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NICHOLAS-APPLEGATE
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CODE OF ETHICS
AND CONDUCT
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NICHOLAS-APPLEGATE
CAPITAL MANAGEMENT
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NICHOLAS-APPLEGATE
SECURITIES
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NICHOLAS-APPLEGATE
INSTITUTIONAL FUNDS
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MESSAGE FROM THE MANAGING PARTNER
Nicholas-Applegate, quite simply, does not exist without our clients. While it's
true we are an investment management firm, known for providing excellent
investment returns and client service, a large part of our success is built on
our reputation for integrity and professionalism. Our clients place not only
their money, but also their trust with us when they hire us. It is up to us as a
firm, and each one of us individually, to ensure that trust is upheld. Without
it, we would not have a single client, regardless of our investment returns.
With this in mind, the firm has long had a formal Code of Ethics in place. Every
employee commits to follow this Code when he/she joins the firm, and we, as a
firm, are committed to the principles embodied by the Code. The driving
principle is actually pretty easy to express: "Our clients come first."
Everything, really, flows from that simple statement. When you review and sign
the attached Code of Ethics, I'd like you to keep these principles in mind and
know that they are supported at our firm from the top down. I'd also like you to
recognize that ultimately the Code of Ethics is really just an expression about
the way we, as a firm, want to do business, and that it is our responsibility
individually, and as a firm, to ensure the Code is followed in spirit, as well
as word. The Code can't cover every individual situation that may come up, so we
must all use our best efforts to apply the principles of the Code in our
everyday business. We, and our clients, should expect nothing less.
Art Nicholas
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TABLE OF CONTENTS
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A. DEFINITIONS ....................................................A-1
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I. INTRODUCTION & OVERVIEW...........................................1
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II. PERSONS COVERED BY THIS CODE
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a. EMPLOYEES & COVERED PERSONS....................................3
b. OUTSIDE FUND DIRECTORS/TRUSTEES................................3
c. THE ADMINISTRATOR..............................................4
III. PERSONAL SECURITIES TRANSACTIONS
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a. COVERED SECURITIES & TRANSACTIONS...........................5
b. EXEMPT SECURITIES & TRANSACTIONS............................5
IV. PROCEDURES FOR TRADING SECURITIES
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A. PRE-CLEARANCE...............................................7
B. VIOLATIONS..................................................8
C. HOLDING PERIOD RESTRICTION.................................10
D. BLACKOUT PERIOD............................................10
E. DE MINIMIS TRANSACTIONS....................................10
F. INITIAL PUBLIC OFFERINGS ("IPOS") & PRIVATE PLACEMENTS.....11
G. FRONT-RUNNING..............................................11
H. INSIDE INFORMATION.........................................11
V. REPORTS & CERTIFICATIONS REGARDING PERSONAL SECURITIES
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TRANSACTIONS
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A. PERSONAL HOLDINGS REPORTS..................................13
B. MONTHLY TRANSACTION & GIFT REPORTS.........................13
C. DUPLICATE BROKERAGE STATEMENTS & CONFIRMATIONS.............14
D. CERTIFICATION OF COMPLIANCE................................14
VI. POTENTIAL CONFLICT OF INTEREST ISSUES
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a. SERVICE ON BOARDS OF OTHER COMPANIES.......................15
b. GIFTS......................................................15
c. GIFT PRE-CLEARANCE.........................................15
d. GIFT VIOLATIONS............................................16
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TABLE OF CONTENTS (CONT'D)
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VII. VIOLATIONS OF THE CODE ..........................................17
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VIII. ANNUAL BOARD REVIEW .............................................18
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IX. ADMINISTRATION & CONSTRUCTION ...................................19
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X. AMENDMENTS & MODIFICATIONS.......................................20
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POLICIES & PROCEDURES - INSIDER TRADING POLICY .................APPENDIX I
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EXAMPLES OF BENEFICIAL OWNERSHIP ..............................APPENDIX II
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PERSONAL TRADING RESTRICTION SUMMARY .........................APPENDIX III
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EXCEPTIONS TO BAN ON SHORT-TERM TRADING .......................APPENDIX IV
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CODE OF ETHICS SIGNATURE PAGES..................................APPENDIX V
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DEFINITIONS
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THE FOLLOWING DEFINITIONS APPLY TO THIS CODE OF ETHICS:
NACM Nicholas-Applegate Capital Management, Inc.,
a CA LP
NAS Nicholas-Applegate Securities
NAIF OR FUNDS Nicholas-Applegate Institutional Funds
NA Nicholas-Applegate (I.E., NACM, NAS and
NAIF)
CODE NA Code of Ethics
EMPLOYEES All officers, partners and employees of NACM
and NAS, well as part-time employees,
consultants, temps and interns after one
month
COVERED PERSONS Any Employee and any relative by blood or
marriage living in the Employee's household
or any person who holds an account that
names Employee as a beneficiary or otherwise
INVESTMENT PERSONNEL Trading Desk personnel, portfolio managers
and financial analysts
ADMINISTRATOR Brown Brothers Harriman - Administrator of
the Funds
ADVISORY CLIENTS Shareholders of funds, institutional clients
and any other person or entity whom NA
provides investment advisory services
EXEMPT TRANSACTIONS Any transaction that does not require
pre-clearance by NA's Compliance Department
prior to execution (E.G., open-end mutual
funds, U.S, government securities and named
indices as listed in the Code at
APPENDIX IV)
TRUSTEES Trustees of the Funds
BENEFICIAL OWNERSHIP For purposes of this Code, "beneficial
ownership" means any interest in a security
for which a Covered Person can directly or
indirectly receive a monetary benefit,
including the right to buy or sell a
security, to direct the purchase or sale of
a security, or to vote or direct the voting
of a security. Please refer to APPENDIX II
for additional examples of beneficial
ownership
A-1
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NON-EMPLOYEE TRUSTEES Trustees of the Funds who are not Employees
of NACM or NAS (including employees of the
Administrator)
PERSONAL SECURITIES Any trade in debt or equity securities
TRANSACTION executed on a stock market, or other
securities not defined as "exempt
securities" under the NA Code of Ethics, by
a Covered Person. This includes all futures,
options, warrants, short-sells, margin
calls, or other instrument of investment
relating to an equity security
EXEMPT SECURITIES Securities, which, under the Code, do not
require pre-clearance authorization by the
Compliance Department (see page 11 and
APPENDIX IV)
BLUEFORM Monthly Personal Securities Transaction and
Gift Report
INSIDER Persons who are officers, directors,
employees and spouse and anyone else who is
privy to inside information
INSIDER TRADING Buying or selling of a security while in
possession of material, non-public
information or anyone who has communicated
such information in connection with a
transaction that results in a public trade
or information service or medium
NON-PUBLIC INFORMATION Any information that is not made known via a
public magazine, newspaper or other public
document
ACCESS PERSON Any Employee of NA, including temporary
employees (if here more than one month),
interns and consultants (working on NA
premises)
OPEN-END INVESTMENT COMPANIES Funds that continuously offer new shares and
(OPEN-END MUTUAL FUNDS) redeem outstanding shares at NAV on any
business day. Shares are purchased directly
from the distributor of the funds
CLOSED-END INVESTMENT Funds whose shares traded on the secondary
COMPANIES market with most being listed on stock
exchanges. New shares are not continuously
offered, nor are outstanding shares
redeemable.
