<PAGE>
PRUDENTIAL INVESTMENT CORPORATION
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC
CODE OF ETHICS ADOPTED PURSUANT TO RULE 17J-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
(THE CODE)
1. PURPOSES
--------
The Code has been adopted by the Board of Directors/Trustees or the
Duly Appointed Officer-In-Charge of the Prudential Mutual Fund (hereinafter,
referred to as the "Fund"), the Manager, the Adviser/Subadviser, and the
Principal Underwriter in accordance with Rule 17j-1(c) under the Investment
Company Act of 1940 (the Act) and in accordance with the following general
principles:
(1) THE DUTY AT ALL TIMES TO PLACE THE INTERESTS OF SHAREHOLDERS
FIRST.
Investment company personnel should scrupulously avoid serving
their own personal interests ahead of shareholders' interests in any
decision relating to their personal investments.
(2) THE REQUIREMENT THAT ALL PERSONAL SECURITIES TRANSACTIONS
BE CONDUCTED CONSISTENT WITH THE CODE AND IN SUCH A MANNER AS
TO AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF INTEREST OR ANY
ABUSE OF AN INDIVIDUAL'S POSITION OF TRUST AND RESPONSIBILITY.
Investment company personnel must not only seek to achieve
technical compliance with the Code but should strive to abide by its
spirit and the principles articulated herein.
(3) THE FUNDAMENTAL STANDARD THAT INVESTMENT COMPANY PERSONNEL
SHOULD NOT TAKE INAPPROPRIATE ADVANTAGE OF THEIR POSITIONS.
Investment company personnel must avoid any situation
that might compromise, or call into question, their exercise
of fully independent
1
<PAGE>
judgment in the interest of shareholders, including, but not limited
to the receipt of unusual investment opportunities, perquisites, or
gifts of more than a DE MINIMIS value from persons doing or seeking
business with the Fund.
Rule 17j-1 under the Act generally proscribes fraudulent or
manipulative practices with respect to a purchase or sale of a security held
or to be acquired (as such term is defined in Section 2) by an investment
company, if effected by an associated person of such company.
The purpose of the Code is to establish procedures consistent with
the Act and Rule 17j-1 to give effect to the following general prohibitions
as set forth in Rule 17j-1(b) as follows:
(a) It shall be unlawful for any affiliated person of or
Principal Underwriter for a registered investment company, or any
affiliated person of an investment adviser 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, 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
2
<PAGE>
(4) To engage in any manipulative practice with respect
to such registered investment company.
2. DEFINITIONS
-----------
(a) "Access Person" means any director/trustee, officer, general
partner or Advisory Person (including any Investment Personnel, as
that term is defined herein) of the Fund, the Manager, the
Adviser/Subadviser, or the Principal Underwriter.
(b) "Adviser/Subadviser" means the Adviser or Subadviser of the
Fund or both as the context may require.
(c) "Advisory Person" means (i) any employee of the Fund,
Manager or Adviser/Subadviser (or of any company in a control
relationship to the Fund, Manager or Adviser/Subadviser) who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains current or pending information regarding
the purchase or sale of a security by the 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 Fund who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale
of a security.
(d) "Beneficial Ownership" will be interpreted in the same
manner as it would be under Securities Exchange Act Rule 16a-1(a)(2)
in determining which security holdings of a person are subject to the
reporting and short-swing profit provisions of Section 16 of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect
beneficial ownership will apply to all securities which an Access
Person has or acquires (EXHIBIT A).
(e) "Complex" means the group of registered investment
companies for which Prudential Investments Fund Management LLC serves
as Manager; provided, however, that with respect to Access Persons of
the Subadviser (including any unit or subdivision thereof), "Complex"
means the group of registered investment companies in the Complex
advised by the Subadviser or unit or subdivision thereof. A list of
such registered investment companies will be maintained by the
Compliance Officer.
(f) "Compliance Officer" means the person designated by the
3
<PAGE>
Manager, the Adviser/Subadviser, or Principal Underwriter (including
his or her designee) as having responsibility for compliance with the
requirements of the Code.
