CODE OF ETHICS
PERMANENT PORTFOLIO FUND FAMILY OF FUNDS,INC.
WORLD MONEY MANAGERS
625 Second Street, Suite 102
Petaluma, California 94952
Adopted by World Money Managers
February 28, 2000
Adopted by the Board of Directors
Permanen Portfolio Family of Funds, Inc.
March 4, 2000
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SECTION I
INTRODUCTION
This Code of Ethics (the "Code") is an important part of the efforts of the
Permanent Portfolio Family of Funds (the "Fund") and its investment advisor,
World Money Managers ("World") to prevent fraud resulting from personal trading
in securities by their respective personnel.
Rule 17j-1, adopted by the Securities and Exchange Commission (the "Commission")
under the Investment Company Act prohibits fraudulent, deceptive or manipulative
acts by Fund personnel in connection with their personal transactions
in securities held or to be acquired by a Portfolio of the Fund. The Rule also
contains requirements that are designed to prevent fraud, including (i)
requiring funds and their investment advisers to adopt a code of ethics
containing provisions reasonably necessary to prevent fraudulent, deceptive or
manipulative acts and (ii) requiring certain persons to report their personal
securities transactions to the Fund.
Amendments to Rule17j-1, effective October 29, 1999, modify the regulation of
personal investment activities in two respects. First, the amendments require
that the Fund's board, including a majority of independent directors on the
board, approve the Fund's code and the code of any investment adviser or
principal underwriter of the Fund. Second, the amendments require initial and
annual holdings reports from Access Persons, as well as review of reports on
personal trading by compliance personnel. The amendments also require World to
review and pre-approve any investment in an Initial Public Offering ("IPO") or a
Private Placement by personnel who participate in managing any of the Fund's
Portfolios.
SECTION II
DEFINITIONS
For purpose of this Code the following definitions shall apply:
"Access Person" means any director, officer, general partner or Advisory Person
of the Fund or of World.
"Advisory Person" means (i) any employee of the Fund or World who, in connection
with his or her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a Covered Security by a Portfolio
of the Fund, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a control
relationship to the Fund or World who obtains information concerning
recommendations made to the Fund with regard to the purchase or sale of a
Covered Security by a Portfolio of the Fund. A person does not become an
Advisory Person merely by the fact that he normally assists in the preparation
of public reports, or receives public reports of the Fund, but does not receive
information as to current recommendations or trading of the Fund. Neither does a
single instance of obtaining knowledge of current recommendations or trading
activity, or infrequently and inadvertently obtaining such knowledge, make such
person an Advisory Person.
"Covered Security" means any security, except: (i) direct obligations of the
Government of the United States; (ii) bankers' acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt instruments,
including repurchase agreements; and (iii) shares issued by open-end mutual
funds. The purchase or sale of a Covered Security includes the writing of an
option to purchase or sell a Covered Security. A commodity, such as gold or
silver, held or to be acquired by a Portfolio of the Fund does not fall within
the definition of a security.
"Initial Public Offering" ("IPO") means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of sections 13 or
15(d) of the Securities Exchange Act of 1934.
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"Investment Personnel" of the Fund or of World means: (i) any employee of the
Fund or World who, in connection with his or her regular functions or duties,
makes or participates in making recommendations regarding the purchase or sale
of securities by a Portfolio of the Fund; and (ii) any natural person who
controls the Fund or investment adviser and who obtains information concerning
recommendations made to the Fund regarding the purchase or sale of securities by
a Portfolio of the Fund.
"Private Placement" means an offering that is exempt from registration under the
Securities Act of 1933 pursuant to section 4(2) or section 4(6)or pursuant to
rule 504, rule 505, or rule 506 under the Securities Act of 1933.
"Security Held or to be Acquired by the Fund" means: (i) any Covered Security
which, within the most recent 15 days: (A) is or has been held by a Portfolio of
the Fund; or (B) is being or has been considered by the Fund or World for
purchase by a Portfolio of the Fund; and (ii) any option to purchase or sell,
and any security convertible into or exchangeable for, a Covered Security.
