PIMCO ADVISORS L.P.
CODE OF ETHICS
Effective June 1, 2000
INTRODUCTION
This Code of Ethics is based on the principle that you, as an officer or
employee of PIMCO Advisors L.P., its divisions or its subsidiaries, including
Cadence Capital Management, NFJ Investment Group, Oppenheimer Capital, PIMCO
Equity Advisors and Parametric Portfolio Associates (collectively, PIMCO
Advisors), owe a fiduciary duty to the shareholders of the registered investment
companies (the Funds) and other clients (together with the Funds, the Advisory
Clients) for which PIMCO Advisors serves as an adviser or subadviser.
Accordingly, you must avoid activities, interests and relationships that might
interfere or appear to interfere with making decisions in the best interests of
our Advisory Clients. If you are covered by another code in the PIMCO Advisors
or Allianz group of companies, this Code shall not apply to you.
At all times, you must:
1. 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 our Advisory Clients. You may not
cause an Advisory Client to take action, or not to take action, for
your personal benefit rather than the benefit of the Advisory Client.
For example, you would violate this Code if you caused an Advisory
Client to purchase a Security you owned for the purpose of increasing
the price of that Security. If you are an employee who makes (or
participates in making) recommendations regarding the purchase or sale
of securities by any Advisory Client, (each a Portfolio Manager) or
provides information or advice to a Portfolio Manager or has access to
or obtains information regarding such recommendations or helps execute
a Portfolio Manager's recommendations (together with Portfolio
Managers, each a Portfolio Employee), you would also violate this Code
if you made a personal investment in a Security that might be an
appropriate investment for an Advisory Client without first
considering the Security as an investment for the Advisory Client.
2. Conduct all of your personal Securities transactions in full
compliance with this Code and the PIMCO Advisors Insider Trading
Policy. PIMCO Advisors encourages you and your family to develop
personal investment programs. However, you must not take any action in
connection with your personal investments that could cause even the
appearance of unfairness or impropriety. Accordingly, you must comply
with the policies and procedures set forth in this Code under the
heading Personal Securities Transactions. In addition, you must comply
with the policies and procedures set forth in the PIMCO Advisors
Insider Trading Policy, which is attached to this Code as Appendix I.
Doubtful situations should be resolved against your personal trading.
3. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, gifts or gratuities from persons seeking
business with PIMCO Advisors directly or on behalf of an Advisory
Client could call into question the independence of your business
judgment. Accordingly, you must comply with the policies and
procedures set forth in this Code under the heading Fiduciary Duties.
Doubtful situations should be resolved against your personal interest.
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TABLE OF CONTENTS
PERSONAL SECURITIES TRANSACTIONS.............................................3
TRADING IN GENERAL......................................................3
SECURITIES..............................................................3
PURCHASE OR SALE OF A SECURITY .........................................3
EXEMPT SECURITIES.......................................................3
BENEFICIAL OWNERSHIP....................................................4
EXEMPT TRANSACTIONS.....................................................5
ADDITIONAL EXEMPT TRANSACTIONS..........................................5
CAUTION.................................................................7
PRECLEARANCE PROCEDURES.................................................7
INITIAL PUBLIC OFFERINGS................................................8
PRIVATE PLACEMENTS......................................................8
SHORT-TERM TRADING PROFITS..............................................8
PUTS, CALLS, SHORT SALES................................................8
USE OF BROKER-DEALERS...................................................9
REPORTING....................................................................9
REPORTING OF TRANSACTIONS AND BROKERAGE ACCOUNTS........................9
INITIAL AND ANNUAL REPORTS..............................................9
FIDUCIARY DUTIES............................................................10
GIFTS..................................................................10
SERVICE AS A DIRECTOR..................................................10
COMPLIANCE..................................................................10
CERTIFICATE OF RECEIPT.................................................10
ANNUAL CERTIFICATE OF COMPLIANCE.......................................10
REMEDIAL ACTIONS.......................................................11
REPORTS TO MANAGEMENT AND TRUSTEES..........................................11
REPORTS OF SIGNIFICANT REMEDIAL ACTION.................................11
ANNUAL REPORTS.........................................................11
THE FOLLOWING APPENDICES ARE ATTACHED AND ARE A PART OF THIS CODE:
I. PIMCO Advisors L.P. Insider Trading Policy and Procedures...............12
II. Form for Acknowledgement of Receipt of this Code........................19
III. Form for Initial and Annual Report of Personal Securities Holdings......20
IV. Form for Reporting Brokerage Accounts and Non-Broker Transactions.......22
V. Form for Annual Certification of Compliance with this Code..............24
VI. Form for Preclearance of Personal Securities Transactions...............25
Questions
Questions regarding this Code should be addressed to your local Compliance
Officer. As of the effective date of this Code, the Compliance Officers are:
Frank Poli and Joe DiBartolo (PIMCO Advisors and Oppenheimer Capital), Dave
Breed and Mary Ellen Melendez (Cadence), Betty Herman and John Johnson (NFJ) and
Andy Abramsky and David Stein (Parametric). The Compliance Committee members are
Richard Weil and Frank Poli who are also Compliance Officers for each above
referenced entity.
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PERSONAL SECURITIES TRANSACTIONS
Trading in General
You may not engage, and you may not permit any other person or entity to engage,
in any purchase or sale of any Security (other than an Exempt Security), of
which you have, or by reason of the transaction will acquire, Beneficial
Ownership, unless (i) the transaction is an Exempt Transaction or (ii) you have
complied with the procedures set forth under Preclearance Procedures.
Securities
The following are Securities:
Any note, stock, treasury stock, bond, debenture, evidence of indebtedness,
certificate of interest or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-trust certificate, certificate
of deposit for a security, fractional undivided interest in oil, gas, or other
mineral rights, any put, call, straddle, option or privilege on any security
(including a certificate of deposit) or on any group or index of securities
(including any interest therein or based on the value thereof), or any put,
call, straddle, option or privilege entered into on a national securities
exchange relating to foreign currency, or, in general, any interest or
instrument commonly known as a security, or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any security.
