EX-99.2R 14 codeofethics.txt Exhibit 2.r ================================================================================ CODE OF ETHICS RMK High Income Fund, Inc. Morgan Keegan Select Fund, Inc. Regions Morgan Keegan Select Funds Morgan Asset Management, Inc. Morgan Keegan & Co., Inc. ------------------------------------------------------------------------ ADOPTED MAY 8, 2003 ------------------------------------------------------------------------------ DEFINITIONS ------------------------------------------------------------------------------ ACCESS PERSON is defined as (1) any director, officer, general partner, or Advisory Person of the Funds or the Adviser and (2) any director, officer or general partner of the Funds' principal underwriter who, in the ordinary course of business, makes, participates in or obtains information regarding, the purchase or sale of Covered Securities by the Funds, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Funds regarding the purchase or sale of Covered Securities. ADVISER means Morgan Asset Management, Inc. ADVISORY PERSON is defined as (i) any employee of the Adviser or of any company in a control relationship with the Adviser, who, in connection with the employee's regular functions or duties, makes, participates in, or obtains information regarding the purchases or sales of Covered Securities by the Funds, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (ii) any employee of the Funds who in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Covered Securities by the Funds, or whose functions related to the making of any recommendations with respect to purchases or sales, or any person in a control relationship with the Funds who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of Covered Securities by the Funds; and the Portfolio Managers, or any other person the Legal/Compliance Department designates as an Advisory Person. ACCOUNT is defined as the following securities accounts: any personal account; any joint or tenant-in-common account in which the person has an interest or is a participant; any account for which the person acts as trustee, executor, or custodian; any account over which the person has investment discretion or otherwise can exercise control (other than non-related clients' accounts over which the person has investment discretion), including the accounts of entities controlled directly or indirectly by the person; any other account in which the person has a direct or indirect Beneficial Interest provided, however, that Account shall not include any securities account over which the person has no investment discretion and cannot exercise control over any investment decisions, including any blind trusts. BENEFICIAL OWNERSHIP/INTEREST means a direct or indirect "pecuniary interest" (as defined in subparagraph (a)(2) of Rule 16a-1 under the Securities Exchange Act of 1934) ("1934 Act") that is held or shared by a person directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, in a security. The term "pecuniary interest," as it is defined under the 1934 Act, is generally understood to mean having the opportunity to share, directly or indirectly, in any profit or loss on a transaction in securities, including but not limited to all joint accounts, partnerships and trusts. An Access Person is presumed to have Beneficial Ownership of any Immediate Family member's account. COVERED SECURITY is defined as a security as defined in section 2(a)(36) of the Investment Company Act of 1940 ("1940 Act"), except that it does not include direct obligations of the United States government, bankers' acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments, repurchase agreements, or shares issued by open-end funds. ------------------------------------------------------------------------ 1 EQUIVALENT SECURITY is defined as any Securities issued by the same entity as the issuer or a security, including options, rights, warrants, preferred stock, restricted stock, bonds, and other obligations of that issuer. IMMEDIATE FAMILY is defined as a person's spouse, a person's minor child, any adult residing in the same household as the person, any relative dependant on the person for financial support, and any other person designated by the Compliance Department. INDEPENDENT FUND DIRECTOR is defined as a director of the Fund who is not an "interested person" of the fund within the meaning of Section 2(a)(19) of the 1940 Act. INITIAL PUBLIC OFFERING is defined as an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the 1934 Act. INVESTMENT CONSIDERATION LIST includes all securities the Funds have purchased or sold in the last seven (7) calendar days, including the date purchased or sold, and all securities the Funds are considering for purchase or sale. The list