(g) "Control" will have the same meaning as that set forth
in Section 2(a)(9) of the Act.
(h) "Disinterested Director/Trustee" means a Director/ Trustee
of the Fund who is not an "interested person" of the Fund within the
meaning of Section 2(a)(19) of the Act.
An interested Director/Trustee who would not otherwise be
deemed to be an Access Person, shall be treated as a Disinterested
Director/Trustee for purposes of compliance with the provisions of the
Code.
(i) "Initial Public Offering" means 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 Securities Exchange Act of
1934.
(j) "Investment Personnel" means: (a) Portfolio Managers and
other Advisory Persons who provide investment information and/or advice
to the Portfolio Manager(s) and/or help execute the Portfolio
Manager's(s') investment decisions, including securities analysts and
traders; (b) any natural person in a control relationship to the Fund
who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of a security; and (c) certain
other individuals as designated by the Compliance Officer.
(k) "Manager" means Prudential Investments Fund
Management, LLC.
(l) "Mutual Fund Code of Ethics and Personal Securities
Trading Committee" or "Committee" means Business Unit, Compliance,
and Human Resources executives responsible for interpreting and
administering the Code, including but not limited to, reviewing
violations of the Code and determining any sanctions or other
disciplinary actions that may be deemed appropriate. In addition,
the Committee may waive and or modify violations and sanctions or
other disciplinary actions at its
4
<PAGE>
discretion when deemed appropriate by the Committee. The Committee
will review such violations in consultation with legal counsel. A
list of such Committee members shall be maintained by the Compliance
Officer.
(m) "Portfolio Manager" means any Advisory Person who has
the direct responsibility and authority to make investment decisions
for the Fund.
(n) "Private placement" means a limited offering that is
exempt from registration under the Securities Act of 1933 pursuant to
section 4(2) or section 4(6) or pursuant to rule 504, rule 505 or rule
506 under such Securities Act.
(o) "Profits" means any total or partial Profit realized
from a securities transaction or group of transactions as defined by
the Mutual Fund Code of Ethics and Personal Securities Trading
Committee ("Committee").
(p) "Security" will have the meaning set forth in Section
2(a)(36) of the Act, except that it will not include shares of
registered open-end investment companies, direct obligations of the
Government of the United States, , short-term debt securities which
are "government securities" within the meaning of Section 2(a)(16) of
the Act, bankers' acceptances, bank certificates of deposit,
commercial paper and such other money market instruments as are
designated by the Compliance Officer. For purposes of the Code, an
"equivalent Security" is one that has a substantial economic
relationship to another Security. This would include, among other
things, (1) a Security that is exchangeable for or convertible into
another Security, (2) with respect to an equity Security, a Security
having the same issuer (including a private issue by the same issuer)
and any derivative, option or warrant relating to that Security and
(3) with respect to a fixed-income Security, a Security having the
same issuer, maturity, coupon and rating.
(q) "Security held or to be acquired" means any Security or
any equivalent Security which, within the most recent 15 days: (1) is
or has been held by the Fund; or (2) is being considered by the Fund
or its investment adviser for purchase by the Fund.
3. APPLICABILITY
-------------
5
<PAGE>
The Code applies to all Access Persons and the Compliance Officer
shall provide each Access Person with a copy of the Code. The prohibitions
described below will only apply to a transaction in a Security in which the
designated Access Person has, or by reason of such transaction acquires, any
direct or indirect Beneficial Ownership. The Compliance Officer will maintain
a list of all Access Persons who are currently, and within the past five
years, subject to the Code.
4. PROHIBITED PURCHASES AND SALES
------------------------------
A. INITIAL PUBLIC OFFERINGS
No Investment Personnel may acquire any Securities in an initial
public offering. For purposes of this restriction, "Initial Public Offerings"
shall not include offerings of government and municipal securities.
B. PRIVATE PLACEMENTS
No Investment Personnel may acquire any Securities in a private
placement without prior approval.