A-2
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CODE OF ETHICS AND CONDUCT
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
NICHOLAS-APPLEGATE SECURITIES
NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS
REVISED AS OF MARCH 20, 2000
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I. INTRODUCTION & OVERVIEW
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Nicholas-Applegate Capital Management ("NACM"), Nicholas-Applegate
Securities ("NAS") and Nicholas-Applegate Institutional Funds ("NAIF")
(collectively, "NA") have developed and maintain a reputation for
integrity and high ethical standards. Therefore, it is essential not only
that NA and its employees comply with relevant federal and state
securities laws, but that we also maintain high standards of personal and
professional conduct. NA's Code of Ethics and Conduct (the "Code") is
designed to help ensure that we conduct our business in a manner
consistent with these high standards.
As a registered investment adviser, NA and its employees owe a fiduciary
duty to our clients that requires each of us to place the interests of our
clients ahead of our own. A critical component of meeting our fiduciary
duty is to avoid potential conflicts of interest. Accordingly, you must
avoid all activities, interests and relationships that interfere or appear
to interfere with making decisions in the best interests of the
shareholders of NAIF (or "Funds") and any other person or entity to which
NA provides investment advisory services (together, "Advisory Clients").
Please bear in mind a conflict of interest can arise even if there is no
financial loss to Advisory Clients and regardless of the employee's
motivation. Many potential conflicts of interest can arise in connection
with employee personal trading and related activities. The Code is
designed to address and prevent potential conflicts of interest pertaining
to personal trading and related activities and is based on the following
principles:
1) WE MUST AT ALL TIMES PLACE THE INTERESTS OF OUR ADVISORY CLIENTS
FIRST. In other words, as a fiduciary, you must scrupulously avoid
serving your own personal interests ahead of the interests of NA
Advisory Clients.
2) We must make sure that all PERSONAL SECURITIES TRANSACTIONS ARE
CONDUCTED CONSISTENT WITH THE CODE and in such a manner as to
avoid any actual or potential conflicts of interest or any abuse
of an individual's position of trust and responsibility.
3) WE MUST NOT TAKE INAPPROPRIATE ADVANTAGE OF OUR POSITIONS. The
receipt of investment opportunities, perquisites, or gifts from
persons seeking business with NA could call into question the
exercise of your independent judgment.
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The Code contains policies and procedures relating to personal trading by
Covered Persons, as well as Trustees of the Funds.
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YOU MUST BECOME FAMILIAR
WITH AND ABIDE BY THE CODE
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Compliance with the Code is a condition of your employment with NA.
Violations of the Code will be taken seriously and will result in
sanctions against the violator, up to and including termination of
employment.
As with all policies and procedures, the Code was designed to apply to a
myriad of circumstances and conduct. However, this Code is not intended to
be all-inclusive as no policy can anticipate every potential conflict of
interest that can arise in connection with personal trading.
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YOU ARE EXPECTED TO ABIDE NOT ONLY BY THE LETTER OF THE CODE,
BUT ALSO BY THE SPIRIT OF THE CODE
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Whether or not a specific provision of the Code addresses a particular
situation, you must conduct your activities in accordance with the general
principles contained in the Code and in a manner that is designed to avoid
any ACTUAL OR POTENTIAL conflicts of interest. NA reserves the right, when
it deems necessary in light of particular circumstances, to impose more
stringent requirements on those persons subject to the Code, or to grant
exceptions to the Code.
Because governmental regulations and industry standards relating to
personal trading and potential conflicts of interest can evolve over time,
NA reserves the right to modify any or all of the policies and procedures
set forth in the Code. If NA revises the Code, the Director of Compliance
will provide you with written notification of the changes. You must
familiarize yourself with any modifications to the Code.
IF YOU HAVE ANY QUESTIONS ABOUT ANY ASPECT OF THE CODE, OR IF YOU HAVE
QUESTIONS REGARDING APPLICATION OF THE CODE IN A PARTICULAR SITUATION,
CONTACT THE COMPLIANCE DEPARTMENT.
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II. PERSONS COVERED BY THIS CODE
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A. EMPLOYEES & COVERED PERSONS
The policies and procedures set forth in the Code apply to all officers,
principals and employees of NACM and NAS (collectively, "Employees"). The
Code also applies to all temporary employees, consultants and interns (if
here more than one month) who work for NA on premises.
The policies and procedures set forth in the Code also apply to all
members of an Employee's immediate family which, for purposes of the Code,
refers to ANY RELATIVE BY BLOOD OR MARRIAGE LIVING IN THE EMPLOYEE'S
HOUSEHOLD (together with Employees, "Covered Persons").
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THE CODE ALSO APPLIES TO ACCOUNTS IN WHICH THE
EMPLOYEE IS NAMED AS A BENEFICIARY, TRUSTEE OR
IS OTHERWISE ABLE TO EXERCISE INVESTMENT CONTROL
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B. OUTSIDE FUND DIRECTORS/TRUSTEES
Special rules apply to Fund Trustees who are not employees of NACM or NAS
("Non-Employee Trustees"). Specifically, Non-Employee Trustees are NOT
subject to the:
- 3-day blackout period;
- prohibition on initial public offerings;
- restrictions on private placements;
- ban on short-term trading profits;
- gift restrictions; or
- restriction on service as a director.
Further, a Non-Employee Trustee is not required to pre-clear personal
securities transactions PROVIDED he or she did not have knowledge of any
current or pending transactions in the Security that have been completed
within the last fifteen (15) calendar days immediately preceding the date
of the transaction.
A Non-Employee Trustee is not required to submit quarterly personal
securities transaction reports, unless he or she knew, or should have
known, in the ordinary course of the fulfillment of his or her official
duties as a trustee of one of the Funds, that during the 15-day period
immediately preceding or following the date of a transaction in a security
by the Non-Employee Trustee that such security was purchased or sold, or
was considered for a purchase or sale, by a Fund or by NA for an Advisory
Client. Non-Employee Trustees also are not required to submit annual
portfolio holdings reports to NA.
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C. THE ADMINISTRATOR
Officers of the Fund who are officers or employees of the Fund's
Administrator are exempt from all provisions of this Code to the extent
that the Administrator has adopted reasonable written policies and
procedures regarding personal securities transactions by its employees.
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III. PERSONAL SECURITIES TRANSACTIONS
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The firm's policies and procedures set forth in the Code regarding
personal investing apply to ALL personal securities transactions by
Covered Persons, unless a transaction is in an Exempt Security or the
transaction is an Exempt Transaction as defined below.
A. COVERED SECURITIES & TRANSACTIONS
Personal securities transactions subject to the Code include, but are not
limited to:
- equity securities including common and preferred stock, except
as otherwise exempted below;
- investment and non-investment grade debt securities;
- investments convertible into, or exchangeable for, stock or debt
securities;
- any derivative instrument relating to any of the above
securities, including options, warrants and futures;
- any interest in a partnership investment in any of the
foregoing; and
- shares of closed-end investment companies.