The following are not Securities:
Commodities, futures and options traded on a commodities exchange, including
currency futures. However, futures and options on any group or index of
Securities are Securities.
Purchase or Sale of a Security
The purchase or sale of a Security includes, among other things, the writing of
an option to purchase or sell a Security.
Exempt Securities
The following are Exempt Securities:
1. Direct obligations of the Government of the United States.
2. Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments (defined as
any instrument that has a maturity at issuance of less than
366 days and that is rated in one of the two highest rating
categories by a Nationally Recognized Statistical Rating
Organization), including repurchase agreements.
3. Shares of registered open-end investment companies.
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Beneficial Ownership
The following section is designed to give you a practical guide with respect to
Beneficial Ownership. However, for purposes of this Code, Beneficial Ownership
shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) of
the Exchange Act of 1934 (the "Exchange Act") in determining whether a person is
the beneficial owner of a security for purposes of Section 16 of the Exchange
Act and the rules and regulations thereunder.
You are considered to have Beneficial Ownership of Securities if you have or
share a direct or indirect Pecuniary Interest in the Securities.
You have a Pecuniary Interest in Securities if you have the opportunity,
directly or indirectly, to profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary Interest in Securities:
1. Securities held by members of your immediate family sharing
the same household; however, this presumption may be rebutted
by convincing evidence that profits derived from transactions
in these Securities will not provide you with any economic
benefit.
Immediate family means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and includes any adoptive
relationship.
2. Your interest as a general partner in Securities held by a general or
limited partnership.
3. Your interest as a manager-member in the Securities held by a limited
liability company.
You do not have an indirect Pecuniary Interest in Securities held by a
corporation, partnership, limited liability company or other entity in which you
hold an equity interest, unless you are a controlling equityholder or you have
or share investment control over the Securities held by the entity.
The following circumstances constitute Beneficial Ownership by you of Securities
held by a trust:
1. Your ownership of Securities as a trustee where either you or
members of your immediate family have a vested interest in the
principal or income of the trust.
2. Your ownership of a vested beneficial interest in a trust.
3. Your status as a settlor of a trust, unless the consent of all of the
beneficiaries is required in order for you to revoke the trust.
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Exempt Transactions
The following are Exempt Transactions:
1. Any transaction in Securities in an account over which you do
not have any direct or indirect influence or control. There is
a presumption that you can exert some measure of influence or
control over accounts held by members of your immediate family
sharing the same household, but this presumption may be
rebutted by convincing evidence.
2. Purchases of Securities under dividend reinvestment plans.
3. Purchases of Securities by exercise of rights issued to the
holders of a class of Securities pro rata, to the extent they
are issued with respect to Securities of which you have
Beneficial Ownership.
4. Acquisitions or dispositions of Securities as the result of a
stock dividend, stock split, reverse stock split, merger,
consolidation, spin-off or other similar corporate
distribution or reorganization applicable to all holders of a
class of Securities of which you have Beneficial Ownership.
5. Subject to the restrictions on participation in private placements set
forth below under Private Placements, acquisitions or dispositions of
Securities of a private issuer. A private issuer is a corporation,
partnership, limited liability company or other entity which has no
outstanding publicly-traded Securities, and no outstanding Securities
which are exercisable to purchase, convertible into or exchangeable
for publicly-traded Securities. However, you will have Beneficial
Ownership of Securities held by a private issuer whose equity
Securities you hold, unless you are not a controlling equityholder and
do not have or share investment control over the Securities held by
the entity.
6. Such other classes of transactions as may be exempted from
time to time by the Compliance Committee based upon a
determination that the transactions are unlikely to violate
Rule 17j-1 under the Investment Company Act of 1940, as
amended. The Compliance Committee may exempt designated
classes of transactions from any of the provisions of this
Code except the provisions set forth below under Reporting.
7. Such other specific transactions as may be exempted from time
to time by a Compliance Officer. On a case-by-case basis when
no abuse is involved a Compliance Officer may exempt a
specific transaction from any of the provisions of this Code
except the provisions set forth below under Reporting. The
form for requesting approval from Compliance is attached to
this Code as Appendix VI.
Additional Exempt Transactions
The following classes of transactions have been designated as Exempt
Transactions by the Compliance Committee:
1. Purchases or sales of up to $100,000 per calendar month per issuer of
fixed-income Securities.
2. Any purchase or sale of fixed-income Securities issued by agencies or
instrumentalities of, or unconditionally guaranteed by, the Government
of the United States.
3. Purchases or sales of up to $1,000,000 per calendar month per issuer
of fixed-income Securities issued by qualified foreign governments.
A qualified foreign government is a national government of a
developed foreign country with outstanding fixed-income
securities in excess of fifty billion dollars.
4.* Purchases or sales of up to 2,000 shares per day per issuer, of
large-cap issuers.
A large-cap issuer is an issuer with a total market
capitalization in excess of one billion dollars and an average
daily trading volume during the preceding calendar quarter, on
the principal securities exchange (including NASDAQ) on which
its shares are traded, in excess of 100,000 shares.
Information concerning large-cap issuers is available on the
Internet. If you are unsure whether a security is a large-cap
issue, contact a Compliance Officer.
5.* Purchases or sales of up to the lesser of 1000 shares or $10,000 per
calendar week, per issuer, of stock of issuers other than large-cap
issuers.
*Exemptions 4 and 5 do not apply to officers and employees of
Oppenheimer Capital, PIMCO Equity Advisors and NFJ. These
employees must preclear all transactions unless another
exemption applies.
6. Purchases or sales of exchange-traded options on broadly-based indices
and units, and/or exchange traded trusts or funds representing a
group, index or a basket of securities (e.g., HHH, QQQ, and SPY).
7. Any purchase or sale of shares of registered closed-end
investment companies other than Municipal Advantage Fund and
PIMCO Commercial Mortgage Trust.
