiliates; and
(iv) any present or proposed business relationship
between such issuer or its affiliates, on the one hand,
and such person or any party in which such person has a
significant interest, on the other.
5. Exempted Transactions
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The prohibitions of Section 3 of this Code shall not apply to:
(a) Purchases or sales of non-exempt securities which are
not eligible for purchase or sale by any Fund of the
Company.
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(b) Purchases or sales which are non-volitional on the part
of the access person.
(c) Purchases which are part of an automatic dividend
reinvestment plan.
(d) Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
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securities, to the extent such rights were acquired
from such issuer, and sales of such rights so acquired.
(e) Sales which are effected pursuant to a tender offer or
similar transaction involving an offer to acquire all
or a significant portion of a class of securities.
(f) Purchases or sales which are only remotely potentially
harmful to the Company or its Funds because the
purchase or sale would be very unlikely to affect a
highly institutional market.
(g) Purchases or sales of non-exempt securities by an
access person who knows or should have known, at the
time of such purchase or sale, that the non-exempt
security: (i) is being considered for purchase or sale
only as part of a security index by an index or index
allocation Fund; or (ii) is being purchased or sold
only as part of a security index by an index or index
allocation Fund.
6. Reporting Procedures
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In order to provide the Company with information to enable it to
determine with reasonable assurance whether the provisions of Rule 17j-1(a) are
being observed by its access persons:
(a) Every access person other than a disinterested Director
shall submit reports in the form attached hereto as
Exhibit A to a Fund's designated compliance person
showing all transactions in any "reportable" security
in which such access person has, or by reason of such
transaction acquires or disposes of, any direct or
indirect beneficial ownership.
Such reports shall be filed not later than 10 days
after the end of each calendar quarter, but need not
show transactions over which such person had no direct
or indirect influence or control. In lieu of providing
such reports, an applicant may arrange for duplicate
confirmations and account statements to be provided
directly to the Company's designated compliance person.
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(b) A disinterested Director of the Company shall submit a
quarterly report as required under paragraph (a) above
but only for a transaction in a "reportable" security
if such Director knew, at the time of that transaction,
or, in the ordinary course of fulfilling his or her
official duties as a Director, should have known that
during the 15-day period immediately preceding the date
of the transaction, such security is or was purchased
or sold or was considered for purchase or sale by a
Fund or the Fund's Manager. No report is required if
the Director had no direct or indirect influence or
control over his or her transaction. Actual or
constructive knowledge that a reportable security is or
was purchased or sold, or was considered for purchase
or sale, only as part of a security index by an index
Fund or index allocation Fund does not trigger a
reporting duty under this paragraph (b).
(c) The Company does not believe that personal transactions
by its access persons in any securities other than
securities which the Company is permitted to purchase
would be prohibited by Rule 17j-1(a). For purposes of
subparagraphs (a) and (b) above, "reportable"
securities include only non-exempt securities which the
Company's Funds are permitted to acquire under their
investment objectives and policies set forth in the
Company's then current prospectus(es) under the
Securities Act of 1933, as amended. In the event that
any of the investment objectives and policies for the
Funds of the Company changes in the future, the Board
of Directors may reconsider the scope of this reporting
requirement in light of such change and Rule 17j-1.
(d) Investment personnel are required to provide copies of
all brokerage statements and confirmations to the
Company's designated compliance person. All investment
personnel shall disclose all personal securities
holdings upon commencement of employment with a Fund
and annually thereafter.
(e) Every access person of the Company shall provide an
annual certification in the form of Exhibit B to the
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Company's designated compliance person. This
requirement applies to all Directors, including
disinterested Directors, of the Company.
(f) Each Company's designated compliance person shall
notify each "access person" of the Company who may be
required to make reports pursuant to this Code that
such person is subject to reporting requirements and
shall deliver a copy of this Code to each such person.
Any amendments to this Code shall be
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similarly furnished to each person to whom this Code is
applicable.