B. EXEMPT SECURITIES & TRANSACTIONS
The Code pre-clearance procedures and reporting requirements do not apply
to the following types of securities and transactions, UNLESS SPECIFIED
OTHERWISE, which are referred to as "Exempt Securities" and "Exempt
Transactions":
EXEMPT SECURITIES
1. Shares of registered open-end mutual funds and money market funds;
2. Treasury bonds, treasury notes, treasury bills, U.S. Savings Bonds,
and other instruments issued by the U.S. government or its agencies
or instrumentalities;
3. Debt instruments issued by a banking institution, such as bankers'
acceptances and bank certificates of deposit; (this does not exempt
corporate bonds or high yield bonds)
4. Commercial paper;
5. Municipal bonds; or
6. Stock indices; (SEE APPENDIX IV)
EXEMPT TRANSACTIONS
1. Transactions in an account over which a Covered Person has no direct
or indirect influence or control; or in any account held by a
Covered Person which is managed on a discretionary basis by a person
other than the Covered Person and, with respect to which the Covered
Person does not influence or control the transactions;
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2. Transactions that are non-voluntary on the part of the Covered
Person (THESE TRANSACTIONS MUST BE REPORTED ON THE MONTHLY REPORT OR
"BLUE FORM") (E.G., bond calls, stock splits, spin-offs, etc.);
3. Purchases that are part of an automatic dividend reinvestment plan.
However, your initial purchase into a DRIP program must be
pre-cleared with Compliance and reported on your first monthly
report after starting the program. If you ever contribute more than
the automatic deduction to this plan, you must pre-clear this
transaction as if it were a non-exempt transaction;
4. Purchases as a result of the exercise by a Covered Person of rights
issued pro rata to all holders of a class of securities, to the
extent that such rights were acquired from the issuer, and the sale
of such rights;
5. Other similar circumstances as determined by the Director of
Compliance or General Counsel; or
6. Transactions in options or futures contracts on commodities,
currencies or interest rates.
Additionally, transactions in accounts over which the Covered Person has
no beneficial ownership, nor exercises direct or indirect influence or
control, may be excluded from the Code (and treated as Exempt
Transactions).
IF YOU HAVE ANY QUESTIONS ABOUT WHETHER A PARTICULAR TRANSACTION QUALIFIES
AS AN EXEMPT TRANSACTION, CONTACT THE COMPLIANCE DEPARTMENT OR THE GENERAL
COUNSEL.
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IV. PROCEDURES FOR TRADING SECURITIES
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Covered Persons wishing to purchase or sell securities for their own
accounts must follow certain procedures designed to avoid actual or
potential conflicts of interest. These procedures include pre-clearing the
transaction, holding the security for at least the required minimum length
of time, and adhering to a blackout period around Advisory Client trades.
Please note that these procedures DO NOT APPLY TO EXEMPT SECURITIES AND
EXEMPT TRANSACTIONS, as described above.
A. PRE-CLEARANCE
As a Covered Person, you must submit an Employee Personal Request (an
electronic pre-clearance form), which can be found on the NA intranet site
at HOME.NACM.COM UNDER TRADING/MONTHLY REPORTS AND FORMS - CTI ITRADE,
prior to the purchase or sale of securities for your own account or any
accounts over which you have control or have a beneficial interest. In
addition, Investment Personnel must have all transactions approved by the
Chief Investment Officer ("CIO") (or investment partner in the CIO's
absence). Requests received without the required signature will not be
cleared.
You must submit pre-clearance for ALL PERSONAL SECURITIES transactions,
unless the transaction qualifies as an Exempt or De Minimis Transaction
(described below). All other purchase or sale transactions, including
transactions in equity securities of up to 1,000 shares or $10,000 that
are NOT listed on a domestic exchange or have market capitalization of
LESS THAN $2 BILLION, must be pre-cleared prior to execution.
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TRANSACTIONS IN EQUITY SECURITIES UNDER 1000 SHARES
OR $10,000, WITH A MARKET CAPITALIZATION OF
OVER $2 BILLION DO NOT NEED PRE-CLEARANCE
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However, if you are buying 500 shares or less, the security is on NYSE or
the issuer's market capitalization is over $500 million the trade will be
approved even if NA is active in the security.
NA will treat the pre-clearance process as confidential and will not
disclose the information given during the pre-clearance process, except as
required by law or for applicable business purposes.
As a Covered Person, you cannot execute the requested transaction until
you receive authorization from the Compliance Department to do so.
Pre-clearance requests will be processed by the Compliance Department as
quickly as possible. PLEASE REMEMBER THAT PRE-CLEARANCE APPROVAL IS NOT
AUTOMATICALLY GRANTED FOR EVERY TRADE.
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PRIORITY PRE-CLEARANCE WINDOW
Compliance Department personnel will give priority attention to any
pre-clearance request submitted prior to 9:00 a.m. In these cases, you
will normally receive notification of your pre-clearance approval or
denial within 10-15 minutes. Pre-clearance requests submitted after 9:00
a.m. will be processed in as timely a manner as possible, but other
Compliance Department duties may delay the response for two (2) hours or
more (depending on department priorities) after submission.
PRE-CLEARANCE PERIOD
Pre-clearance must be obtained on the date of the proposed transaction.
Pre-clearance approval for domestic Personal Securities Transactions
effected through a broker-dealer is the day it is pre-cleared up until the
"market open" the next business day (6:30 a.m. PT, except holidays) after
the day that pre-clearance was obtained.
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IF YOU DECIDE NOT TO EXECUTE THE TRANSACTION ON THE DAY YOUR
PRE-CLEARANCE APPROVAL IS GIVEN, OR YOUR ENTIRE TRADE IS NOT
EXECUTED, YOU MUST REQUEST PRE-CLEARANCE AGAIN AT
SUCH TIME AS YOU DECIDE TO EXECUTE THE TRADE
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Pre-clearance approval is valid only for the particular security and
quantity indicated on the Form. For example, if you wish to increase the
size of the transaction, you must submit a new pre-clearance request and
receive a new pre-clearance approval. However, you may decrease the size
of the transaction without obtaining new authorization, but should inform
Compliance if this is done.
Failure to obtain pre-clearance for a personal securities transaction is a
serious breach of NA's Code. If you fail to obtain pre-clearance approval
for your personal securities transaction, you will be subject to
disciplinary action, up to and including termination of employment. You
may also be required to cancel the trade and bear any losses that occur.
You may also be required to disgorge any profits realized on the
unauthorized trade and donate them to a charity designated by NA (see
below).
B. VIOLATIONS
1. MONTHLY REPORTING VIOLATIONS
You must complete your Personal Security Transaction and Gift Report
("Blueform") via the intranet site by the end of the 10th day of each
month, regardless of whether you had any trading or gift activity for that
month.
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YOU MUST SUBMIT YOUR BLUEFORM
BY THE 10TH OF EVERY MONTH
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The Executive Committee member with oversight of your department may grant
exceptions to this requirement for legitimate business or personal
reasons. However, you should make every reasonable effort to submit your
report in a timely manner.
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IF YOU FAIL TO REMIT YOUR BLUEFORM ON TIME,
YOU WILL BE FINED $50 FOR THE FIRST DAY LATE &
$10 FOR EACH ADDITIONAL DAY THE REPORT IS LATE.
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2. TRADING VIOLATIONS
Any trading-related violation of this Code, including failure to properly
pre-clear a non-exempt personal trade, etc., will incur the following
sanctions, IN ADDITION TO disgorging any profits on personal trades that
conflict with NA client transactions:
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FIRST VIOLATION
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- A fine of 0.5% of base salary up to $500;
- Meet with Department Head and the Director of Compliance to discuss
and re-sign the Code of Ethics.
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SECOND VIOLATION (WITHIN 12 MONTHS)
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- A fine of 1% of base salary up to $1,000;
- Meet with Department Head and the Director of Compliance to discuss
and re-sign the Code of Ethics;
- Written warning to personnel file;
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THIRD VIOLATION (WITHIN 12 MONTHS)
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- A fine of 2% of base salary up to $2,000;
- Meet with Department Head and the Director of Compliance to discuss
and re-sign the Code of Ethics;
- Written warning to personnel file;
- Prohibition from trading personally for a specific period of time
(E.G., 6 months to 1 year) except to close out current positions;
- May result in termination of employment with NA.