8. For employees of NFJ Investment Group, shares of any issuer
not owned in NFJ's Advisory Client's accounts and not
contemplated for purchase for any Advisory Clients, based upon
the determination by NFJ that because of the investment
objectives and policies of the Advisory Clients, such
securities are not eligible for purchase by NFJ for the
Advisory Clients.
9. If you are not a Portfolio Employee, short sales of any
Security otherwise permitted hereunder or puts, calls,
straddles or options where the underlying amount of Securities
controlled is an amount or transaction otherwise permitted
hereunder.
CAUTION
Qualified foreign governments, large-cap issuers and broadly based indices may
change from time to time. Accordingly, you may purchase Securities in an Exempt
Transaction only to find that when you wish to sell them, you may not do so
without approval of a Compliance Officer and preclearance.
Preclearance Procedures
If a Securities transaction requires preclearance:
1. The Securities may not be purchased or sold if at the time of
preclearance there is a pending buy or sell order on behalf of
an Advisory Client in the same Security or an equivalent
Security or if you knew or should have known that an Advisory
Client would be trading in that security or an equivalent
Security on the same day.
An equivalent Security of a given Security is (i) a Security
issuable upon exercise, conversion or exchange of the given
Security, (ii) a Security exercisable to purchase, convertible
into or exchangeable for the given Security, or (iii) a
Security otherwise representing an interest in or based on the
value of the given Security.
2. If you are a Portfolio Manager (or a person identified by the
Chief Investment Officer (CIO) as having access to the same
information), the Securities may not be purchased or sold
during the period which begins seven days before and ends
seven days after the day on which an Advisory Client trades in
the same Security or an equivalent Security; except that you
may, if you preclear the transaction, (i) trade "same way" to
an Advisory Client after its trading is completed, or (ii)
trade "opposite way" to an Advisory Client before its trading
is commenced.
If you are a Portfolio Manager (or a person identified by the
CIO as having access to the same information), and you
preclear a Securities transaction and trade same way to an
Advisory Client before its trading is commenced, the
transaction is not a violation of this Code unless you knew or
should have known that the Advisory Client would be trading in
that Security or an equivalent Security within seven days
after your trade.
3. The Securities may be purchased or sold only if you have asked
a Compliance Officer to preclear the purchase or sale, the
Compliance Officer has given you preclearance in writing, and
the purchase or sale is executed by the close of business on
the day preclearance is given. The form for requesting
preclearance is attached to this Code as Appendix VI.
4. In addition to the foregoing, if you are an officer or
employee of Oppenheimer Capital, PIMCO Equity Advisors or NFJ
Investment Group, the Securities may be purchased or sold only
if you have asked the Trading Department to preclear the
purchase or sale, the Trading Department has given you
preclearance in writing, and the purchase or sale is executed
by the close of business on the day preclearance is given. The
form for requesting preclearance is attached to this Code as
Appendix VI. Preclearance forms must be submitted immediately
upon trade execution to the Compliance Department.
5. If you are an officer or employee of Oppenheimer Capital,
preclearance may be granted if, in comparing the net value of
OpCap's trading in the Security to the total market volume of
trading in the Security: (i) the net volume of OpCap's trading
in the Security amounts to less than 1% of the total market
volume of trading in the Security for the past five days; (ii)
the net volume of OpCap's trading in the Security amounts to
less than 1% of the total volume of trading in the Security
for the previous day; and (iii) OpCap has not transacted in
the Security on the day of preclearance and has no pending
orders in the Security at the time of preclearance.
Initial Public Offerings
If you are a Portfolio Employee, you may not acquire Beneficial Ownership of any
Securities in an initial public offering (as defined in Rule 17j-1).
Private Placements
If you are a Portfolio Employee, you may not acquire Beneficial Ownership of any
Securities in a private placement (a limited offering as defined in Rule 17j-1),
unless you have received the prior written approval from a member of the
Compliance Committee. Approval will be not be given unless a determination is
made that the investment opportunity should not be reserved for one or more
Advisory Clients, and that the opportunity to invest has not been offered to you
by virtue of your position.
If you are a Portfolio Employee, and you have acquired Beneficial Ownership of
Securities in a private placement, you must disclose your investment when you
play a part in any consideration of an investment by an Advisory Client in the
issuer of the Securities, and any decision to make such an investment must be
independently reviewed by a Portfolio Manager who does not have Beneficial
Ownership of any Securities of the issuer.
Short-Term Trading Profits
If you are a Portfolio Employee, you may not profit from the purchase and sale,
or sale and purchase, within 60 calendar days, of the same Securities or
equivalent Securities (other than Exempt Securities) of which you have
Beneficial Ownership. Any such short-term trade must be unwound, or if that is
not practical, the profits must be contributed to a charitable organization.
Puts, Calls, Short Sales
If you are a Portfolio Employee, you are prohibited from transactions involving
puts, calls, straddles, options and/or short sales except for: Exempt
Transactions, transactions in Exempt Securities or transactions approved by a
Compliance Officer. If you are an Oppenheimer Capital Non-Portfolio Employee,
you may not acquire Beneficial Ownership of any put, call, straddle, option or
privilege on any Securities on the Approved List or any Securities which are not
shares of a large-cap issuer.
You are considered to profit from a short-term trade if Securities of which you
have Beneficial Ownership are sold for more than the purchase price of the same
Securities or equivalent Securities, even though the Securities purchased and
the Securities sold are held of record or beneficially by different persons or
entities.
Use of Broker-Dealers and Brokerage Accounts
You may not engage, and you may not permit any other person or entity to engage,
in any purchase or sale of publicly traded Securities (other than Exempt
Securities) of which you have, or by reason of the transaction will acquire,
Beneficial Ownership, except through a registered broker-dealer. Oppenheimer
Capital and PIMCO Advisors employees located in New York may only engage in
purchases or sales of publicly traded Securities through Charles Schwab & Co. or
such other registered broker-dealer as may be specified by the Compliance
Committee unless an exemption has been requested and approved in writing by a
Compliance Officer.