will also identify those securities that are currently a component of Standard & Poor 500. INVESTMENT PERSONNEL include Access Persons with direct responsibility and authority to make investment decisions affecting the Funds (such as portfolio managers and chief investment officers); Access Persons who provide information and advice to such Portfolio Managers (such as securities analysts employed by the Adviser); and Access Persons who assist in executing investment decisions for the Funds (such as traders). LIMITED OFFERING is defined as an offering that is exempt from registration under the Securities Act of 1933 ("1933 Act") pursuant to section 4(2) or section 4(6) or 77d(6)) or pursuant to rule 504, rule 505, or rule 506 under the 1933 Act, or pursuant to any other exemption. PORTFOLIO MANAGER is defined as any person or persons with principal day-to-day responsibility for managing the Funds' portfolios. PORTFOLIO SECURITIES is defined as stocks, notes, bonds, debentures, or other evidences of indebtedness, and all derivative investments, such as options and warrants, being held by a Fund, or presently being contemplated for purchase by a Fund. SECURITIES TRANSACTION is defined as a purchase or sale of securities, or writing an option to purchase or sell a Covered Security. ------------------------------------------------------------------------------ 1. DUTY OF CARE AND LOYALTY ------------------------------------------------------------------------------ This Code of Ethics ("Code") is based on the principle that certain officers, directors, and employees of RMK High Income Fund, Inc., Morgan Keegan Select Fund, Inc., Regions Morgan Keegan Select Funds (collectively, the "Funds"), Morgan Asset Management, Inc. ("MAM") and Morgan Keegan & Company, Inc. ("Morgan Keegan") owe a fiduciary duty to, among others, the Fund, its shareholders and the clients of MAM and Morgan Keegan. The Code applies to every Access Person of the Funds, MAM, and Morgan Keegan as described below and required by SEC Rule 17j-1(a)(1). All such Access Persons must avoid ------------------------------------------------------------------------ 2 activities, interests, relationships or conflicts of interest that might interfere with making decisions in the best interests of the Funds and its shareholders. All Access Persons must at all times: 1. Place the interests of the Funds first. In other words, you must scrupulously avoid conflicts of interest in which you serve your own personal interests to the detriment of the interests of the Funds and its shareholders. 2. Conduct all personal Securities Transactions in Accounts in full compliance with this Code. 3. Avoid taking inappropriate advantage of your position. The receipt of investment opportunities, perquisites, or gifts from persons seeking business or undue influence with the Funds, MAM, Morgan Keegan could call into question the exercise of your independent judgment in dealing with conflicts of interest. Questionable situations should be resolved in favor of the Funds and technical compliance with the Code's procedures will not necessarily insulate from scrutiny any trades or other situations that indicate an abuse of your duties. ------------------------------------------------------------------------------ 2. IMPLEMENTATION OF THE CODE ------------------------------------------------------------------------------ Mr. J. Kenneth Alderman, Vice Chairman & CEO of MAM (hereinafter referred to as the "Supervisor") shall be responsible for the implementation of this Code, including the issuance of procedures, forms and guidelines as deemed necessary for such implementation. The Supervisor may designate one or more individuals to assist him in carrying out the terms and responsibilities of this Code. Any questions concerning this Code should be directed to the Supervisor or the Legal/Compliance Department. ------------------------------------------------------------------------------ 3. ACCESS PERSON REPORTING REQUIREMENTS ------------------------------------------------------------------------------ In addition to the Trade Reporting Requirements described in Section 8 of this Code, every Access Person of the Funds must provide to the Supervisor or his designee personal holdings disclosure reports as described below. Each report must include the date that the report was submitted to the Supervisor or his designee. The Supervisor or his designee will identify all Access Persons who are required to make reports under Section 3 of this Code and will inform those persons of their reporting obligations. A list of all persons required to make reports under this section will be maintained as described in Section 15 of this Code. 3.1 INITIAL HOLDINGS REPORT. ------------------------ No later than 10 days after the person becomes an Access Person, each Access Person, except for Independent Fund Directors, must submit an Initial Holdings Report including the title, number of shares, and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person. In addition, with respect to brokerage accounts, the Initial Holdings Report must include the name of any broker, dealer, or bank with whom the Access Person maintained an account in which Securities ------------------------------------------------------------------------ 3 were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person. 