(g) The Company's designated compliance person shall report
to the Board of Directors:
(i) at the next meeting following the receipt of
any report on Exhibit A with respect to each
reported transaction in a security which was,
within 15 days before or after the date of the
reported transaction: (A) purchased or sold by
the Company, or (B) considered by the Company
for purchase or sale, unless (in either case)
the amount involved in the reported transaction
was less than $50,000 or the security was
purchased or sold by the Company only as part
of a security index by an index Fund or an
index allocation Fund;
(ii) with respect to any transaction not required to
be reported to the Board by the operation of
subparagraph (a), that the Company's designated
compliance person believes nonetheless may
evidence a violation of this Code; and
(iii) apparent violations of the reporting
requirements stated herein.
(h) The Board of Directors shall consider reports made to
it hereunder and shall determine whether the policies
established in Section 2 above have been violated, and
what sanctions, if any, should be imposed. The Board of
Directors shall review the operation of this policy at
least once a year.
(i) This Code, a copy of each report by an access person,
any written report hereunder by each Company's
designated compliance person and lists of all persons
required to make reports shall be preserved with the
Company's records for the period required by Rule 17j-
1.
7. Insider Trading and Conflicts of Interest
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The Board of Directors of the Company has adopted a policy statement
on insider trading and conflicts of interests (the "Policy Statement"), a copy
of which is attached hereto as Exhibit C. All access persons are required by
this Code of Ethics to read and familiarize themselves with their
responsibilities under the Policy Statement.
8. Sanctions
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Upon discovering a violation of this Code, the Board of Directors of
the Company may impose such sanctions as it deems appropriate, including, inter
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alia, a letter of censure or suspension or termination of the employment of the
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violator.
Adopted as Revised: February 1, 1996
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EXHIBIT A
MASTERWORKS FUNDS INC.
MASTER INVESTMENT PORTFOLIO
MANAGED SERIES INVESTMENT TRUST
Securities Transaction Report
For the Calendar Quarter Ended _________________
(mo./day/yr.)
To the Designated Compliance Person:
During the quarter referred to above, the following transactions were
effected in reportable securities of which I had, or by reason of such
transaction acquired or disposed of, direct or indirect beneficial ownership,
and which are required to be reported pursuant to the Company's Code of Ethics:
No. of Dollar Broker
Shares or Amount Nature Dealer
Date of Principal of of or
Security Transaction Amount Transaction Transaction Price Bank
This report (i) excludes transactions with respect to which I had no
direct or indirect influence of control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Dated: _______________________________ Signature: _____________________________
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EXHIBIT B
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MASTERWORKS FUNDS.
MASTER INVESTMENT PORTFOLIO
MANAGED SERIES INVESTMENT TRUST
Annual Certification of Compliance
for the Calendar Year Ended December 31, 199__.
To the Designated Compliance Person:
I hereby certify that, during the calendar year specified above, I
have complied with the requirements of the Code of Ethics and have disclosed or
reported all personal securities transactions required to be disclosed or
reported pursuant to the requirements of the Code of Ethics. I have read and
understand the Code of Ethics and recognize that I am subject thereto.
Dated: ______________________________ Signature: ____________________________
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EXHIBIT C
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POLICY STATEMENT ON INSIDER TRADING
A. Introduction
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The Company seeks to foster a reputation for integrity and
professionalism. That reputation is a vital business asset. The confidence and
trust placed in us by investors in the Company is something we should value and
endeavor to protect. To further that goal, this Policy Statement implements
procedures to deter the misuse of material, nonpublic information in securities
transactions.
Trading securities while in possession of material, nonpublic
information or improperly communicating that information to others may expose
you to stringent penalties. Criminal sanctions may include a fine of up to
$1,000,000 and/or ten years imprisonment. The Securities and Exchange Commission
can recover the profits gained or losses avoided through the violative trading,
a penalty of up to three times the illicit windfall and an order permanently
barring you from the securities industry. Finally, you may be sued by investors
seeking to recover damages for insider trading violations.
Regardless of whether a government inquiry occurs, the Company views
seriously any violation of this Policy Statement. Such violations constitute
grounds for disciplinary sanctions, including dismissal.
B. Scope of the Policy Statement
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This Policy Statement is drafted broadly; it will be applied and
interpreted in a similar manner. This Policy Statement applies to securities
trading and information handling by Access Persons, as defined in the Company's
Code of Ethics, (including spouses, minor children and adult members of their
households).
