Exhibit r (2)
GLOBAL ASSET MANAGEMENT
CODE OF ETHICS PURSUANT TO RULE 17j-1 OF THE
INVESTMENT COMPANY ACT OF 1940
AND
POLICIES AND PROCEDURES TO PREVENT THE MISUSE OF
NON-PUBLIC INFORMATION PURSUANT TO SECTION 204A
OF THE INVESTMENT ADVISERS ACT OF 1940
This Code of Ethics (the "Code") shall apply to the investment operations of GAM
International Management Limited (GIML), its affiliates named in Appendix A
hereto (the "Affiliates"), and all US registered investment companies for which
it or the Affiliates act as investment adviser or underwriter (such registered
investment companies are collectively referred to herein as "Funds" or "Fund"),
as required by Rule 17j-1 of the Investment Company Act of 1940, as amended. The
Code applies to every person "associated" with GIML, the Affiliates, or any
Fund, which means every partner, officer, director and employee thereof4 (the
"GAM Group"). The Code extends to the activities of such "associated persons"
within and outside such person's duties of these entities. The Code governs
conflicts of interest in personal securities transactions that may arise when
associated persons of the GAM Group invest in securities that are held or to be
acquired by the Funds, prevents circumstances that may result in an actual or
potential conflict of interest or the appearance thereof, and prevents abuse of
an individual's position of trust and responsibility.
The Code incorporates the Policies and Procedures (the "Policy Statement")
required by Section 204A of the Investment Advisers Act of 1940, as amended,
which are reasonably designed, taking into consideration the nature of GIML's
business and the business of its affiliated US advisers, to prevent any
associated person or entity from trading in securities while in possession of
material, non-public information ("insider trading").
EVERY ASSOCIATED PERSON MUST READ, ACKNOWLEDGE RECEIPT AND UNDERSTANDING OF, AND
RETAIN THIS CODE AND POLICY STATEMENT. ANY QUESTIONS REGARDING THE CODE AND
POLICY STATEMENT SHOULD BE REFERRED TO THE US COMPLIANCE OFFICER ("COMPLIANCE").
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4 This term covers not only the associated person, but also his or her immediate
family (including such person's spouse, minor children, stepchildren and
relatives of such person or person's spouse who are sharing such person's
household), any other member of the associated person's immediate household, or
any trust or estate of which the person or spouse is a trustee, fiduciary or
beneficiary, or any person for whom the associated person directs or effects
transactions under a power of attorney or otherwise.
<PAGE>
THE CODE AND POLICY STATEMENT
I. STATEMENT OF GENERAL PRINCIPLES AND PROHIBITED CONDUCT
A. General Principles
All associated persons have a duty at all times to place the interests of
shareholders or account holders above their own interests, and never to take
inappropriate advantage of their position. All associated persons are prohibited
from engaging in, or recommending, any securities transaction which places or
appears to place their own interests above that of any Fund, and shall insure
that all personal securities transactions are conducted consistent with this
Code and Policy Statement or any other separate procedures in force as to any
particular GAM entity within the GAM Group for the protection of the Funds and
in such a manner as to avoid any actual or potential conflict of interest, or
any abuse of an associated person's position of trust and responsibility.
B. Prohibited Conduct
For purposes of the following prohibitions, "investment personnel" shall mean
those associated persons who, in connection with his or her regular functions or
duties, makes, participates in, or obtains information regarding the purchase or
sale of a security by a registered investment company, or whose functions relate
to the making of any recommendations with respect to such purchases or sales.
1. Personal Interest in Securities/Issuers. All associated persons are
prohibited from recommending securities transactions by any Fund without
disclosing his or her interest, if any, in such securities or the issuer
thereof, including without limitation:
a. any direct or indirect beneficial ownership of any securities of such
issuer;
b. any contemplated transaction by such person in such securities;
c. any position with such issuer or its affiliates; and
d. any present or proposed business relationship between such issuer or
its affiliates and such person or any party in which such person has a
significant interest.