(i) Prior approval must be obtained in accordance with the
preclearance procedure described in Section 6 below. Such approval
will take into account, among other factors, whether the investment
opportunity should be reserved for the Fund and its shareholders and
whether the opportunity is being offered to the Investment Personnel
by virtue of his or her position with the Fund. The Adviser/Subadviser
shall maintain a record of such prior approval and reason for same,
for at least
6
<PAGE>
5 years after the end of the fiscal year in which the approval is
granted.
(ii) Investment Personnel who have been authorized to
acquire Securities in a private placement must disclose that
investment to the chief investment officer (including his or her
designee) of the Adviser/Subadviser (or of any unit or subdivision
thereof) or the Compliance Officer when they play a part in any
subsequent consideration of an investment by the Fund in the issuer.
In such circumstances, the Fund's decision to purchase Securities of
the issuer will be subject to an independent review by appropriate
personnel with no personal interest in the issuer.
C. BLACKOUT PERIODS
(i) Except as provided in Section 5 below, Access Persons
are prohibited from executing a Securities transaction on a day during
which any investment company in the Complex has a pending "buy" or
"sell" order in the same or an equivalent Security and until such time
as that order is executed or withdrawn; provided, however, that this
prohibition shall not apply to Disinterested Directors/Trustees except
if they have actual knowledge of trading by any fund in the Complex
and, in any event, only with respect to those funds on whose boards
they sit.
This prohibition shall also not apply to Access Persons of
the Subadviser
7
<PAGE>
who do not, in the ordinary course of fulfilling his or her official
duties, have access to current or pending information regarding the
purchase and sale of Securities for the Fund and are not engaged in
the day-to-day trading operations of the Fund; provided that
Securities investments effected by such Access Persons during the
proscribed period are not effected with knowledge of the purchase or
sale of the same or equivalent Securities by any fund in the Complex.
A "pending 'buy' or 'sell' order" exists when a decision to
purchase or sell a Security has been made and communicated. However,
this prohibition shall not apply to a "pending `buy `or `sell' order"
in the same or an equivalent security in a broad based index fund.(1)
(ii) Portfolio Managers are prohibited from buying or selling
a Security within seven calendar days before or after a Fund in the
same Complex trades in the same or an equivalent Security.
Nevertheless, a personal trade by any Investment Personnel shall not
prevent a Fund in the same Complex from trading in the same or an
equivalent security. However, such a transaction shall be subject to
independent review by the Compliance Officer. This prohibition shall
not apply to purchases and sales executed in a broad based index fund.
(iii) If trades are effected during the periods proscribed in
(i) or (ii) above, except as provided in (iv) below with respect to (i)
above, Profits realized
----------------------
(1) A list of such Funds shall be maintained by the Compliance Officer.
8
<PAGE>
on such trades will be promptly required to be disgorged to the Fund
or a charitable organization approved by the Committee.
(iv) A transaction by Access Persons (other than Investment
Personnel) inadvertently effected during the period proscribed in (i)
above will not be considered a violation of the Code and disgorgement
will not be required so long as the transaction was effected in
accordance with the preclearance procedures described in Section 6
below and without prior knowledge of trading by any fund in the
Complex in the same or an equivalent Security.
D. SHORT-TERM TRADING PROFITS
Except as provided in Section 5 below, Investment Personnel are
prohibited from profiting from a purchase and sale, or sale and purchase, of
the same or an equivalent Security within any 60 calendar day period. If
trades are effected during the proscribed period, Profits realized on such
trades will be promptly required to be disgorged to the Fund or a charitable
organization approved by the Committee.
E. SHORT SALES
No Access Person may sell any security short which is owned by any
Fund in the Complex. Access Persons may, however make short sales when he/she
owns an equivalent amount of the same security.