REPORTING
Reporting of Transactions and Brokerage Accounts
You must report all brokerage accounts and all Securities Transactions that are
not transactions in Exempt Securities. To satisfy these requirements; (i) you
must cause each registered broker-dealer which maintains an account for
Securities of which you have Beneficial Ownership, to provide to a Compliance
Officer, within 10 days of the end of each calendar quarter, duplicate copies:
(a) of confirmations of all transactions in the account and (b) periodic
statements (no frequently less than quarterly) for the account, and (ii) you
must report (on the Form attached as Appendix IV hereto) to a Compliance
Officer, within 10 days of the occurrence, the opening of a new or previously
unreported brokerage account and all transactions effected without the use of a
registered broker-dealer for Securities (other than Exempt Securities) of which
you have Beneficial Ownership.
The confirmations and statements required by (i)(a) and (i)(b) above must in the
aggregate provide all of the information required by the form attached as
Appendix IV hereto. If they do not, you must complete and submit a Brokerage
Account and Non-Broker Transaction Report within 10 days of the end of each
calendar quarter.
Initial and Annual Reports
You must disclose your holdings of all Securities (other than Exempt Securities)
of which you have Beneficial Ownership no later than 10 days after becoming an
employee and annually thereafter. The form for this purpose is attached to this
Code as Appendix III.
Anyone filing a report required hereunder may disclaim Beneficial Ownership of
any Security listed thereon.
FIDUCIARY DUTIES
Gifts
You may not accept any investment opportunity, gift, gratuity or other thing of
more than nominal value, from any person or entity that does business, or
desires to do business, with PIMCO Advisors directly or on behalf of an Advisory
Client. You may accept gifts from a single giver so long as their aggregate
annual value does not exceed the equivalent of $100. You may attend business
meals, business related conferences, sporting events and other entertainment
events at the expense of a giver, so long as the expense is reasonable and both
you and the giver are present. You must obtain prior written approval from your
supervisor (the person to whom you report) for all air travel, conferences, and
business events that require overnight accommodations. You must provide a copy
of such written approval to the Compliance Committee.
Service as a Director
If you are a Portfolio Employee, you may not serve on the board of directors or
other governing board of a publicly traded entity, unless you have received the
prior written approval of the General Counsel of PIMCO Advisors. Approval will
not be given unless a determination is made that your service on the board would
be consistent with the interests of our Advisory Clients. If you are permitted
to serve on the board of a publicly traded entity, you will be isolated from
those Portfolio Employees who make investment decisions with respect to the
securities of that entity, through a "Chinese Wall" or other procedures.
COMPLIANCE
Certificate of Receipt
You are required to acknowledge receipt of your copy of this Code. A form for
this purpose is attached to this Code as Appendix II.
Annual Certificate of Compliance
You are required to certify upon commencement of your employment or the
effective date of this Code, whichever occurs later, and annually thereafter,
that you have read and understand this Code and recognize that you are subject
to this Code. Each annual certificate will also state that you have complied
with the requirements of this Code during the prior year, and that you have
disclosed, reported, or caused to be reported all holdings required hereunder
and all transactions during the prior year in Securities (other than Exempt
Securities) of which you had or acquired Beneficial Ownership. A form for this
purpose is attached to this Code as Appendix V.
<PAGE>
Remedial Actions
If you violate this Code, you are subject to remedial actions, which may
include, but are not limited to, disgorgement of profits, imposition of a
substantial fine, demotion, suspension or termination.
REPORTS TO MANAGEMENT AND TRUSTEES
Reports of Significant Remedial Action
The General Counsel of PIMCO Advisors or his delegate will on a timely basis
inform the management of PIMCO Advisors and trustees of each Fund which is an
Advisory Client of each significant remedial action taken in response to a
violation of this Code. A significant remedial action means any action that has
a significant financial effect on the violator, such as disgorgement of profits,
imposition of a significant fine, demotion, suspension or termination.
Annual Reports
The General Counsel of PIMCO Advisors or his delegate will report annually to
the management of PIMCO Advisors and the trustees of each Fund which is an
Advisory Client with regard to efforts to ensure compliance by the directors,
officers and employees of PIMCO Advisors with their fiduciary obligations to our
Advisory Clients.
The annual report will, at a minimum:
1. Describe any issues arising under the Code of Ethics or
procedures since the last report to the trustees, as the case
may be, including, but not limited to, information about
material violations of the Code or procedures and sanctions
imposed in response to the material violations; and;
2. Certify that PIMCO Advisors has adopted procedures reasonably
necessary to prevent all employees from violating the Code.
<PAGE>
APPENDIX I
PIMCO ADVISORS
INSIDER TRADING POLICY AND PROCEDURES
SECTION I. POLICY STATEMENT ON INSIDER TRADING
A. Policy Statement on Insider Trading
PIMCO Advisors L.P. ("PIMCO Advisors"), its affiliates, PIMCO Partners, G.P.,
Cadence Capital Management, NFJ Investment Group, Oppenheimer Capital,
Parametric Portfolio Associates and PIMCO Fund Distributors LLC (collectively
the "Company" or "PIMCO Advisors") forbid any of their officers, directors or
employees from trading, either personally or on behalf of others (such as,
mutual funds and private accounts managed by PIMCO Advisors), on the basis of
material non-public information or communicating material non-public information
to others in violation of the law. This conduct is frequently referred to as
"insider trading". This is a group wide policy.
The term "insider trading" is not defined in the federal securities laws, but
generally is used to refer to the use of material non-public information to
trade in securities or to communications of material non-public information to
others in breach of a fiduciary duty.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(1) trading by an insider, while in possession of material non-public
information, or
(2) trading by a non-insider, while in possession of material non-public
information, where the information was disclosed to the non-insider in
violation of an insider's duty to keep it confidential, or
(3) communicating material non-public information to others in breach of a
fiduciary duty.