2. Confidential Information. All associated persons are prohibited from
divulging current and anticipated portfolio transactions or strategies, programs
and studies of GIML with respect to any Fund to anyone unless it is properly
within his or her duties to do so.
3. Private Placements/IPO's. Transactions involving new issues or privately
offered securities usually involve complex issues of potential conflicts of
interest or personal advantage. Transactions involving new US public issues are
also subject to various SEC and NASD rules and regulations, including
restrictions on so-called "hot issues". It is recommended that all such
offerings be discussed with Compliance sufficiently in advance to allow time for
full consideration.
<PAGE>
4. Blackout Periods. Investment personnel shall refer to Section II, Item 5 of
this Policy Statement to determine any Blackout Period applicable to
transactions in securities in which his or her Fund holds a position or for
which a sale or purchase is contemplated.
5. Short-Term Trading Profits. Investment personnel shall refer to Section II,
Item 4 of this Policy Statement to determine any restriction on short-term
trading.
6. Gifts. No investment personnel may accept a gift (other than one or more not
exceeding $100 in combined value or it's approximate equivalent in another
currency) from any person that does business with or on behalf of any GAM Group
entity.
7. Inside Information. All associated persons are prohibited from engaging in
any securities transaction for their own benefit or the benefit of others,
including the Funds, while in possession of material, non-public information5
concerning such securities. Information in your possession that you identify as
material and non-public may not be communicated to anyone, including persons
within the GAM Group, except to Compliance. In addition, care should be taken so
that such information is secure. For example, files containing material,
non-public information should be sealed and access to computer files containing
material non-public information should be restricted.
Penalties for trading on or merely communicating material, non-public
information are severe, both for the 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:
* TREBLE DAMAGES - 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.
* CIVIL FINES - for the employer or other controlling person to the
greater of $1 Million or three times the amount of the profit gained
or loss avoided.
* JAIL SENTENCES - Up to 10 Years.
* CIVIL INJUNCTIONS
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5 Material Information means 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
an effect on the price of a company's securities. Material information does not
have to relate to a company's business. For example, information about the
contents of a forthcoming newspaper or magazine article that is expected to
affect the price of a security should be considered material. Similarly,
information concerning significant transactions which GIML intends to execute on
behalf of Funds or managed accounts could be material information and is
prohibited from being communicated.
Information that should be considered material includes, but is not limited to,
dividend changes, earnings estimates, changes in previously released earnings
estimates, significant expansion or curtailment of operations, a significant
increase or decline in orders, significant new products or discoveries,
extraordinary borrowing, purchase or sale of substantial assets, significant
merger or acquisition proposals, major litigation, liquidity problems, and
extraordinary management developments. Information is 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, such as information
appearing in the Dow Jones news service, Reuters Economic Services, The Wall
Street Journal or other publications of general circulation or communications
generally available to the public.
<PAGE>
In addition to the penalties set forth above, penalties for violations of Rule
17j-1 of the Investment Company Act of 1940, as amended, may include fines of up
to $10,000, as well as jail sentences of up to five years.
II. PROCEDURES FOR PERSONAL SECURITIES TRANSACTIONS
The following procedures have been established to aid associated persons in
avoiding conflicts of interest and insider trading, and to aid the GAM Group in
preventing, detecting and imposing sanctions against such conduct. Every
associated person must adhere to the procedures set forth in this Section II.
Those associated persons who fail to comply with this Code and Policy Statement
or such other procedures to which they are subject with respect to the Funds,
risk serious sanctions, including dismissal, substantial personal liability and
criminal penalties. If you have any questions about these procedures you should
consult Compliance.