F. OPTIONS
No Access Person may write a naked call option or buy a naked put
option on a security owned by any Fund in the Complex. Access Persons may
purchase options on
9
<PAGE>
securities not held by any Fund in the Complex, or purchase call options or
write put options on securities owned by any Fund in the Complex, subject to
preclearance and the same restrictions applicable to other Securities. Access
Persons may write covered call options or buy covered put options on a
Security owned by any Fund in the Complex at the discretion of the Compliance
Officer.
G. INVESTMENT CLUBS
No Access Person may participate in an investment club.
5. EXEMPTED TRANSACTIONS
---------------------
Subject to preclearance in accordance with Section 6 below with
respect to subitems (b), (e), (f), (g) and (i) hereof, the prohibitions of
Sections 4(C) and 4(D) will not apply to the following:
(a) Purchases or sales of Securities effected in any account
over which the Access Person has no direct or indirect influence or
control or in any account of the Access Person which is managed on a
discretionary basis by a person other than such Access Person and with
respect to which such Access Person does not in fact influence or
control such transactions.
(b) Purchases or sales of Securities (or their equivalents)
which are not eligible for purchase or sale by any fund in the
Complex.
(c) Purchases or sales of Securities which are non-volitional
on the part of either the Access Person or any fund in the Complex.
(d) Purchases of Securities which are part of an automatic
dividend reinvestment plan.
(e) 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, and sales of such
rights so acquired.
10
<PAGE>
(f) Any equity Securities transaction, or series of related
transactions effected over a 30 calendar day period, involving 500
shares or less in the aggregate, if (i) the Access Person has no prior
knowledge of activity in such security by any fund in the Complex and
(ii) the issuer is listed on The New York Stock Exchange or has a
market capitalization (outstanding shares multiplied by the current
price per share) greater than $1 billion (or a corresponding market
capitalization in foreign markets).
(g) Any fixed-income Securities transaction, or series of
related transactions effected over a 30 calendar day period, involving
100 units ($100,000 principal amount) or less in the aggregate, if the
Access Person has no prior knowledge of transactions in such Securities
by any fund in the Complex.
(h) Any transaction in index options effected on a
broad-based index.(2)
(i) Purchases or sales of Securities which receive the prior
approval of the Compliance Officer (such person having no personal
interest in such purchases or sales), based on a determination that no
abuse is involved and that such purchases and sales are not likely to
have any economic impact on any fund in the Complex or on its ability
to purchase or sell Securities of the same class or other Securities
of the same issuer.
(j) Purchases or sales of Unit Investment Trusts.
6. PRECLEARANCE
------------
Access Persons (other than Disinterested Directors/Trustees) must
preclear all personal Securities investments with the exception of those
identified in subparts (a), (c), (d), (h) and (j) of Section 5 above.
All requests for preclearance must be submitted to the Compliance
Officer for
--------------------
(2) A list of such indices will be maintained by the Compliance Officer.
11
<PAGE>
approval. All approved orders must be executed by the close of business on
the day in which preclearance is granted; provided, however that approved
orders for Securities traded in foreign markets may be executed within two
(2) business days from the date preclearance is granted. If any order is not
timely executed, a request for preclearance must be resubmitted.
7. REPORTING
---------
(a) Disinterested Directors/Trustees shall report to the Secretary
of the Fund or the Compliance Officer the information described in Section
7(b) hereof with respect to transactions in any Security in which such
Disinterested Director/Trustee has, or by reason of such transaction
acquires, any direct or indirect Beneficial Ownership in the Security ONLY if
such Disinterested Director/Trustee, at the time of that transaction knew or,
in the ordinary course of fulfilling his or her official duties as a
Director/Trustee of the Fund, should have known that, during the 15-day
period immediately preceding or subsequent to the date of the transaction in
a Security by such Director/Trustee, such Security is or was purchased or
sold by the Fund or was being considered for purchase or sale by the Fund,
the Manager or Adviser/Subadviser; provided, however, that a Disinterested
Director/Trustee is not required to make a report with respect to
transactions effected in any account over which such Director/Trustee does
not have any direct or indirect influence or control or in any account of the
Disinterested Director/Trustee which is managed on a discretionary basis by a
person other than such Director/Trustee and with respect to which such
Director/Trustee does not in fact
12
<PAGE>
influence or control such transactions. The Secretary of the Fund or the
Compliance Officer shall maintain such reports and such other records to the
extent required by Rule 17j-1 under the Act.