This policy applies to every such officer, director and employee and extends to
activities within and outside their duties at the Company. Every officer,
director and employee must read and retain this policy statement. Any questions
regarding this policy statement and the related procedures set forth herein
should be referred to a Compliance Officer of PIMCO Advisors.
The remainder of this memorandum discusses in detail the elements of insider
trading, the penalties for such unlawful conduct and the procedures adopted by
the Company to implement its policy against insider trading.
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1. TO WHOM DOES THIS POLICY APPLY?
This Policy applies to all employees, officers and directors (direct or
indirect) of the Company ("Covered Persons"), as well as to any transactions in
any securities participated in by family members, trusts or corporations
controlled by such persons. In particular, this Policy applies to securities
transactions by:
the Covered Person's spouse;
the Covered Person's minor children;
any other relatives living in the Covered Person's household; a trust
in which the Covered Person has a beneficial interest, unless such
person has no direct or indirect control over the trust; a trust as to
which the Covered Person is a trustee; a revocable trust as to which
the Covered Person is a settlor; a corporation of which the Covered
Person is an officer, director or 10% or greater stockholder; or a
partnership of which the Covered Person is a partner (including most
investment clubs) unless the Covered Person has no direct or indirect
control over the partnership.
2. WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment decisions,
or information that is reasonably certain to have a substantial effect on the
price of a company's securities.
Although there is no precise, generally accepted definition of materiality,
information is likely to be "material" if it relates to significant changes
affecting such matters as:
dividend or earnings expectations;
write-downs or write-offs of assets;
additions to reserves for bad debts or contingent liabilities;
expansion or curtailment of company or major division operations;
proposals or agreements involving a joint venture, merger,
acquisition,
divestiture, or leveraged buy-out;
new products or services;
exploratory, discovery or research developments;
criminal indictments, civil litigation or government investigations;
disputes with major suppliers or customers or significant changes in
the relationships with such parties; labor disputes including
strikes or lockouts; substantial changes in accounting methods;
major litigation developments; major personnel changes; debt service
or liquidity problems; bankruptcy or insolvency; extraordinary
management developments;
public offerings or private sales of debt or equity securities;
calls, redemptions or purchases of a company's own stock; issuer
tender offers; or recapitalizations.
Information provided by a company could be material because of its expected
effect on a particular class of the company's securities, all of the company's
securities, the securities of another company, or the securities of several
companies. Moreover, the resulting prohibition against the misuses of "material"
information reaches all types of securities (whether stock or other equity
interests, corporate debt, government or municipal obligations, or commercial
paper) as well as any option related to that security (such as a put, call or
index security).
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme 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 reporter for The Wall Street Journal 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.
3. WHAT IS NON-PUBLIC INFORMATION?
In order for issues concerning insider trading to arise, information must not
only be "material", it must be "non-public". "Non-public" information is
information which has not been made available to investors generally.
Information received in circumstances indicating that it is not yet in general
circulation or where the recipient knows or should know that the information
could only have been provided by an "insider" is also deemed "non-public"
information.
At such time as material, non-public information has been effectively
distributed to the investing public, it is no longer subject to insider trading
restrictions. However, for "non-public" information to become public
information, it must be disseminated through recognized channels of distribution
designed to reach the securities marketplace.
To show that "material" information is public, you should be able to point to
some fact verifying that the information has become generally available, for
example, disclosure in a national business and financial wire service (Dow Jones
or Reuters), a national news service (AP or UPI), a national newspaper (The Wall
Street Journal, The New York Times or Financial Times), or a publicly
disseminated disclosure document (a proxy statement or prospectus). The
circulation of rumors or "talk on the street", even if accurate, widespread and
reported in the media, does not constitute the requisite public disclosure. The
information must not only be publicly disclosed, there must also be adequate
time for the market as a whole to digest the information. Although timing may
vary depending upon the circumstances, a good rule of thumb is that information
is considered non-public until the third business day after public disclosure.
Material non-public information is not made public by selective dissemination.
Material information improperly disclosed only to institutional investors or to
a fund analyst or a favored group of analysts retains its status as "non-public"
information which must not be disclosed or otherwise misused. Similarly, partial
disclosure does not constitute public dissemination. So long as any material
component of the "inside" information possessed by the Company has yet to be
publicly disclosed, the information is deemed "non-public" and may not be
misused.
Information Provided in Confidence. Occasionally, one or more directors,
officers, or employees of the Company may become temporary "insiders" because of
a fiduciary or commercial relationship. For example, personnel at the Company
may become insiders when an external source, such as a company whose securities
are held by one or more of the accounts managed by the Company, entrusts
material, non-public information to the Company's portfolio managers or analysts
with the expectation that the information will remain confidential.
As an "insider", the Company has a fiduciary responsibility not to breach the
trust of the party that has communicated the "material non-public" information
by misusing that information. This fiduciary duty arises because the Company has
entered or has been invited to enter into a commercial relationship with the
client or prospective client and has been given access to confidential
information solely for the corporate purposes of that client or prospective
client. This obligation remains whether or not the Company ultimately
participates in the transaction.
Information Disclosed in Breach of a Duty. Analysts and portfolio managers at
the Company must be especially wary of "material non-public" information
disclosed in breach of a corporate insider's fiduciary duty. Even where there is
no expectation of confidentiality, a person may become an "insider" upon
receiving material, non-public information in circumstances where a person
knows, or should know, that a corporate insider is disclosing information in
breach of the fiduciary duty he or she owes the corporation and its
shareholders. Whether the disclosure is an improper "tip" that renders the
recipient a "tippee" depends on whether the corporate insider expects to benefit
personally, either directly or indirectly, from the disclosure. In the context
of an improper disclosure by a corporate insider, the requisite "personal
benefit" may not be limited to a present or future monetary gain. Rather, a
prohibited personal benefit could include a reputational benefit, an expectation
of a "quid pro quo" from the recipient or the recipient's employer by a gift of
the "inside" information.