1. All associated persons engaging in any personal securities transaction shall
report such transaction(s) in writing to Compliance within 24 hours of effecting
such transaction(s).6
The report shall include the date of the transaction, the security traded,
number of shares and the principal amount of each security; the nature of the
transaction; the price at which it was effected; and the broker, dealer or bank
through which it was traded. Compliance shall institute internal procedures for
conducting periodic reviews of transactions against the Fund's trade reports to
determine that no apparent or potential conflict exists.
2. All persons who have reported under 1 above shall, within 10 days of such
transaction, submit or have submitted to Compliance a bank or broker's
confirmation detailing the transaction. This reporting requirement can be
satisfied by having duplicate confirmations of such securities transactions sent
to Compliance by your bank or brokerage firm(s).
3. Reporting under No. 1 shall not be required for:
(i) purchases or sales effected in any account over which the associated person
has no direct or indirect control over the investment decision-making process
(e.g., discretionary trading accounts);
(ii) transactions which are non-volitional;
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6 The term "engaging in any personal securities transaction" means purchasing or
selling, directly or indirectly, any security in which the associated person
has, or by reason of such transaction would acquire, any direct or indirect
beneficial ownership.
The term "security" has the meaning set forth in Section 2(a)(36) of the
Investment Company Act of 1940, as amended, and includes shares, loan stock, or
other fixed income instruments, warrants, options, futures or any other
contracts, units in a collective investment scheme, shares in funds (offshore
and onshore) or instruments dealt in or on any securities market, except that
the term does not include securities issued or guaranteed by the United States
government or its agencies or instrumentalities, banker's acceptances, bank
certificates of deposit and time deposits, commercial paper, repurchase
agreements and shares of registered open-end investment companies.
<PAGE>
(iii) purchases which are part of a systematic investment plan or automatic
dividend reinvestment plan; provided however, that notification of participation
in or termination of such plan must be given to Compliance;
(iv) purchases effected upon the exercise of rights issued by an issuer pro rata
to all holders of a class of securities, to the extent such rights were acquired
from such issuer, and the sale of rights so acquired;
(v) any securities transaction, or series of related transactions, engaged in by
non-management directors of any GAM Group entity or by the Independent Directors
of the Fund; provided however, that (i) in the case of the Funds' Independent
Directors, a report shall be filed if the Independent Fund Director knew, or in
the ordinary course of fulfilling his or her official duties as a Director of a
Fund should have known, that during the 15-day period immediately preceding or
after the date of the transaction in a security by the Director, such security
is or was purchased or sold by a Fund or the purchase or sale was considered by
the Fund or the Adviser; and (ii) in the case of each non-management director of
GIML and the Affiliates, such persons shall report with respect to such of his
or her personal securities transactions required to be reported hereunder not
later than ten (10) days after the end of the calendar quarter in which the
transaction to which the report relates was effected.
4. All associated persons are subject to the 60 day short-term trading
restriction below.
Securities purchased may not be sold at a profit until at least 60 days from the
purchase trade date, and securities sold may not be purchased at a lower price
until at least 60 days from the sale trade date. Any violation will result in
disgorgement of all profits from the transaction. (This restriction on 60 day
short-term trades may be waived by the Compliance Officer with respect to trades
of 500 shares or less of the common stock of a company with a market
capitalization of at least $1 billion.)
5. Investment Managers and Investment Related Staff: Your local Compliance
Officer will inform you if you fall into the category of Investment Manager or
Investment Related Staff. As well as observing the personal dealings rules for
all employees which are outlined above, Investment Managers and Investment
Related Staff are required to pre-notify their local Compliance Officer of any
personal dealings in securities which they intend to carry out. This requirement
for prior approval shall not apply to transactions in units or shares of GAM
Funds. To avoid any potential conflicts, all Investment Managers and Investment
Related Staff are encouraged not to invest directly into securities, but instead
to utilise GAM Funds for their personal investment activities. To this end, your
Compliance Officer must give you WRITTEN authority to undertake any transactions
BEFORE you deal.