(b) Every report required by Section 7(a) hereof 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 contain the
following information:
(i) The date of the transaction, the title and the number of
shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (I.E., purchase, sale or any
other type of acquisition or disposition);
(iii) The price at which the transaction was effected;
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected; and
(v) The date that the report is submitted.
(c) Any such report may contain a statement that the report shall
not be construed as an admission by the person making such report that he or
she has any direct or indirect Beneficial Ownership in the Security to which
the report relates.
8. RECORDS OF SECURITIES TRANSACTIONS AND POST-TRADE REVIEW
--------------------------------------------------------
Access Persons (other than Disinterested Directors/Trustees) are
required to direct their brokers to supply, on a timely basis, duplicate
copies of confirmations of all personal Securities transactions and copies of
periodic statements for all Securities accounts in which such Access Persons
have a Beneficial Ownership interest to the
13
<PAGE>
Compliance Officer. Such instructions must be made upon becoming an Access
Person and promptly as new accounts are established, but no later than ten
days after the end of a calendar quarter, with respect to any account
established by the Access Person in which any securities were held during the
quarter for the direct or indirect beneficial interest of the Access Person.
Notification must be made in writing and a copy of the notification must be
submitted to Compliance. This notification will include the broker, dealer or
bank with which the account was established and the date the account was
established.
Compliance with this Code requirement will be deemed to satisfy the
reporting requirements imposed on Access Persons under Rule 17j-1(d),
provided, however, that such confirmations and statements contain all the
information required by Section 7. b. hereof and are furnished within the
time period required by such section.
The Compliance Officer will periodically review the personal
investment activity of all Access Persons (including Disinterested
Directors/Trustees with respect to Securities transactions reported pursuant
to Section 7 above) and holdings reports of all Access Persons.
9. DISCLOSURE OF PERSONAL HOLDINGS
-------------------------------
Within ten days after an individual first becomes an Access Person
and thereafter on an annual basis, each Access Person (other than
Disinterested Directors/Trustees) must disclose all personal Securities
holdings. Such disclosure must be made in writing and be as of the date the
individual first became an Access
14
<PAGE>
Person with respect to the initial report and by January 30 of each year,
including holdings information as of December 31, with respect to the annual
report. All such reports shall include the following: title, number of shares
and principal amount of each security held, name of broker, dealer or bank
with whom these securities are held and the date of submission by the Access
Person.
10. GIFTS
-----
Access Persons are prohibited from receiving any gift or other thing
which would be considered excessive in value from any person or entity that
does business with or on behalf of the Fund. Occasional business meals or
entertainment (theatrical or sporting events, etc.) are permitted so long as
they are not excessive in number or cost.
11. SERVICE AS A DIRECTOR
Investment Personnel are prohibited from serving on the boards of
directors of publicly traded companies, absent prior authorization based upon
a determination that the board service would be consistent with the interests
of the Fund and its shareholders. In the limited instances that such board
service is authorized, Investment Personnel will be isolated from those
making investment decisions affecting transactions in Securities issued by
any publicly traded company on whose board such Investment Personnel serves
as a director through the use of "Chinese Wall" or other procedures designed
to address the potential conflicts of interest.
12. CERTIFICATION OF COMPLIANCE WITH THE CODE
-----------------------------------------
Access Persons are required to certify annually as follows:
15
<PAGE>
(i) that they have read and understood the Code;
(ii) that they recognize that they are subject to the Code;
(iii) that they have complied with the requirements of the Code;
and
(iv) that they have disclosed or reported all personal Securities
transactions required to be disclosed or reported pursuant to
the requirements of the Code.