All fines will be paid to a charity of NA's choice: currently the United
Way. Checks will be submitted to Compliance and forwarded to the selected
charity.
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C. HOLDING PERIOD RESTRICTION
As a general principle, personal securities transactions must be for
investment purposes and not for the purposes of generating short-term
profits. Any profits realized on a sale of a security held less than 60
days will be disgorged, with a check written to a charity of NA's choice,
currently the United Way. Checks will be submitted to Compliance and
forwarded to the selected charity. You may, however, sell a security held
less than 60 days if the security is being sold for no profit.
This holding period restriction does not apply to Exempt Securities or
Exempt Transactions. NA's Director of Compliance or General Counsel may
also grant exceptions to this prohibition in limited circumstances (E.G.,
bankruptcy, eviction, personal health emergency, etc.) upon prior written
request.
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YOU MAY NOT SELL A SECURITY ACQUIRED WITHIN THE
PREVIOUS 60 DAYS, UNLESS SELLING AT A LOSS
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D. BLACKOUT PERIOD
As a Covered Person, you may not buy or sell equity securities for your
personal accounts if:
- NA has engaged in a transaction in the same or an equivalent
security for an Advisory Client account within the last three (3)
days, OR
- the security is on the NA trading blotter or proposed blotter.
In the event you effect a prohibited personal securities transaction
within 3 business days before or after an Advisory Client account
transaction in the same or equivalent security, you will be required to
close out your position in the security and disgorge any profit realized
from the transaction to a charity designated by NA. However, if you
properly obtained pre-clearance for a transaction and an Advisory Client
account subsequently transacted in the same security within 3 days of your
transaction, this will not normally result in required disgorgement,
unless otherwise determined by NA's Director of Compliance or General
Counsel.
The blackout period does not apply to transactions that qualify as Exempt
Securities or Exempt Transactions.
E. DE MINIMIS TRANSACTIONS
You are NOT required to pre-clear certain de minimis transactions that
meet the following criteria. However, you must report these transactions
on your monthly Blue Form:
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EQUITY SECURITIES
Any purchase or sale transaction of up to 1,000 shares or $10,000 DAILY in
a NYSE-listed security or any security listed on another domestic exchange
(including NASDAQ) with a market capitalization of at least $2 billion.
DEBT SECURITIES
Any purchase or sale transaction of up to 100 units ($100,000 principal
amount) in an issuer with a market capitalization of at least $2 billion.
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ALL DE MINIMIS TRANSACTIONS ARE SUBJECT TO
THE HOLDING PERIOD RESTRICTION
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F. INITIAL PUBLIC OFFERINGS ("IPOS") & PRIVATE PLACEMENTS
As a Covered Person, you may not engage in a personal securities
transaction in any security in a private placement or IPO without prior
written approval of NA's Director of Compliance or its General Counsel. In
considering such approval, the Director of Compliance or General Counsel
will take into account, among other factors, whether the investment
opportunity is available to and/or should be reserved for an Advisory
Client account, and whether the opportunity is being offered to the
Covered Person by virtue of his or her position.
If you are approved to engage in a personal securities transaction in a
private placement or IPO, you must disclose that investment if you play a
part directly or indirectly in subsequent investment considerations of the
security for an Advisory Client account. In such circumstances, NA's
decision to purchase or sell securities of the issuer shall be subject to
an independent review by an NA Employee with no personal interest in the
issuer. In addition, you may also be required to refrain from trading the
security.
G. FRONT-RUNNING
As a Covered Person, you may not front-run an order or recommendation,
even if you are not handling the order or the recommendation (and even if
the order or recommendation is for someone other than the Covered Person).
Front-running consists of executing a transaction based on the knowledge
of the forthcoming transaction or recommendation in the same or an
underlying security, or other related securities, within three (3)
business days preceding a transaction on behalf of an Advisory Client.
H. INSIDE INFORMATION
As a Covered Person, you may not use material, non-public information
about any issuer of securities, whether or not such securities are held in
the portfolios of Advisory Clients or suitable for inclusion in such
portfolios, for personal gain or on behalf of an Advisory Client. If you
believe you are in possession of such information, you must contact NA's
Director of
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Compliance immediately to discuss the information and the circumstances
surrounding its receipt. This prohibition does not prevent a Covered
Person from contacting officers and employees of issuers or other
investment professionals in seeking information about issuers that is
publicly available. (REFER TO NA'S INSIDER TRADING POLICY ATTACHED
APPENDIX I FOR MORE INFORMATION.)
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AS A COVERED PERSON, YOU MAY NOT USE MATERIAL,
NON-PUBLIC INFORMATION ABOUT ANY ISSUER OF SECURITIES
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IF YOU HAVE ANY REGARDING PERSONAL TRADING, CONTACT THE COMPLIANCE
DEPARTMENT OR THE GENERAL COUNSEL.
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V. REPORTS & CERTIFICATIONS REGARDING PERSONAL SECURITIES TRANSACTIONS
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A. PERSONAL HOLDINGS REPORTS
In order to address potential conflicts of interest that can arise when a
Covered Person acquires or disposes of a security, and to help ensure
compliance with the Code, as a Covered Person, you must submit a Personal
Holdings Report at the time of commencement of employment with NACM or NAS
and annually thereafter with a list of all securities holdings in which
you have a beneficial interest (other than interests in Exempt
Securities).
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YOU MUST SUBMIT A COMPLETE PERSONAL HOLDINGS
REPORT UPON COMMENCEMENT OF
EMPLOYMENT & ANNUALLY THEREAFTER
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B. MONTHLY TRANSACTION & GIFT REPORTS
As a Covered Person, you must file a Monthly Securities Transaction and
Gift Report ("Blueform") with Compliance by the 10th day of each month for
the previous month (E.G., a September Blue Form would be due by the 10th
of October). If you did not execute any securities transactions during the
applicable month, you must still submit a Blue Form indicating that fact.
You file these Reports electronically on the NA Intranet site at
HTTP://HOME.NACM.COM/COMPLIANCE. The Compliance Department receives all
Report confirmations via email and stores them in a master database that
is archived annually to CD ROM.
Your Report must contain the following information with respect to each
reportable personal securities transaction. All fields must be completed
in order for your report to be successfully filed:
- Date of transaction;
- Nature of the transaction (purchase, sale or any other type of
acquisition or disposition);
- Security name;
- Security symbol or CUSIP;
- Number of shares/par;
- Principal amount of each security and/or the price at which the
transaction was effected; and
- Name of the broker, dealer or bank with or through whom the
transaction was effected.
13
<PAGE>
Monthly Reports may contain a statement that the report is not to be
construed as an admission that the person filing the report has or had any
direct or indirect beneficial interest in any security described in the
report.
C. DUPLICATE BROKERAGE STATEMENTS & CONFIRMATIONS
To assist NA in monitoring compliance with the Code, as a Covered Person,
you must instruct each broker-dealer with whom you maintain an account to
send duplicate copies of all transaction confirmations and statements
directly to NA's Compliance Department. This requirement does not apply to
accounts that are exclusively hold Exempt Securities or are held at a
mutual fund company.
D. CERTIFICATION OF COMPLIANCE
As a newly hired Employee, you must certify that you have read, understand
and will comply with the Code.
As a continuing Employee, you must annually certify that you have read,
understand, have complied, and will continue to comply, with the Code.