3.2 QUARTERLY TRANSACTIONS REPORT ----------------------------- No later than 10 days after the end of a calendar quarter, each Access Person must submit a Quarterly Transactions Report which contains the following: A. TRANSACTION SUMMARIES. A summary of all transactions conducted during the quarter in Covered Securities in which the Access Person had any direct or beneficial ownership and indicating the status of any and all outside directorships. The Transaction Summaries must include: i. The nature and date of the transaction (i.e. purchase, sale, or any other type of acquisition or disposition): ii. The title, interest rate, maturity date, number of shares, and principal amount of each Covered Security involved; iii. The name of the broker, dealer or bank with or through which the transaction was effected; and iv. The price of the Covered Security at which the transaction was effected. B. ACCOUNTS REPORT. In addition with respect to brokerage accounts, the Quarterly Holdings Report must include the name of any broker, dealer, or bank with whom an account was established during the quarter in which Securities were held for the direct or indirect benefit of the Access Person and the date such account was established. Independent Fund Directors are not required to submit Quarterly Holdings Reports as required by this section unless the Independent Fund Director knows or, in the course of fulfilling his or her official duties as a Funds director, should have known, that during the fifteen day period immediately before or after the Independent Fund Director's transaction in a Covered Security, the Fund purchased or sold the Covered Security, or the Fund or the Adviser considered purchasing or selling the Covered Security. In the event that an Access Person is required by this section to file a Quarterly Holdings Report for a period in which he or she cannot identify any personal holdings or transactions which would require reporting, the Access Person will instead file a signed Certification of Exemption, certifying that he or she is not required to report any holdings or transactions in the said period. 3.3 ANNUAL HOLDINGS REPORT ---------------------- According to a schedule adopted by the Supervisor or his designee, each Access Person must submit an Annual Holdings Report which is current as of a date no more than thirty (30) days before the report is submitted. The Annual Holdings Report must include the following: A. HOLDINGS SUMMARY. The title, number of shares, and principal amount of each Covered Security in which the Access Person had any direct or indirect beneficial ownership. In addition, with respect to brokerage accounts, the Annual Holdings Report must include the name ------------------------------------------------------------------------ 4 of any broker, dealer, or bank with whom the Access Person maintained an account in which Securities were held for the direct or indirect benefit of the Access Person. Independent Fund Directors do not need to submit a Holdings Summary. B. ANNUAL CERTIFICATION OF COMPLIANCE. Each Annual Holdings Report will also include an Annual Certification of Compliance, signed by the Access Person, in which the Access Person certifies that he or she has read and understands this Code, has complied with the requirements of this Code, and has reported all Securities Transactions in Accounts required to be disclosed or reported pursuant to the requirements of this Code. ------------------------------------------------------------------------------ 4. PRE-CLEARNACE REQUIREMENTS ------------------------------------------------------------------------------ All Securities Transactions in Accounts held by Advisory Persons or their Immediate Families are subject to prior authorization by the Supervisor or his designee subject to the limitations and exceptions set forth below. Advisory Persons, except the Portfolio Managers, can seek approval by submitting, prior to the time the order is entered, a request to the Portfolio Managers (Each Portfolio Manager is aware of all equities or bonds that the portfolio he manages holds.). The Portfolio Managers should submit their requests to the