13. CODE VIOLATIONS AND SANCTIONS
-----------------------------
All violations of the Code will be reviewed by the Committee. The
Committee will determine any sanctions or other disciplinary actions that may
be deemed appropriate. All violations and corresponding sanctions and/or
disciplinary action will be reported to the Board of Directors/Trustees of
the Fund on a quarterly basis. The Board of Directors/Trustees may take
action as it deems appropriate, in addition to any action previously taken by
the Committee.
14. REVIEW BY THE BOARD OF DIRECTORS/TRUSTEES
-----------------------------------------
The Board of Directors/Trustees will be provided with an annual report
which at a minimum:
(i) certifies to the Board that the Fund, Manager, Investment
Adviser/Subadviser, and Principal Underwriter has adopted procedures
reasonably necessary to prevent its Access persons from violating its Code.
(ii) summarizes existing procedures concerning personal investing
and any changes in the procedures made during the preceding year;
16
<PAGE>
(iii) identifies material Code or procedural violations and
sanctions imposed in response to those material violations; and
(iv) identifies any recommended changes in existing restrictions or
procedures based upon the Fund's experience under the Code, evolving industry
practices, or developments in applicable laws and regulations.
The Board will review such report and determine if any further action is
required.
17
<PAGE>
EXPLANATORY NOTES TO CODE
1. No comparable Code requirements have been imposed upon
Prudential Mutual Fund Services LLC, the Fund's transfer agent, or those of
its directors or officers who are not Directors/Trustees or Officers of the
Fund since they are deemed not to constitute Access Persons or Advisory
Persons as defined in paragraphs (e)(1) and (2) of Rule 17j-1.
Dated: February 29, 2000
Amended: November 13, 2000
18
<PAGE>
EXHIBIT A
DEFINITION OF BENEFICIAL OWNERSHIP
The term "beneficial ownership" of securities would include not only
ownership of securities held by an access person for his or her own benefit,
whether in bearer form or registered in his or her own name or otherwise, but
also ownership of securities held for his or her benefit by other (regardless
of whether or how they are registered) such as custodians, brokers,
executors, administrators, or trustees (including trusts in which he or she
has only a remainder interest), and securities held for his or her account by
pledges, securities owned by a partnership in which he or she should regard
as a personal holding corporation. Correspondingly, this term would exclude
securities held by an access person for the benefit of someone else.
Ordinarily, this term would not include securities held by executors
or administrators in estates in which an access person is a legatee or
beneficiary unless there is a specific legacy to such person of such
securities or such person is the sole legatee or beneficiary and there are
other assets in the estate sufficient to pay debts ranking ahead of such
legacy, or the securities are held in the estate more than a year after the
decedent's death.
Securities held in the name of another should be considered as
"beneficially" owned by an access person where such person enjoys "benefits
substantially equivalent to ownership". The SEC has said that although the
final determination of beneficial ownership is a question to be determined in
the light of the facts of the particular case, generally a person is regarded
as the beneficial owner of securities held in the name of his or her spouse
and their minor children. Absent special circumstances such relationship
ordinarily results in such person obtaining benefits substantially equivalent
to ownership, e.g., application of the income derived from such securities to
maintain a common home, to meet expenses which such person otherwise would
meet from other sources, or the ability to exercise a controlling influence
over the purchase, sale or voting of such securities.
An access person also may be regarded as the beneficial owner of
securities held in the name of another person, if by reason of any contact,
understanding, relationship, agreement or other arrangement, he obtains
therefrom benefits substantially equivalent to those of ownership. Moreover,
the fact that the holder is a relative or relative of a spouse and sharing
the same home as an access person may in itself indicate that the access
person would obtain benefits substantially equivalent to those of ownership
from securities held in the name of such relative. Thus, absent
countervailing facts, it is expected that securities held by relatives who
share the same home as an access person will be treated as being beneficially
owned by the access person.
An access person also is regarded as the beneficial owner of
securities held in the name of a spouse, minor children or other person, even
though he does not obtain therefrom the aforementioned benefits of ownership,
if he can vest or revest title in himself at once or at some future time.
19