14
<PAGE>
--------------------------------------------------------------------------------
VI. POTENTIAL CONFLICT OF INTEREST ISSUES
--------------------------------------------------------------------------------
Certain activities, while not directly involving personal trading issues,
nonetheless raise similar potential conflict of interest issues and are
appropriate for inclusion in the Code. These monitored activities are as
follows:
A. SERVICE ON BOARDS OF OTHER COMPANIES
As a Covered Person, you are prohibited from serving on the board of
directors of any PUBLICLY TRADED company or organization. In addition, if
you wish to serve on the board of directors of a PRIVATELY HELD "for
profit" company, you must first obtain prior written approval from NA's
Director of Compliance or General Counsel. It is not necessary to obtain
approval to serve on the board of directors of entities such as schools,
churches, industry organizations or associations, or similar non-profit
boards.
B. GIFTS
As a Covered Person, you may not seek any gift, favor, gratuity, or
preferential treatment from any person or entity that:
- does business with or on behalf of NA;
- is or may appear to be connected with any present or future
business dealings between NA and that person or organization; or
- may create or appear to create a conflict of interest.
You may only accept gifts offered as a courtesy. You must report on your
monthly Blueform all gifts, favors or gratuities valued at $25 MORE
(EXCEPT MEALS VALUED AT LESS THAN $50). Non-Employee Trustees only need to
report gifts if values in excess of $100 AND the gift is given in
connection with the Trustee's affiliation with the NA.
C. GIFT PRE-CLEARANCE
You must submit a gift pre-clearance form and obtain prior written
approval for all gifts with a fair market value in excess of $100. Fair
market value applies to the value of the total gift (E.G., if you receive
4 tickets valued at $55 a piece, this is considered a gift in valued over
$100 and must be pre-cleared). You must make every reasonable effort to
obtain approval from your direct supervisor and the Compliance Department
PRIOR to accepting anything of value over $100. In the event that
pre-approval is not possible, you must make disclosure as soon as possible
after the gift/event, in any event, no later than on your next Blue Form.
A gift may be denied or required to be returned or reimbursed if you
receive an excessive number of gifts, especially if received from a single
source or if the total dollar value of gifts received during a single year
is deemed excessive.
15
<PAGE>
D. GIFT VIOLATIONS
In the event you fail to properly disclose and/or pre-clear these items,
the Management Committee will require the employee personally to either
donate the fair market value of the item (or the item itself) to charity
or directly reimburse the person or entity responsible for giving the
item.
As a Covered Person, you may not offer any gifts, favors or gratuities
that could be viewed as influencing decision-making or otherwise could be
considered as creating a conflict of interest on the part of the
recipient.
You must never give or receive gifts or entertainment that would be
controversial to either you or NA, if the information was made public. You
should be aware that certain NA clients might also place restrictions on
gifts YOU may give to their employees.
16
<PAGE>
--------------------------------------------------------------------------------
VII. VIOLATIONS OF THE CODE
--------------------------------------------------------------------------------
A violation of this Code is subject to the imposition of such sanctions as
may be deemed appropriate under the circumstances to achieve the purposes
of this Code. NA's Director of Compliance and the Executive Committee will
determine sanctions for violations of the Code. Such sanctions may include
those previously described, as well as others deemed appropriate.
Sanctions for a material violation (I.E., one that involves an actual
conflict or appearance of impropriety) of this Code by a Trustee of the
Funds will be determined by a majority vote of that Fund's Disinterested
Trustees.
IF YOU HAVE ANY QUESTIONS ABOUT ANY ASPECT OF THE CODE, CONTACT THE
DIRECTOR OF COMPLIANCE.
17
<PAGE>
--------------------------------------------------------------------------------
VIII. ANNUAL BOARD REVIEW
--------------------------------------------------------------------------------
The NA management annually prepares a report to the Funds' boards
summarizing existing procedures concerning personal trading (including any
changes in the Code), highlights material violations of the Code requiring
significant corrective action and identifies any recommended changes to
the Code.
18
<PAGE>
--------------------------------------------------------------------------------
IX. ADMINISTRATION & CONSTRUCTION
--------------------------------------------------------------------------------
NA's Director of Compliance serves as the "Administrator" of this Code.
The Administrator's duties include:
- Maintenance of a current list of Covered Persons;
- Providing all Employees with a copy of the Code and periodically
informing them of their duties and obligations under the Code;
- Supervising the implementation and enforcement of the terms of the
Code;
- Maintaining or supervising the maintenance of all records and
reports required by the Code;
- Preparing a list of all transactions effected by any Covered Person
during the three (3) day blackout period;
- Determining whether any particular securities transactions should
be exempted pursuant to the provisions of Section III of the Code;
- Issuing, either personally or with the assistance of counsel, any
interpretation of the Code which would be consistent with the
objectives of the Code;
- Conducting inspections or investigations reasonably required to
detect and report material violations of the Code and provide
recommendations relative to these violations to NA's Management
Committee, or the Board of Trustees of a Fund or any Committee
appointed by them to deal with such information;
- Submitting a quarterly report to the Trustees of each Fund
containing a description of any material violation and action taken
and any other significant information concerning administration of
the Code; and
- Regular reporting on Code compliance to the Executive Committee and
General Counsel.
19
<PAGE>
--------------------------------------------------------------------------------
X. AMENDMENTS & MODIFICATIONS
--------------------------------------------------------------------------------
This Code may be amended or modified as deemed necessary by the officers
of the Funds, with the advice of Fund counsel, provided such amendments or
modifications shall be submitted to the Board of Trustees of the Funds for
ratification and approval at the next available meeting. This version of
the Code has been amended taking into account the recent amendments to
Rule 17j-1 under the Investment Company Act of 1940. This Code is
effective as of March 20, 2000 to be ratified by the Board of Trustees of
the Funds at its next regularly scheduled meeting.
20
<PAGE>
================================================================================
APPENDIX I
================================================================================
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
NICHOLAS-APPLEGATE SECURITIES
POLICIES AND PROCEDURES CONCERNING THE MISUSE
OF MATERIAL NON-PUBLIC INFORMATION
("INSIDER TRADING")
Every employee of Nicholas-Applegate Capital Management, a California Limited
Partnership ("NA") must read and retain a copy of these Policies and Procedures.
Any questions regarding the Policies and Procedures described herein should be
referred to NA's Compliance Department ("Compliance").
--------------------------------------------------------------------------------
SECTION I. POLICY STATEMENT ON INSIDER TRADING ("POLICY STATEMENT")
--------------------------------------------------------------------------------
NA's Policy Statement applies to every Employee and extends to activities
both within and outside the scope of their duties at NA. NA forbids any
Employee from engaging in any activities that would be considered "insider
trading."
The term "insider trading" is not defined in the federal securities laws,
but generally is understood to prohibit the following activities:
- Trading by an insider, while in possession of material non-public
information;
- Trading by a non-insider, while in possession of material
non-public information, where the information either was disclosed
to the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated;
- Recommending the purchase or sale of securities while in possession
of material non-public information; or
- Communicating material non-public information to others (I.E.,
"tipping").
The elements of insider trading and the penalties for such unlawful
conduct are discussed below. If you have any questions regarding this
Policy Statement you should consult the Compliance Department.
WHO IS AN INSIDER?
The concept of "insider" is broad and it includes officers, partners and
employees of a company. In addition, a person can be a "temporary insider"
if he or she enters into a special confidential relationship in the
conduct of a company's affairs and, as a result, is given access to
information solely for the company's purposes. A temporary insider can
include, among others, company attorneys, accountants, consultants, bank
lending officers, and the employees of these organizations. In addition,
NA and its Employees may become temporary insiders of a company that NA
advises or for which NA performs other services. According to the U.S.