You must not deal personally in securities within 7 working days (either in
advance or retrospectively) of carrying out any transaction in the same security
on behalf of funds or portfolios which you manage or administer.
<PAGE>
III. REPORTING REQUIREMENTS OF MEMBERS OF GAM GROUP
Each entity that is a member of the GAM Group subject to the GAM Group's Code
and Policy Statement shall designate from its staff a Compliance Director who
shall be charged with monitoring compliance with such procedures by all persons
subject thereto. The Compliance Director shall report to the Compliance Officer
of the Funds on a quarterly basis, certifying that there have been no violations
by such GAM Group personnel of the policies, and, upon the occurrence of a
breach of the policies, the Compliance Director shall notify the Compliance
Officer for the Funds in writing within five (5) business days of discovery of
the violation, describing the nature and scope of the breach and any actual or
proposed remedial and/or punitive action taken or to be taken in respect of the
violation.
IV. UNAFFILIATED FUND ADVISERS
Where the Funds shall employ the services of advisers that are not affiliated
with the GAM Group other than in their role as adviser to a Fund, the Compliance
Officer of the Fund shall be responsible for reviewing the policies and
procedures adopted and in effect with respect to the personal securities
transactions of such advisory personnel to ensure that the interests of the Fund
and its shareholders are adequately protected. A current copy of the policies
and procedures of each such adviser shall be maintained with the books and
records of the Fund at all times. On a quarterly basis, the Compliance Officer
shall request from the appropriate employee or agent acting on behalf of the
adviser, a certification that no violations of the adviser's code have occurred
in the prior quarter, or, in the event a breach of such procedures has occurred,
a description in writing of the nature and scope of the breach and any actual or
proposed remedial and/or punitive action taken or to be taken by the adviser in
respect of the violation.
V. RECORDKEEPING
The Compliance Officer shall maintain with this Code (i) a record of any
violation of such Code and of any action taken as result of such violations for
a period of not less than five years following the end of the fiscal year in
which the violation occurs; (ii) a copy of each report made by an associated
person pursuant to this Code for a period of not less than five years from the
end of the fiscal year in which it is made; and (iii) a list of all persons who
are, or within the past five years have been, required to make reports pursuant
to the Code.
<PAGE>
ACKNOWLEDGEMENT (Initial and Yearly)
I hereby acknowledge that I have read, understand and will comply with the
foregoing Code and Policy Statement ("GAM Code of Ethics").
I also understand that any violations of the GAM Code of Ethics or any policies
of the GAM Group incorporated by reference herein may subject me to dismissal
from the entity with which I am employed within the GAM Group.
By signing below I agree to place and have placed the interests of the GAM Group
and the GAM Group's clients, at all times material hereto, before my own
personal interests. I further certify that I will and have complied with the
prohibition relating to the possession of material, non-public information (as
defined in the GAM Code of Ethics). I also agree not to accept and have not
accepted any "gifts" in access of $100.00 as set forth herein.
Date: _________________________
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Name (Printed)
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Signature
(Rev. 12/00)
<PAGE>
APPENDIX A
Global Asset Management (USA) Inc. (Affiliate of Fund Adviser)
GAM Investments, Inc. (Affiliate of Fund Adviser)
GAM Services, Inc. (Fund Underwriter)
<PAGE>
BROKERAGE ACCOUNT INFORMATION (Initial and Yearly)
The following is a list of all brokerage accounts in which I maintain beneficial
ownership, as defined in the GAM Group's Code of Ethics. In order to comply with
the Code, I understand that the following accounts must be reviewed (and
approved as necessary) by the Compliance Officer:
Firm/Address/Broker Account Number
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______ I do not maintain any type of brokerage account, which is prohibited
under the Code of Ethics.
By signing below I certify that I have disclosed all such accounts and interests
(including any "private placements") with respect to these accounts which are
required to be disclosed pursuant to the GAM Code of Ethics.
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Date Signature
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Print
(Rev. 12/00)