Supervisor or his designee. The Supervisor or his designee shall submit his/her requests to the Legal/Compliance Department. ------------------------------------------------------------------------------ 5. PROHIBITED TRANSACTIONS ------------------------------------------------------------------------------ All Advisory Persons, Investment Personnel and their Immediate Families are prohibited from engaging in any of the following Securities Transactions in Accounts, although some transactions may be engaged in with prior approval. All Advisory Persons and Investment Personnel, except the Portfolio Managers, seeking prior approval should submit such requests to the Portfolio Managers. The Portfolio Managers should submit their requests for prior approval to the Supervisor or his designee. The provisions of this Section 5 shall not apply to Independent Fund Directors. A. Any transaction in a Covered Security while in possession of material nonpublic information regarding the Covered Security or the issuer of the Covered Security. This prohibition applies to all Access Persons; B. Transactions intended to raise, lower, or maintain the price of any Covered Security or to create a false appearance of active trading. This prohibition applies to all Access Persons; C. Purchases or sales of Covered Securities, or writing an option to purchase or sell a Covered Security, at a time when the Person has knowledge of an intention to purchase or sell that Covered Security (or an Equivalent Security) on behalf of the Funds. This prohibition applies whether the Securities Transaction is in the same (two purchases) or the opposite (a purchase and sale) direction of the transaction of the Funds. This prohibition applies to all Access Persons; D. Any purchase or sale of Covered Securities, including writing an option to purchase or sell a Covered Security, on any day during which the Funds have a pending "buy" or "sell" order in the same ------------------------------------------------------------------------ 5 Covered Security (or Equivalent Security) until that order is executed or withdrawn, unless an explanation of why the trade is necessary is provided and provision is made for the Funds trade to take precedence, in terms of price, over the trade in question. Prior to approving a trade, the Supervisor or his designee shall determine whether there is an open order for the Covered Security by the Funds; E. Any acquisition of Securities in an Initial Public Offering (other than a new offering of a registered open-end investment company). A record of any approval granted under this paragraph and the reasons for such approval will be maintained as described in Section 15 of this Code. In instances where an Investment Personnel, after receiving prior approval, acquires a Security in an initial public offering, the Investment Personnel has an affirmative obligation to disclose this investment to the Supervisor or his designee (or his designee) if the Investment Personnel participates in any subsequent consideration of any potential investment by the Funds in the issuer of that Security. Following a purchase by an Investment Personnel in an approved personal transaction, any purchase by the Fund of Securities issued by the same company (other than secondary market purchases of publicly traded Securities) will be subject to an independent review by the Supervisor or his designee and so documented; F. Any acquisition of Covered Securities in a Limited Offering or private placement. The Supervisor or his designee may give permission after considering, among other factors, whether the investment opportunity should be reserved for the Funds and whether the opportunity is being offered to the Advisory Person by virtue of his or her position. In the event any Advisory Person is authorized to acquire and has acquired Covered Securities in a Limited Offering, he or she is required to disclose that investment to the Supervisor or his designee if the investment plays a part in any subsequent consideration of an investment in the issuer by the Funds. The decision to purchase Securities of the issuer by the Funds must be authorized by the Supervisor or his designee. A record of any approval granted under this paragraph and the reasons for such approval will be maintained as described in Section 15 of this Code; G. All Investment Personnel are prohibited from purchasing or selling any Covered Security which has been placed on the Investment Consideration List; H. All Investment Personnel are prohibited from purchasing or selling any Covered Security which is not a component of the Standard & Poors 500 within seven (7) calendar days AFTER the Funds purchase or sell the same Covered Security. Investment Personnel are prohibited from purchasing