A person may, depending on the circumstances, also become an "insider" or
"tippee" when he or she obtains apparently material, non-public information by
happenstance, including information derived from social situations, business
gatherings, overheard conversations, misplaced documents, and "tips" from
insiders or other third parties.
4. IDENTIFYING MATERIAL INFORMATION
Before trading for yourself or others, including investment companies or private
accounts managed by the Company, in the securities of a company about which you
may have potential material, non-public information, ask yourself the following
questions:
i. Is this information that an investor could consider important in making
his or her investment decisions? Is this information that could
substantially affect the market price of the securities if generally
disclosed?
ii. To whom has this information been provided? Has the information been
effectively communicated to the marketplace by being published in The
Financial Times, Reuters, The Wall Street Journal or other publications
of general circulation?
Given the potentially severe regulatory, civil and criminal sanctions to which
you the Company and its personnel could be subject, any director, officer and
employee uncertain as to whether the information he or she possesses is
"material non-public" information should immediately take the following steps:
i. Report the matter immediately to a Compliance Officer or the General
Counsel of PIMCO Advisors;
ii. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
PIMCO Advisors; and
iii. Do not communicate the information inside or outside the Company,
other than to a Compliance Officer or the General Counsel of PIMCO
Advisors.
After the Compliance Officer or General Counsel has reviewed the issue, you will
be instructed to continue the prohibitions against trading and communication or
will be allowed to trade and communicate the information.
5. 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 does not personally benefit from the violation. Penalties include:
civil injunctions
treble damages
disgorgement of profits
jail sentences
fines 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, and
fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit
gained or loss avoided.
In addition, any violation of this policy statement can be expected to result in
serious sanctions by the Company, including dismissal of the persons involved.
<PAGE>
SECTION II. PROCEDURES TO IMPLEMENT THE POLICY AGAINST INSIDER TRADING
A. Procedures to Implement the Policy Against Insider Trading
The following procedures have been established to aid the officers, directors
and employees of PIMCO Advisors in avoiding insider trading, and to aid PIMCO
Advisors in preventing, detecting and imposing sanctions against insider
trading. Every officer, director and employee of PIMCO Advisors must follow
these procedures or risk serious sanctions, including dismissal, substantial
personal liability and criminal penalties.
TRADING RESTRICTIONS AND REPORTING REQUIREMENTS
1. No employee, officer or director of PIMCO Advisors who possesses
material non-public information relating to PIMCO Advisors, may buy or
sell any securities of PIMCO Advisors Holdings L.P. or engage in any
other action to take advantage of, or pass on to others, such material
non-public information.
2. No employee, officer or director of PIMCO Advisors who obtains material
non-public information which relates to any other company or entity in
circumstances in which such person is deemed to be an insider or is
otherwise subject to restrictions under the federal securities laws may
buy or sell securities of that company or otherwise take advantage of,
or pass on to others, such material non-public information.
3. No employee, officer or director of PIMCO Advisors shall engage in a
securities transaction with respect to the securities of PIMCO Advisors
Holdings L.P., except in accordance with the specific procedures
published from time to time by PIMCO Advisors.
4. Each employee, officer and director of PIMCO Advisors shall submit
reports of every securities transaction involving securities of PIMCO
Advisors Holdings L.P. (if applicable) to a Compliance Officer in
accordance with the terms of PIMCO Advisors' Code of Ethics as they
relate to any other securities transaction.
5. No employee shall engage in a securities transaction with respect to
any securities of any other company, except in accordance with the
specific procedures set forth in PIMCO Advisors' Code of Ethics.
6. Employees shall submit reports concerning each securities transaction
in accordance with the terms of the Code of Ethics and verify their
personal ownership of securities in accordance with the procedures set
forth in the Code of Ethics.
7. Because even inadvertent disclosure of material non-public information
to others can lead to significant legal difficulties, officers,
directors and employees of PIMCO Advisors should not discuss any
potentially material non-public information concerning PIMCO Advisors
or other companies, including other officers, employees and directors,
except as specifically required in the performance of their duties.
<PAGE>
B. Chinese Wall Procedures
The Insider Trading and Securities Fraud Enforcement Act in the US requires the
establishment and strict enforcement of procedures reasonably designed to
prevent the misuse of "inside" information1. Accordingly, you should not discuss
material non-public information about PIMCO Advisors or other companies with
anyone, including other employees, except as required in the performance of your
regular duties. In addition, care should be taken so that such information is
secure. For example, files containing material non-public information should be
sealed; access to computer files containing material non-public information
should be restricted.
C. Resolving Issues Concerning Insider Trading
The federal securities laws, including the US laws governing insider trading,
are complex. If you have any doubts or questions as to the materiality or
non-public nature of information in your possession or as to any of the
applicability or interpretation of any of the foregoing procedures or as to the
propriety of any action, you should contact your Compliance Officer. Until
advised to the contrary by a Compliance Officer, you should presume that the
information is material and non-public and you should not trade in the
securities or disclose this information to anyone.
<PAGE>
APPENDIX II
PIMCO ADVISORS
ACKNOWLEDGMENT CERTIFICATION
CODE OF ETHICS
and
INSIDER TRADING POLICY AND PROCEDURES
I hereby certify that I have read and understand the attached PIMCO Advisors
Code of Ethics and Insider Trading Policy and Procedures. Pursuant to such Code,
I recognize that I must disclose or report all personal securities holdings and
transactions required to be disclosed or reported thereunder and comply in all
other respects with the requirements of the Code. I also agree to cooperate
fully with any investigation or inquiry as to whether a possible violation of
the foregoing Code has occurred2. I understand that any failure to comply in all
aspects with the foregoing and these policies and procedures may lead to
sanctions including dismissal.