The law of insider trading is unsettled; an individual legitimately
may be uncertain about the application of the Policy Statement in a particular
circumstance. Often, a single question can forestall disciplinary action or
complex legal problems. You should direct any questions relating to the Policy
Statement to the Company's designated compliance person (the "Compliance
Person"). You also must notify the Compliance Person immediately if you have any
reason to believe that a violation of the Policy Statement has occurred or is
about to occur.
C. Policy Statement
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No person to whom this Policy Statement applies, including you, may
trade, either personally or on behalf of others, while in possession of
material, nonpublic information; nor
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may the Company's Access Persons communicate material, nonpublic information to
others in violation of the law. This section reviews principles important to the
Policy Statement.
1. What is Material Information?
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Information is "material" when there is a substantial likelihood that
a reasonable investor would consider it important in making his or her
investment decisions. Generally, this is information whose disclosure will have
a substantial effect on the price of a company's securities. No simple "bright
line" test exists to determine when information is material; assessments of
materiality involve a highly fact-specific inquiry. For this reason, you should
direct any questions about whether information is material to the Compliance
Person.
Material information often relates to a company's results and
operations including, for example, dividend changes, earning results, changes in
previously released earnings estimates, significant merger or acquisition
proposals or agreements, major litigation, liquidation problems, and
extraordinary management developments.
Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or sell securities
may, in some contexts, be deemed material. Similarly, prepublication information
regarding reports in the financial press also may be deemed material. For
example, the Supreme Court upheld the criminal convictions of insider trading
defendants who capitalized on prepublication information about the Wall Street
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Journal's "Heard on the Street" column.
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2. What is Nonpublic Information?
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Information is "public" when it has been disseminated broadly to
investors in the marketplace. Tangible evidence of such dissemination is the
best indication that the information is public. For example, information is
public after it has become available to the general public through a public
filing with the Securities and Exchange Commission ("SEC") or some other
government agency, the Dow Jones "tape" or the Wall Street Journal or some other
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publication of general circulation, and after sufficient time has passed so that
the information has been disseminated widely.
3. Identifying Inside Information
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Before executing any trade for yourself or others, including the
Company, you must determine whether you have access to material, nonpublic
information. If you think that you might have access to material, nonpublic
information, you should take the following steps:
(i) Report the information and proposed trade immediately to the
Compliance Person.
(ii) Do not purchase or sell the securities on behalf of yourself or
others, including the Company.
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(iii) Do not communicate the information inside or outside the
Company, other than to the Compliance Person.
(iv) After the Compliance Person has reviewed the issue, the firm
will determine whether the information is material and
nonpublic and, if so, what action the Company should take.
You should consult with the Compliance Person before taking any
action. This degree of caution will protect you and the Company.
4. Contact with Public Companies
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The Company's contacts with public companies represent an important
part of our research efforts. The Company may make investment decisions on the
basis of the Company's conclusions formed through such contacts and analysis of
publicly-available information. Difficult legal issues arise, however, when, in
the course of these contacts, a Company employee or other person subject to this
Policy Statement becomes aware of material, nonpublic information. This could
happen, for example, if a company's Chief Financial Officer prematurely
disclosed quarterly results to an analyst or an investor relations
representative makes a selective disclosure of adverse news to a handful of
investors. In such situations, the Company must make a judgment as to its
further conduct. To protect yourself and the Company, you should contact the
Compliance Person immediately if you believe that you may have received
material, nonpublic information.
5. Tender Offers
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Tender offers represent a particular concern in the law of insider
trading for two reasons. First, tender offer activity often produces
extraordinary gyrations in the price of the target company's securities. Trading
during this time period is more likely to attract regulatory attention (and
produces a disproportionate percentage of insider trading cases). Second, the
SEC has adopted a rule which expressly forbids trading and "tipping" while in
possession of material, nonpublic information regarding a tender offer received
from the tender offeror, the target company or anyone acting on behalf of
either. Company employees and others subject to this Policy Statement should
exercise particular caution any time they become aware of nonpublic information
relating to a tender offer.
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