or selling any Covered Security which is a component of the Standard & Poors 500 within three (3) calendar days AFTER the Funds purchase or sell the same Covered Security; I. Purchases of a Portfolio Security within sixty (60) days of a sale of the Portfolio Security, and sales of a Portfolio Security within sixty (60) days of a purchase of the Portfolio Security absent an agreement to give up all profits of the transaction. ------------------------------------------------------------------------ 6 ------------------------------------------------------------------------------ 6. EXEMPTIONS ------------------------------------------------------------------------------ The following Securities Transactions are exempt from the pre-clearance requirements set forth in Section 4 and the prohibitions set forth in Section 5, except as further explained below: A. MUTUAL FUNDS. Securities issued by any registered open-end investment companies (including but not limited to the Funds); B. NO KNOWLEDGE. Securities Transactions where neither the Access Person nor an Immediate Family member knows of the transaction before it is completed (for example, Securities Transactions effected for an Access Person by a trustee of a blind trust or discretionary trades involving an investment partnership or investment club in which the Access Person is neither consulted nor advised of the trade before it is executed); C. CERTAIN CORPORATE ACTIONS. Any acquisition of Securities through stock dividends, dividend reinvestments, stock splits, reverse stock splits, mergers, consolidations, spin-offs, or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of Securities; D. EXERCISE OF RIGHTS. Any acquisition of Securities through the exercise of rights issued by an issuer PRO RATA to all holders of a class of its Securities, to the extent the rights were acquired in the issue; E. COMMODITIES, FUTURES AND OPTIONS ON FUTURES. Commodities, futures (including currency futures) and options on futures are not subject to pre-clearance, nor to the seven (7) day blackout, sixty (60) day profit disgorgement, and prohibited transaction provisions of Section 5, but are subject to transaction reporting; F. GIFTS AND BEQUESTS. Receipt of Securities as gifts and bequests and the making of personal or charitable gifts and bequests of Securities; and G. MISCELLANEOUS. Any transaction in the following: (1) bankers acceptances, (2) bank certificates of deposits, (3) commercial paper, (4) repurchase agreements, (5) Securities that are direct obligations of the U.S. Government, (6) other Securities which may from time to time be exempted in writing by the Securities and Exchange Commission. ------------------------------------------------------------------------------ 7. DE MINIMIS EXCEPTION ------------------------------------------------------------------------------ Unless otherwise specified, de minimis rules will apply, whereby: (A). Pre-approval of Securities transactions by Advisory Persons or their Immediate Families shall not be required for personal transactions of $10,000.00 or less in any security traded on the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) or in any Nasdaq National Market Security (NMS). Please note, NMS does NOT include Nasdaq SmallCap Securities, OTC Bulletin Board Securities or securities traded in the Pink Sheets. ------------------------------------------------------------------------ 7 (B). No Advisory Person may execute a personal transaction, directly or indirectly, in any Covered Security in reliance upon the DE MINIMIS exception when the Advisory Person knows, or should have known, that the Covered Security: a. is being considered for purchase or sale by the Funds; or b. is being purchased or sold by the Funds. ------------------------------------------------------------------------------ 8. TRADE REPORTING REQUIREMENTS ------------------------------------------------------------------------------ All Access Persons and their Immediate Families must arrange for the Supervisor or his designee to receive directly from the broker, dealer, or bank in question, duplicate copies of each confirmation and periodic statements for each Securities Transaction in each Account. If any such Access Person is unable to arrange for duplicate confirmations and statements to be sent, he or she must immediately notify the Supervisor or his designee. This provision shall not apply to Independent Fund Directors. ------------------------------------------------------------------------------ 9. CONFIDENTIALITY/CONFLICTS OF INTEREST ------------------------------------------------------------------------------ 9.1 ALL ACCESS PERSONS ARE PROHIBITED FROM REVEALING (except to the extent necessary in the normal course of the fulfillment of required duties on behalf of the Funds), OR ACTING UPON FOR PERSONAL BENEFIT, ANY INFORMATION RELATING TO THE INVESTMENT INTENTIONS, ACTIVITIES OR PORTFOLIO HOLDINGS OF THE FUNDS. 