Supreme Court, before an outsider will be considered a temporary insider
for these purposes, the company
I-1
<PAGE>
must expect the outsider to keep the disclosed non-public information
confidential and the relationship must, at least, imply such a duty.
WHAT IS MATERIAL INFORMATION?
Trading, tipping, or recommending securities transactions while in
possession of inside information is not an actionable activity UNLESS the
information is "material." Generally, information is considered material
if: (i) there is a substantial likelihood that a reasonable investor would
consider it important in making his or her investment decisions or (ii) it
is reasonably certain to have a substantial effect on the price of a
company's securities. Information that should be considered material
includes, but is not limited to:
- dividend changes;
- earnings estimates;
- changes in previously released earnings estimates;
- a joint venture;
- the borrowing of significant funds;
- a major labor dispute, merger or acquisition proposals or
agreements;
- major litigation;
- liquidation problems; and
- extraordinary management developments.
For information to be considered material, it need not be so important
that it would have changed an investor's decision to purchase or sell
particular securities; rather it is enough that it is the type of
information on which reasonable investors rely in making purchase or sale
decisions. The materiality of information relating to the possible
occurrence of any future event would depend on the likelihood that the
event will occur and its significance if it did occur.
Material information does not have to relate to a company's business. For
example, in U.S. V. CARPENTER, 791 F.2d 1024 (2d Cir. 1986), AFF'D, 484
U.S. 19 (1987) (affirmed without opinion by an evenly divided court with
respect to the charge of insider trading, based on the "misappropriation"
theory), the court considered as material certain information about the
contents of a forthcoming newspaper column that was expected to affect the
market price of a security. In that case, a WALL STREET JOURNAL reporter
was found criminally liable for disclosing to others the dates that
reports on various companies would appear in the JOURNAL and whether those
reports would be favorable or not.
WHAT IS NON-PUBLIC INFORMATION?
All information is considered non-public until it has been effectively
communicated to the marketplace. One must be able to point to some fact to
show that the information is generally public. For example, information
found in a report filed with the SEC, or appearing in DOW JONES, REUTERS
ECONOMIC SERVICES, THE WALL STREET JOURNAL or other publications of
general circulation would be considered public. Information in bulletins
and research reports disseminated by brokerage firms are also generally
considered to be public information.
I-2
<PAGE>
BASIS FOR LIABILITY
In order to be found liable for insider trading, one must either (i) have
a fiduciary relationship with the other party to the transaction and have
breached the fiduciary duty owed to that other party, or (ii) have
misappropriated material non-public information from another person.
FIDUCIARY DUTY THEORY
Insider trading liability may be imposed on the theory that the
insider breached a fiduciary duty to a company. In 1980, the U.S.
Supreme Court held that there is no general duty to disclose before
trading on material non-public information, and that such a duty
arises only where there is a fiduciary relationship. That is, there
must be an existing relationship between the parties to the
transaction such that one party has a right to expect that the other
party would either (a) disclose any material non-public information,
if appropriate or permitted to do so, or (b) refrain from trading on
such material non-public information. CHIARELLA V. U.S., 445 U.S.
222 (1980).
In DIRKS V. SEC, 463 U.S. 646 (1983), the U.S. Supreme Court stated
alternative theories under which non-insiders can acquire the
fiduciary duties of insiders: (a) they can enter into a confidential
relationship with the company through which they gain the
information (E.G., attorneys, accountants, etc.), or (b) they can
acquire a fiduciary duty to the company's shareholders as "tippees"
if they were aware, or should have been aware, that they had been
given confidential information by an insider that violated his or
her fiduciary duty to the company's shareholders by providing such
information to an outsider.
However, in the "tippee" situation, a breach of duty occurs ONLY
where the insider personally benefits, directly or indirectly, from
the disclosure. Such benefit does not have to be pecuniary, and can
be a gift, a reputational benefit that will translate into future
earnings, or even evidence of a relationship that suggests a QUID
PRO QUO.
MISAPPROPRIATION THEORY
Another basis for insider trading liability is the
"misappropriation" theory. Under the misappropriation theory,
liability is established when trading occurs as a result of, or
based upon, material non-public information that was stolen or
misappropriated from any other person. In U.S. V. CARPENTER, SUPRA,
the court held that a columnist for THE WALL STREET JOURNAL had
defrauded the JOURNAL when he obtained information that was to
appear in the JOURNAL and used such information for trading in the
securities markets. The court held that the columnist's
misappropriation of information from his employer was sufficient to
give rise to a duty to disclose such information or abstain from
trading thereon, even though the columnist owed no direct fiduciary
duty to the issuers of the securities described in the column or to
purchasers or sellers of such securities in the marketplace.
Similarly, if information is given to an analyst on a confidential
basis and the analyst uses that information for trading purposes,
liability could arise under the misappropriation theory.
I-3
<PAGE>
PENALTIES FOR INSIDER TRADING
Penalties for trading on, or communicating material non-public information
are severe, both for individuals involved in such unlawful conduct and
their employers. A person can be subject to some or all of the penalties
below even if he or she did not personally benefit from the violation.
Penalties include:
- Civil injunctions;
- Criminal penalties for individuals of up to $1 million and for
"non-natural persons" of up to $2.5 million plus, for individuals,
a maximum jail term from five to ten years;
- Private rights of actions for disgorgement of profits;
- Civil penalties for the person who committed the violation of up to
three times the profit gained or loss avoided, whether or not the
person actually benefited;
- Civil penalties for the employer or other controlling person of up
to the greater of $1 million per violation or three times the
amount of the profit gained or loss avoided, as a result of each
violation; and
- A permanent bar, pursuant to the SEC's administrative jurisdiction,
from association with any broker, dealer, investment company,
investment adviser, or municipal securities dealer.
In addition, any violation of this Policy Statement can be expected to
result in serious sanctions by NA, including dismissal of the persons
involved.
--------------------------------------------------------------------------------
SECTION II. PROCEDURES TO IMPLEMENT NA'S POLICY STATEMENT
--------------------------------------------------------------------------------
The following procedures have been established to aid NA's Employees in
avoiding insider trading, and to aid NA in preventing, detecting and
imposing sanctions against insider trading. Every Employee of NA must
follow these procedures or risk serious sanctions, as described above. If
you have any questions about these procedures you should consult with the
Director of Compliance.
IDENTIFYING INSIDER INFORMATION
Before trading for yourself or others, including for any client accounts
managed by NA, in the securities of a company about which you may have
potential insider information, or revealing such information to others or
making a recommendation based on such information, you should ask yourself
the following questions.
- Is the information material?
- Is this information that an investor would consider important in
making an investment decision?
- Is this information that would substantially affect the market
price of the securities if generally disclosed?
- Is the information non-public?
I-4
<PAGE>
- To whom has this information been provided?
- Has the information been effectively communicated to the
marketplace by being published in THE WALL STREET JOURNAL or other
publications of general circulation, or has it otherwise been made
available to the public?
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the
information may be material and non-public, you should take the following
steps.
- Report the matter immediately to Compliance and disclose all
information that you believe may bear on the issue of whether
the information you have is material and non-public;
- Refrain from purchasing or selling securities with respect to
such information on behalf of yourself or others, including
for client accounts managed by NA; and
- Refrain from communicating the information inside or outside
NA, other than to Compliance.