Date: __________________________ ______________________________
Signature
------------------------------
Print Name
<PAGE>
APPENDIX III
PIMCO ADVISORS
INITIAL AND ANNUAL REPORT OF
PERSONAL SECURITIES HOLDINGS
In accordance with the Code of Ethics, please provide a list of all Securities
(other than Exempt Securities) in which you or any account, in which you have a
Pecuniary Interest, has a Beneficial Interest and all Securities (other than
Exempt Securities) in non-client accounts for which you make investment
decisions. This includes not only securities held by brokers, but also
Securities held at home, in safe deposit boxes, or by an issuer.
(1) Name of employee: __________________________
(2) If different than #1, name of the person
in whose name the account is held: __________________________
(3) Relationship of (2) to (1): __________________________
(4) Broker(s) at which Account is Maintained: __________________________
----------------------------
----------------------------
----------------------------
(5) Account Number(s): __________________________
--------------------------
--------------------------
--------------------------
(6) Telephone number(s) of Broker: __________________________
--------------------------
--------------------------
<PAGE>
Appendix III - (cont'd)
(7) For each account, attach your most recent account statement listing
Securities in that account. This information must be current as of a
date no more than 30 days before this report is submitted. If you own
Securities that are not listed in an attached account statement, list
them below:
<TABLE>
<CAPTION>
Name of Security* Quantity Value Custodian
<S> <C> <C> <C>
1. __________________ ___________ ___________ ___________________
2. __________________ ___________ ___________ ___________________
3. __________________ ___________ ___________ ___________________
4. __________________ ___________ ___________ ___________________
5. __________________ ___________ ___________ ___________________
*Including principal amount, if applicable.
</TABLE>
(Attached separate sheet if necessary)
I certify that this form and the attached statements (if any) constitute all of
the Securities of which I have Beneficial Ownership as defined in the Code.
------------------------------
Signature
------------------------------
Print Name
Dated: _________________
<PAGE>
APPENDIX IV
PIMCO ADVISORS
BROKERAGE ACCOUNT AND NON-BROKER TRANSACTION REPORT
You may not engage, and you may not permit any other person or entity to engage,
in any purchase or sale of publicly-traded securities (other than Exempt
Securities) of which you have, or by reason of the transaction will acquire,
Beneficial Ownership, except through a registered broker-dealer.
You must also cause each broker-dealer who maintains an account for Securities
of which you have beneficial ownership, to provide to a Compliance Officer, on a
timely basis, duplicate copies of confirmations of all transactions in the
account and duplicate statements for the account and you must report to the
Compliance Officer, within 10 days of the occurrence, all transactions effected
without the use of a registered broker-dealer in Securities (other than
transactions in Exempt Securities).
I have requested that you receive duplicate confirms on my behalf from the
following brokers:
<TABLE>
<CAPTION>
------------------------- ---------------------------- ------------------------------ ------------------------------
Name Broker Account Number Date Account Opened
<S> <C> <C> <C>
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
------------------------- ---------------------------- ------------------------------ ------------------------------
</TABLE>
The following are securities transactions that have not been reported and/or
executed other than through a Broker-Dealer (i.e., direct purchase of a private
placement.)
<TABLE>
<CAPTION>
--------------- ---------------- ------------------------ ------------------- ----------------- ---------------------
Date Buy/Sell Security Name Amount Price Broker/Issuer
<S> <C> <C> <C> <C> <C>
--------------- ---------------- ------------------------ ------------------- ----------------- ---------------------
--------------- ---------------- ------------------------ ------------------- ----------------- ---------------------
--------------- ---------------- ------------------------ ------------------- ----------------- ---------------------
--------------- ---------------- ------------------------ ------------------- ----------------- ---------------------
</TABLE>
By signing this document, I am certifying that I have caused duplicate confirms
and duplicate statements to be sent to the Compliance Officer for every
brokerage account that trades in Securities other than Exempt Securities (as
defined in the PIMCO Advisors Code of Ethics).
---------------- -------------------------------------
Date Signature
<PAGE>
APPENDIX IV (cont'd)
<PAGE>
1. Transactions required to be reported. You should report every transaction
in which you acquired or disposed of any beneficial ownership of any
security during the calendar quarter. The term "beneficial ownership" is
the subject of a long history of opinions and releases issued by the
Securities and Exchange Commission and generally means that you would
receive the benefits of owning a security. The term includes, but is not
limited to the following cases and any other examples in the Code:
(A) Where the security is held for your benefit by others (brokers,
custodians, banks and pledgees);
(B) Where the security is held for the benefit of members of your
immediate family sharing the same household;
(C) Where securities are held by a corporation, partnership, limited
liability company, investment club or other entity in which you have
an equity interest if you are a controlling equityholder or you have
or share investment control over the securities held by the entity;
(D) Where securities are held in a trust for which you are a trustee and
under which either you or any member of your immediate family have a
vested interest in the principal or income; and
(E) Where securities are held in a trust for which you are the settlor,
unless the consent of all of the beneficiaries is required in order
for you to revoke the trust.
Notwithstanding the foregoing, none of the following transactions need be
reported:
(A) Transactions in securities which are direct obligations of the United
States;
(B) Transactions effected in any account over which you have no direct or
indirect influence or control; or
(C) Shares of registered open-end investment companies.
2. Security Name. State the name of the issuer and the class of the security
(e.g., common stock, preferred stock or designated issue of debt
securities) including the interest rate, principal amount and maturity
date, if applicable. In the case of the acquisition or disposition of a
futures contract, put, call option or other right (hereinafter referred to
as "options"), state the title of the security subject to the option and
the expiration date of the option.
3. Futures Transactions. Please remember that duplicates of all Confirmations,
Purchase and Sale Reports, and Month-end Statements must be send to the
firm by your broker. Please double check to be sure this occurs if you
report a futures transaction. You should use the address below.
4. Transaction Date. In the case of a market transaction, state the trade date
(not the settlement date).