9.2 ALL ACCESS PERSONS ARE PROHIBITED FROM TAKING PERSONAL ADVANTAGE OF ANY INVESTMENT OPPORTUNITY PROPERLY BELONGING TO THE FUNDS, TO MAM OR TO MORGAN KEEGAN. ------------------------------------------------------------------------------ 10. GIFTS ------------------------------------------------------------------------------ 10.1 ACCEPTING GIFTS --------------- On occasion, because of their position with MAM, Morgan Keegan, or the Funds, the Portfolio Manager or other Advisory Persons may be offered, or may receive without notice, gifts from clients, outside vendors, or other persons who do business or are seeking to do business with MAM, Morgan Keegan or the Funds. Solicitation of such gifts or gratuities is unprofessional and is strictly prohibited. This provision shall not apply to gifts received from immediate family members who give any such gifts in that capacity. Acceptance of extraordinary or extravagant gifts is not permissible. Any such gifts must be declined or returned in order to protect the reputation and integrity of MAM, Morgan Keegan and the Funds. Gifts of a nominal value (I.E., gifts with a reasonable value of no more $100 a year) and customary business lunches, dinners, entertainment (E.G., sporting events), and promotional items (E.G., pens, mugs, T-shirts) may be accepted. If any gift is received that might be prohibited under this Code, the Portfolio Manager or Advisory Person involved must immediately inform the Supervisor or his designee. ------------------------------------------------------------------------ 8 10.2 GIVING GIFTS ------------ The Portfolio Manager and other Advisory Persons may not give any gift with a value in excess of $100 per year to any other person associated with securities or financial organizations, other member organization, including exchanges, commodity firms, news media, or clients of Morgan Keegan or MAM. This provision shall not apply to gifts to immediate family members given in that capacity. ------------------------------------------------------------------------------ 11. UNDUE INFLUENCE ------------------------------------------------------------------------------ NO PERSON MAY CAUSE OR ATTEMPT TO CAUSE THE FUNDS TO PURCHASE, SELL OR HOLD ANY SECURITY IN A MANNER CALCULATED TO CREATE ANY PERSONAL BENEFIT TO SUCH PERSON. If the Portfolio Manager or any member of his or her Immediate Family stands to materially benefit from an investment decision for the Funds that he or she is recommending or participating in, the Portfolio Manager must disclose that interest to the Supervisor or his designee. Based on the information given, a decision will be made on whether or not to restrict the Portfolio Manager's participation in causing the Fund to purchase or sell a Covered Security in which he or she has an interest. The Portfolio Manager must disclose to the Supervisor or his designee any Beneficial Interest that he or she, or his or her Immediate Family, has in that Covered Security or an Equivalent Security, or in the issuer thereof, where the decision could create a material benefit to the Portfolio Manager, or to his or her Immediate Family, or create the appearance of impropriety. The Supervisor or his designee will determine whether or not the Portfolio Manager will be restricted in making investment decisions. ------------------------------------------------------------------------------ 12. SERVICE AS A DIRECTOR ------------------------------------------------------------------------------ No Advisory Person or Investment Personnel may serve on the board of directors of a publicly traded company not affiliated with MAM, absent prior authorization from the Supervisor or his designee. This provision shall not apply to Independent Fund Directors. The Supervisor or his designee shall consult with the Legal/Compliance Department as is necessary to carry out this provision of the Code. If prior approval to serve as a director of a company is granted by the Supervisor or his designee, the Advisory Person or Investment Personnel has an affirmative duty to excuse himself/herself from participating in any deliberations by the Funds regarding possible investments in the securities issued by the company on whose board the Advisory Person or Investment Personnel sits. ------------------------------------------------------------------------------ 13. CODE OF ETHICS REVIEW COMMITTEE ------------------------------------------------------------------------------ 13.1 INVESTIGATING VIOLATIONS OF THE CODE ------------------------------------ The Code of Ethics Review Committee is responsible for investigating any reported or suspected violation of the Code and imposing sanctions. Any such investigation may be delegated to the Legal/Compliance Department. Investigations shall include discussions/interviews with the involved parties as well as the gathering of documentary evidence (i.e., including ------------------------------------------------------------------------ 9 but not limited to, trading, journals, account statements, etc.).This information will be utilized to determine if any violation has occurred. 