After Compliance has reviewed the issue, you will be instructed to
continue the prohibitions against trading, tipping, or communication, or
you will be allowed to trade and communicate the information. In
appropriate circumstances, our Director of Compliance will consult with
our General Counsel as to the appropriate course of action.
PERSONAL SECURITIES TRADING
All Employees of NA must adhere to NA's Code of Ethics and Conduct
("Code") with respect to:
- securities transactions effected for their own account,
- accounts over which they have a direct or indirect beneficial
interest, and
- accounts over which they exercise any direct or indirect
influence.
Please refer to NA's Code as necessary. In accordance with the Code,
Employees are required to obtain prior written approval from Compliance
for all personal securities transactions (unless otherwise exempt under
the Code) and to submit to Compliance a Monthly Securities Transaction and
Gift Report ("Blueform") concerning all equity securities transactions as
required by NA's Code.
RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in your possession that you identify, or that has been
identified to you as material and non-public, must not be communicated to
anyone, except as provided above. In addition, you should make certain
that such information is secure. For example, files containing material
non-public information should be sealed and inaccessible and access to
computer files containing material non-public information should be
restricted by means of a password or other similar restriction.
I-5
<PAGE>
RESOLVING ISSUES CONCERNING INSIDER TRADING
If, after consideration of the items set forth above, doubt remains as to
whether information is material or non-public, or if there is any
unresolved question as to the applicability or interpretation of the
foregoing procedures, or as to the propriety of any action, please discuss
such matters with our Director of Compliance before trading or
communicating the information in question to anyone.
SUPERVISORY PROCEDURES
NA's Compliance Department is critical to the implementation and
maintenance of these Policies and Procedures against insider trading. The
supervisory procedures set forth below are designed to detect and prevent
insider trading.
PREVENTION OF INSIDER TRADING
In addition to the pre-approval and monthly reporting procedures
specified in the Code concerning personal securities transactions,
the following measures have been implemented to prevent insider
trading by NA's Employees.
1. All Employees of NA will be provided with a copy of these
Policies and Procedures regarding insider trading.
2. Compliance will, as deemed necessary, conduct educational
seminars to familiarize Employees with NA's Policies and
Procedures. Such educational seminars will target, in
particular, persons in sensitive areas of NA who may receive
inside information more often than others;
3. Compliance will answer questions regarding NA's Policies and
Procedures;
4. Compliance will resolve issues of whether information received
by an Employee of NA is material and non-public;
5. Compliance will review these Policies and Procedures on a
regular basis and update as necessary;
6. Whenever it has been determined that an Employee of NA has
possession of material non-public information, Compliance will
(i) implement measures to prevent dissemination of such
information, and (ii) restrict Employees from trading in the
securities by placing such securities on NA's Restricted List;
and
7. Upon the request of any Employee, Compliance will review and any
requests for clearance to trade in specified securities and
either approve or disapprove.
DETECTION OF INSIDER TRADING
To detect insider trading, Compliance will:
1. Review the personal securities transaction reports filed by each
Employee, including subsequent monthly review of all personal
securities transactions;
2. Review the trading activity of client accounts managed by NA;
3. Review the trading activity of NA's own accounts, if any; and
I-6
<PAGE>
4. Coordinate the review of such reports with other appropriate
Employees of NA when Compliance has reason to believe inside
information has been provided to certain Employees.
REPORTS TO MANAGEMENT
Promptly upon learning of a potential violation of NA's Policies and
Procedures, Compliance will prepare a confidential written report to
management, providing full details and recommendations for further
action. In addition, Compliance will prepare reports to management,
when appropriate, setting forth:
1. A summary of existing procedures to prevent and detect insider
trading;
2. Full details of any investigation, either internal or by a
regulatory agency, of any suspected insider trading and the
results of such investigation;
3. An evaluation of the current procedures and any recommendations
for improvement; and
4. A description of NA's continuing education program regarding
insider trading, including the dates of any seminars since the
last report to management.
In response to such report, management will determine whether any
changes to the Policies and Procedures might be appropriate.
I-7
<PAGE>
--------------------------------------------------------------------------------
APPENDIX II
--------------------------------------------------------------------------------
EXAMPLES OF BENEFICIAL OWNERSHIP
- Securities held by an Access Person for their own benefit, regardless of the
form in which held;
- Securities held by others for an Access Person's benefit, such as securities
held by custodians, brokers, relatives, executors or administrators;
- Securities held by a pledgee for an Access Person's account;
- Securities held by a trust in which an Access Person has an income or
remainder interest, unless the Access Person's only interest is to receive
principal (a) if some other remainderman dies before distribution or (b) if
some other person can direct by will a distribution of trust property or
income to the Access Person;
- Securities held by an Access Person as trustee or co-trustee, where the
Access Person or any member of their immediate family (I.E., spouse, children
or their descendants, stepchildren, parents and their ancestors, and
stepparents, in each case treating a legal adoption as a blood relationship)
has an income or remainder interest in the trust;
- Securities held by a trust of which the Access Person is the settlor, if the
Access Person has the power to revoke the trust without obtaining the consent
of all the beneficiaries;
- Securities held by a general or limited partnership in which an Access Person
is either the general partner of such partnership or a controlling partner of
such entity (E.G., Access Person owns more than 25% of the partnership's
general or limited partnership interests);
- Securities held by a personal holding company controlled by an Access Person
alone or jointly with others;
- Securities held in the name of an Access Person's spouse - unless legally
separated or divorced;
- Securities held in the name of minor children of an Access Person or in the
name of any relative of an Access Person or of their spouse (including an
adult child) who is presently sharing the Access Person's home;
- Securities held in the name of any person other than an Access Person and
those listed in above, if by reason of any contract, understanding,
relationship, agreement, or other arrangement the Access Person obtains
benefits equivalent to those of ownership; and
- Securities held in the name of any person other than an Access Person , even
though the Access Person does not obtain benefits equivalent to those of
ownership (as described above), if the Access Person can vest or re-vest
title in himself.
I-8
<PAGE>
--------------------------------------------------------------------------------
APPENDIX III
--------------------------------------------------------------------------------
QUICK REFERENCE GUIDE
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
DESCRIPTION PRE- REPORT BLACK-OUT HOLDING TRADING FINE DISGORGEMENT
CLEAR PERIOD PERIOD APPLIES REQUIRED
("Blue Form")
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EXEMPT SECURITIES:
Open-end mutual funds, US Gov't
securities, BAs, CDs, CP, Muni bonds NO NO NO NO N/A N/A
and stock indices
---------------------------------------------------------------------------------------------------------------------------
EXEMPT TRANSACTIONS:
No control or influence, non-voluntary,
automatic dividend reinvestment plan,
exercise of pro-rata rights issue, options NO NO NO NO N/A N/A
or futures on commodities, currencies or
interest rates
---------------------------------------------------------------------------------------------------------------------------
DE MINIMIS TRANSACTIONS:
1,000 shares or $10,000 and NYSE or
other listed domestic exchange, NO YES NO YES YES YES
including NASDAQ, and market cap =
$2 billion (daily limit)
---------------------------------------------------------------------------------------------------------------------------
= 500 shares, NYSE, or market cap = YES YES NO YES YES YES
$500 million
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: THIS INFORMATION IS PROVIDED AS A SUMMARY ONLY. YOU ARE RESPONSIBLE TO
ENSURE YOUR PERSONAL SECURITIES TRADING COMPLIES WITH THE CODE. PLEASE REFER TO
THE CODE FOR FURTHER DETAILS. IF YOU HAVE ANY QUESTIONS, PLEASE CONTACT
COMPLIANCE.