5. Nature of Transaction (Buy or Sale). State the character of the transaction
(e.g., purchase or sale of security, purchase or sale of option, or
exercise of option).
6. Amount of Security Involved (No. of Shares). State the number of shares of
stock, the face amount of debt securities or other units of other
securities. For options, state the amount of securities subject to the
option. If your ownership interest was through a spouse, relative or other
natural person or through a partnership, trust, other entity, state the
entire amount of securities involved in the transaction. In such cases, you
may also indicate, if you wish, the extent of your interest in the
transaction.
7. Purchase or Sale Price. State the purchase or sale price per share or other
unit, exclusive of brokerage commissions or other costs of execution. In
the case of an option, state the price at which it is currently
exercisable. No price need be reported for transactions not involving cash.
8. Broker, Dealer or Bank Effecting Transaction. State the name of the broker,
dealer or bank with or through whom the transaction was effected.
9. Signature. Sign the form in the space provided.
10. Filing of Report. A report should be filed NO LATER THAN 10 CALENDAR DAYS
after establishing a new brokerage account or effecting a non-reported
securities transaction with your local Compliance Officer.
<PAGE>
25
<PAGE>
APPENDIX V
PIMCO ADVISORS
ANNUAL CERTIFICATION OF COMPLIANCE
I hereby certify that I have complied with the requirements of the Code of
Ethics and the Insider Trading Policy and Procedures, for the year ended
December 31, ____. Pursuant to the Code, I have disclosed or reported all
personal securities holdings and transactions required to be disclosed or
reported thereunder, and complied in all other respects with the requirements of
the Code. I also agree to cooperate fully with any investigation or inquiry as
to whether a possible violation of the Code has occurred.
Date: __________ Signature_________________________________
Print Name--------------------------------
<PAGE>
APPENDIX VI
EMPLOYEE TRADE PRECLEARANCE FORM
PLEASE USE A SEPARATE FORM FOR EACH SECURITY
<TABLE>
<CAPTION>
--------------------------------------------------------------------- ------------------------------------------------------------
Name of Employee (please print)
<S> <C> <C> <C>
--------------------------------------------------------------------- --------------------------------------------------------------
----------------------------------- --------------------------------- -------------------------------- -----------------------------
Department Supervisor Telephone Date
----------------------------------- --------------------------------- -------------------------------- -----------------------------
Broker Account Number Telephone Sales Representative
( )
----------------------------------- --------------------------------- -------------------------------- -----------------------------
---------------------------------------------------- -------------------------------- ----------------------------------------------
|_| Buy |_| Sell Ticker Symbol Price: Limit _______ Market |_|
-------------
---------------------------------------------------- -------------------------------- ----------------------------------------------
--------------------------------
--------------------------------
----------------------------------- ------------------------------------------------------------------------------------------------
Quantity Issue (Full Security Description)
-----------------------------------
----------------------------------- ------------------------------------------------------------------------------------------------
----------------------------------- ------------------------------------------------------------------------------------------------
------------------- ----------------- ---------------- ------------------- ---------------- ----------------------------------------
Private Traded Security
Portfolio Employee IPO Placement in Prior 60 days Short Sale Special Instructions
------------------- ----------------- ---------------- ------------------- ---------------- ----------------------------------------
------------------- ----------------- ---------------- -------------------
|_| Yes |_| No |_| Yes |_| No |_| Yes |_| No |_| Yes |_| No |_| Yes |_| No
------------------- ----------------- ---------------- ------------------- ---------------- ----------------------------------------
Approvals
------------------------------------------------------------------------------------------------------------------------------------
This area reserved for Trading Department use only
---------------------------------------------- -------------------------------------------- ----------------------------------------
Trade Has Been Date Approved Approved By
|_| Approved |_| Not Approved
---------------------------------------------- -------------------------------------------- ----------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Legal / Compliance (if required)
------------------------------------------------------------------------------------------------------------------------------------
Approvals are valid until the close of business on the day approval has been
granted. Accordingly, GTC (good till canceled) orders are prohibited. If a
trade is not executed by the close of business resubmitting a new
preclearance form is required. It is each employee's responsibility to
comply with all provisions of the Code. Obtaining preclearance satisfies the
preclearance requirements of the Code and does not imply compliance with the
Code's other provisions.
Preclearance procedures apply to all employees and their immediate family
(as defined by the Code) including: a) all accounts in the name of the
employee or the employee's spouse or minor children; b) all accounts in
which any of such persons have a beneficial interest; and c) all other
accounts over which any such person exercises any investment discretion.
Please see the Code for the complete definition of immediate family.
By signing below the employee certifies the following: The employee agrees
that the above order is in compliance with the Code of Ethics and is not
based on knowledge of an actual client order within the previous seven
calendar days in the security that is being purchased or sold, or knowledge
that the security is being considered for purchase or sale in one or more
specific client accounts, or knowledge of a change or pendency of a change
of an investment management recommendation. The employee also acknowledges
that he/she is not in possession of material, inside information pertaining
to the security or issuer of the security.
--------------------------------------------------------------------- --------------------------------------------------------------
Employee Signature Date
--------------------------------------------------------------------- --------------------------------------------------------------
PLEASE SEND A COPY OF THIS COMPLETED FORM TO THE COMPLIANCE DEPARTMENT FOR ALL EXECUTED TRADES
----------------------------------------------------------------------------------------------
</TABLE>
--------
1 The antifraud provisions of United States securities laws reach insider
trading or tipping activity worldwide which defrauds domestic securities
markets. In addition, the Insider Trading and Securities Fraud Enforcement Act
specifically authorizes the SEC to conduct investigations at the request of
foreign governments, without regard to whether the conduct violates United
States law.
2 The antifraud provisions of United States securities laws reach insider
trading or tipping activity worldwide which defrauds domestic securities
markets. In addition, the Insider Trading and Securities Fraud Enforcement Act
specifically authorizes the SEC to conduct investigations at the request of
foreign governments, without regard to whether the conduct violates United
States law.