13.2 ANNUAL REPORTS -------------- The Code of Ethics Review Committee will review the Code at least once a year, in light of legal and business developments and experience in implementing the Code, and will prepare an annual report to the Funds' Board of Directors. The report will: (i) Describe any issues arising under this Code since the last report to the Board of Directors, including but not limited to, information about material violations of the Code and sanctions imposed in response to the material violations; and (ii) Certify that the Funds, MAM or Morgan Keegan has adopted procedures reasonably necessary to prevent Access Persons from violating the Code. ------------------------------------------------------------------------------ 14. REMEDIES ------------------------------------------------------------------------------ 14.1 SANCTIONS --------- If the Code of Ethics Review Committee determines that any Access Person has committed a violation of this Code, the Committee may recommend the imposition of such sanctions, subject to review as set forth below, as it deems appropriate, including reversal of the transaction(s) in question and forfeiture of any profit or absorption of any loss derived there from, a letter of censure, or suspension or termination of the employment of the violator for cause. 14.2 REVIEW ------ Whenever the Code of Ethics Review Committee determines that any Access Person has committed a violation of this Code that merits remedial action, it will report to the Supervisor or his designee information relating to the investigation of the violation, including any recommended sanctions. The Supervisor or his designee shall have the power to modify or increase the sanction as he or she deems appropriate. In performing this function, the Supervisor or his designee shall have access to all information considered by the Code of Ethics Review Committee in relation to the case. ------------------------------------------------------------------------------ 15. RECORKEEPING ------------------------------------------------------------------------------ A copy of all of the following information, supplied pursuant to this Code, will be retained at the principal place of business of the Funds for at least five years after the end of the fiscal year in which the report is submitted: (A). A copy of the current Code of Ethics, in addition to a copy of any Code of Ethics in effect at any time within the past five years; ------------------------------------------------------------------------ 10 (B). A list of all persons, currently or within the last five years, who are or were required to make Personal Holdings Reports, and the names of any employees designated by the Supervisor or his designee who are or were responsible for reviewing those reports (as described in Section 3 of this Code); (C). Personal Holdings Reports (including Initial Holdings Reports, Quarterly Holdings Reports, and Annual Holdings Reports) or Certifications of Exemption submitted by Access Persons (as described in Section 3); (D). A record of any pre-clearance approval of investments, and the reasons for such approval (as described in Section 4); (E). A record of any approval granted for acquisition of Securities in an Initial Public Offering or Limited Offering and the reasons for such approval (as described in Sections 5.E and 5.F); (F). Trade Reports submitted by Access Persons (as described in Section 8); and (G). The Annual Report of the Code of Ethics Review Committee (as described in Section 13). All such reports and information will be made available for reasonable periodic or any other special inspection by the Code of Ethics Review Committee, the Legal/Compliance Department, any party to which any investigation is referred by any of the foregoing, the Securities and Exchange Commission, any self-regulatory organization, and any state securities commission. ------------------------------------------------------------------------ 11 ================================================================================ APPENDIX PROCEDURES ------------------------------------------------------------------------------ A.1. INDIVIDUAL SUBJECT TO THE CODE OF ETHICS ------------------------------------------------------------------------------ The following Officers, Directors and Employees of Morgan Asset Management and Morgan Keegan & Co., Inc. are subject to the Code of Ethics. A. PORTFOLIO MANAGERS: James Kelsoe, Carter Anthony, Craig Harris, John Norris V, Charles Murray, David Rees, Jr., David McGrath, Leslie Denison, Peyton Diliberto. B. ADVISORY PERSONS: Kenneth Alderman, Charles Maxwell, Dan Mann, Rip Mecherle, Mary Webb, Chris Fleischman, Thom Weller, Louis Hale, Tom Gamble, the Portfolio Managers, Douglas Barber, James Basham, Courtenay Bloodworth, Harry Bradford, John Haigler, Emily Johnson, George Kelley, Joe Mayfield, Susan McClure, Nick Newton, Cynthia Reynolds, William Aycock III, Thomas Cochran Jr., Roderick Payton. C. ACCESS PERSONS: Allen Morgan, Jr., Joseph Weller, Kenneth Alderman, Charles Maxwell, Mac Abel, Jack Anderson, Mike Atkisson, Kay Beaver, Tiffany Bekurs, Richard Calhoun, Terri Carson, Brandi Chamblee, Mamie Clark, Shirley Davis, Jud Ferguson, Merrill Hodges, Frank Hosse, Annie James, Elaine King, Erica Lamm, Joshua Mims, Sarah Moore, Sandy Myrick, Nick Newton, Becky Reamey, Louise Seale, Donna Smith, Paula Smith, Cathie Stahlkuppe, Paul White, the Advisory Persons, and the Independent Fund Directors (unless otherwise excepted). D. INDEPENDENT FUND DIRECTORS: James D. Witherington, Jr., William J. Mann, Stillman McFadden, Archie W. Willis, III, Mary S. Stone and W. Randall Pittman ------------------------------------------------------------------------------ A.2. COMPLIANCE PROCEDURES ------------------------------------------------------------------------------ A.2.1 GENERAL (A) The Portfolio Managers shall maintain all records and documents relating to his/her portfolio management in a secure and confidential manner. (B) All Access Person Account statements provided pursuant to Section 8 (Trade Reporting Requirements) of the Code shall be compared with completed transactions of the Funds to monitor for possible violations. The basis of this comparison shall be the trading ------------------------------------------------------------------------ 1 activity of the duplicated confirmations and statements versus a daily report of securities transactions for the Funds. (C) A signed acknowledgement is to be obtained from the Portfolio Manager designating any Accounts in which the Portfolio Manager has no involvement in investment decisions. (D) A signed acknowledgement is to be obtained from the Portfolio Manager designating which Accounts have investment objectives that are inconsistent with those of the Fund. A.2.2 ACKNOWLEDGEMENT --------------- Signed acknowledgements are to be obtained from the persons listed in Section A.I. (Individuals Subject to the Code of Ethics) as follows: (A) A signed acknowledgement stating that the individual has read, understood and complied with the Code and that no transactions have been effected in conflict with the Code is to be obtained from all Access Persons, including Independent Fund Directors. (B) A signed acknowledgement stating that the individual has no access to transactions or contemplated transactions prior to public disclosure is to be obtained from all Access Persons, including Independent Fund Directors. (C) A signed acknowledgement stating that all personal transactions have been reported as required is to be obtained from all Access Persons, except for Independent Fund Directors. ------------------------------------------------------------------------------ A.3. CODE OF ETHICS REVIEW COMMITTEE ------------------------------------------------------------------------------ The Code of Ethics Review Committee shall be composed of the following persons: o Edward Balsmann, Deputy General Counsel o Kenneth Alderman, Vice Chairman & CEO o James Kelsoe, Portfolio Manager o Carter Anthony, President & Portfolio Manager o Beth Ducrest, Compliance Administrator The Code of Ethics Review Committee shall meet annually and on an as-needed basis. ------------------------------------------------------------------------ 2 NOTICE OF ACKNOWLEDGEMENT ------------------------- RMK High Income Fund, Inc. Morgan Keegan Select Fund, Inc. Regions Morgan Keegan Select Funds Morgan Asset Management, Inc. Morgan Keegan & Co., Inc. I hereby acknowledge that I have received and reviewed the Code of Ethics and that I agree to comply with its requirements and with all amendments and/or additional requirements which may be included in the future. ----------------------------------- DATE ----------------------------------- PRINTED NAME ----------------------------------- SIGNATURE **PLEASE RETURN EXECUTED ACKNOWLEDGEMENTS TO THE SUPERVISOR OR HIS DESIGNEE IDENTIFIED IN SECTION 2 OF THE CODE. ------------------------------------------------------------------------ 1