III-1
<PAGE>
--------------------------------------------------------------------------------
APPENDIX IV
--------------------------------------------------------------------------------
EXEMPT INDICES
--------------------------------------------------------------------------------
The following are exempt from the 60-DAY MINIMUM hold rule and are exempt from
pre-clearance:
- S&P 500 Index
- S&P 100 Index
- S&P Mid Cap Index (400 Issues)
- S&P Small Cap Index (600 Issues)
- NASDAQ 100 Index
- Russell 2000 Index
- Wilshire Small Cap Index (250 Issues)
- EUROTOP 100 Index
- Financial Times Stock Exchange (FT-SE) 100 Index
- Japan Index (210 Issues)
- NYSE Composite Index (2400 Issues)
- PHLX National OTC Index (100 Issues)
- Standard & Poor's Depository Receipts (SPDRs)
- Standard & Poor's Mid Cap 400 Depository Receipts (Mid Cap SPDRs)
- Gold/Silver Index Options
- World Equity Benchmark Shares (WEBS)
- JP Morgan Commodity Indexed Preferred Securities, Series A (Symbol JPO)
- Dow Jones Industrials Diamonds (DIA)
- NASDAQ 100 Shares (QQQ)
The Director of Compliance may approve any other Index on a case-by-case basis.
If you have any questions regarding the above, please contact the Compliance
Department.
IV-1
<PAGE>
--------------------------------------------------------------------------------
APPENDIX V
--------------------------------------------------------------------------------
================================================================================
NEW HIRES:
PLEASE COMPLETE, SIGN & RETURN THE FOLLOWING 4 PAGES TO THE COMPLIANCE
DEPARTMENT WITHIN 5 DAYS OF YOUR DATE OF HIRE
------
YOU ARE NOT PERMITTED TO EXECUTE ANY PERSONAL
TRADES UNTIL THESE CERTIFICATES ARE FILED.
ANNUAL RECERTIFICATION (PRESENT EMPLOYEES):
YOU ARE REQUIRED TO COMPLETE, SIGN & RETURN THE FOLLOWING 4 PAGES TO THE
COMPLIANCE DEPARTMENT BY THE ANNUAL DUE DATE (STATED IN RENEWAL PACKET). IF IT
IS RECEIVED AFTER THAT DATE YOU WILL INCUR A FINE AS FOLLOWS - $50 FOR THE FIRST
DAY LATE & $10 EVERY DAY AFTER THAT.
ALL FINES ARE WRITTEN & SENT TO THE UNITED WAY.
YOU WILL ALSO BE RESTRICTED FROM TRADING UNTIL THESE
CERTIFICATES ARE RECEIVED IN COMPLIANCE (ONLY IF LATE).
THANK YOU
================================================================================
V-1
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--------------------------------------------------------------------------------
NICHOLAS-APPLEGATE INSTITUTIONAL FUNDS
NICHOLAS-APPLEGATE SECURITIES
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
CERTIFICATE OF COMPLIANCE
-----------------------------------
NAME (PLEASE PRINT)
This is to certify that the Code of Ethics and Conduct ("Code"), updated as of
March 2000, is available for my review on the intranet site (home.nacm.com) for
the year 2000. I have read and understand the Code. I certify that I will comply
with these policies and procedures during the course of my employment by NACM or
NAS. Moreover, I agree to promptly report to the Director of Compliance any
violation, or possible violation of this Code, of which I become aware.
I understand that a violation of this Code will be grounds for disciplinary
action or dismissal and may also be a violation of federal and/or state
securities laws.
------------------------------------
SIGNATURE
------------------------------------
DATE
--------------------------------------------------------------------------------
V-2
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--------------------------------------------------------------------------------
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
NICHOLAS-APPLEGATE SECURITIES
INSIDER TRADING POLICY
{APPENDIX I}
CERTIFICATE OF COMPLIANCE
------------------------------------
NAME (PLEASE PRINT)
This is to certify that I have read and understand the policies and procedures
of NA's Insider Trading Policy (the "Policy"), updated as of March 2000, and
available for my review on the intranet site (home.nacm.com) for the year 2000.
I certify that I will comply with these policies and procedures during the
course of my employment with NA. Moreover, I agree to promptly report to the
Director of Compliance any violation, or possible violation, of the Policy of
which I became aware.
I understand that violation of the Policy will be grounds for disciplinary
action or dismissal and may also be a violation of federal and/or state
securities laws.
------------------------------------
SIGNATURE
------------------------------------
DATE
--------------------------------------------------------------------------------
V-3
<PAGE>
PERSONAL HOLDINGS REPORT
AS REQUIRED IN Section V of the NA's Code of Ethics ("Code"), please provide a
list of all Securities (except Exempt Securities) in which you have a beneficial
interest, including those in accounts of your immediate family and all
Securities in non-client accounts for which you make investment decisions.
1. List all Securities that are:
a) personally owned; or
b) in which a beneficial interest is held by you, your spouse, minor
child, or any other member of your immediate household;
c) any trust or estate of which you or your spouse is a trustee, other
fiduciary or beneficiary, or of which your minor child is a
beneficiary; or
d) any person for whom you direct or effect transactions under a power
of attorney or otherwise.
TABLE A
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
NAME OF SECURITY TYPE SECURITY(1) HOLDINGS HOLDINGS RELATIONSHIP(3) DISCLAIMER OF
# OF SHARES PRINCIPAL BENEFICIAL INTEREST(4)
AMOUNT ($)(2)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
* IF NONE, WRITE NONE.
*NOTE: CONTINUE LISTING AS NECESSARY ON ADDITIONAL SHEETS. (YOU MAY ATTACH A
COPY OF A BROKER STATEMENT LISTING THE INFORMATION - IF SO, INDICATE BY WRITING
"SEE ATTACHED.")
IF YOU ARE A PRESENT EMPLOYEE (NEW EMPLOYEES CONTINUE TO TABLE B)
-----------------------------------------------------------------
2. Have you, during the past 12 months, requested prior clearance of and
filed monthly reports for all applicable securities transactions as
required by the Code?
Yes No
----- -----
If "No", has the transaction been discussed with the Compliance
Department?
Yes No
-------------------------------------
-----------------------------
(1) Insert the following symbol as pertinent to indicate the type of security
held: C-common stock, P-preferred stock, O-option, W-warrant and D-debt
security.
(2) To be completed only for debt securities.
(3) Insert a, b, c, or d as explained above, to describe your interest in these
securities.
(4) Mark x to indicate that the reporting or recording of this securities
holding shall not be construed as an admission that you have any direct or
indirect beneficial interest in these securities. Please see Appendix II for a
list of examples of beneficial interest.
V-4
<PAGE>
If not, please advise the Compliance Department in writing separately of
any securities transactions not pre-cleared or reported.
3. Have you filed monthly reports for all reportable securities transactions
as required by the Code?
Yes No
-------------------------------------
In addition, Nicholas-Applegate requires all employees to disclose ALL
BROKERAGE ACCOUNTS in their name, any spouse's account, any children's
account or any other account over which the employee has control or is
a beneficiary.
TABLE B
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
NAME OF BROKER ACCOUNT NUMBER NAME(S) ON ACCOUNT
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
* IF NONE, WRITE NONE.
I certify that the statements made by me on this form are true, complete and
correct to the best of my knowledge and belief and are made in good faith.
------------------------------- --------------------------------------
DATE SIGNATURE
V-5