SECTION III
PROHIBITED CONDUCT
It is unlawful for any Access Person or Advisory Person of the Fund or World, in
connection with the purchase or sale, directly or indirectly, by such person of
a Security Held or to be Acquired by a Portfolio of the Fund:
(A) To employ any device, scheme or artifice to defraud the Fund;
(B) To make to the Fund any untrue statement of a material fact or omit to
state to the Fund a material fact necessary in order to make the statements
made, in light of the circumstances under which they are made, not misleading;
(C) To engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon the Fund; or
(D) To engage in any manipulative practice with respect to the Fund.
No Access Person or Advisory Person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his actual
knowledge at the time of such purchase or sale is a Security Held or to be
Acquired by a Portfolio of the Fund.
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The aforementioned prohibitions shall not apply to:
(A) Purchases or sales effected in any account over which the Access Person
or Advisory Person has no direct or indirect influence or control;
(B) Purchases or sales of those securities which are not eligible for
purchase or sale by a Portfolio of the Fund;
(C) Purchases or sales which are non-volitional on the part of either the
Access Person or Advisory Person of the Fund;
(D) Purchases which are part of an automatic dividend reinvestment plan;
Purchases effected upon the exercise of rights issued by an issuer pro rata to
all holders of a class of its securities, to the extent such right were
acquired; and
(E) Purchases or sales which receive the prior approval of the Fund's Board
of Directors in light of their determination that, under the circumstances, the
purchase or sale will not adversely affect a Portfolio of the Fund.
The Fund may prescribe from time to time such means as may be reasonably
necessary to prevent such acts, practices, or courses of business as are of a
fraudulent, deceptive or manipulative nature.
SECTION IV
INVESTMENT RESTRICTIONS
The investment restrictions described below are either contained in the current
Investment Advisory Contract between the Fund and World, or have been adopted by
the Fund as operating policies subject to change by the Fund's Board of
Directors, and reflected as such in the Prospectus. As set forth in these
statements of policy, no access or affiliated person of the Fund or World may
engage in the following:
(A) Purchase from or sell to the Fund or World any property or securities
other than shares of the Fund;
(B) Borrow assets of the Fund;
(C) Take long or short positions in shares of any Portfolio of the Fund
(which prohibition shall not prevent any person from acquiring such shares for
investment purposes at the current public offering price); or
(D) Act for or on behalf of the Fund with himself as principal or agent, or
with any corporation or partnership in which he may have a financial interest,
except that this does not prohibit (i) his having a financial interest in the
Fund or in World; or (ii) the purchase of securities or other assets for the
Fund, or the sale of securities or other assets owned by the Fund, through a
security broker or dealer, one or more of whose partners, officers, directors or
employees is an Access Person of the Fund or World, provided such transactions
are handled in the capacity of broker only and provided commissions charged do
not exceed customary brokerage charges for such services.
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SECTION V
PRE-APPROVAL OF INVESTMENTS
IN IPOS AND PRIVATE PLACEMENTS
Introduction
Most individuals rarely have a chance to invest in IPOs, particularly "hot
issue" IPOs, shares of which usually are reserved for institutional investors,
or wealthy individual customers with large brokerage accounts. The opportunity
for Investment Personnel to purchase IPO shares presents a potential for
conflict between the interests of the individual and the Fund. The purchase of
IPO shares by Investment Personnel may raise questions as to whether the
investment is an undisclosed reward for directing Fund business to the
underwriter or issuer, whether the individual is misappropriating an opportunity
that should have been offered to the Fund, and whether the individual's future
investment decisions for the Fund will be based solely on the best interests of
the Fund's shareholders.
Purchases by Investment Personnel of securities in a Private Placement may raise
similar conflicts because the opportunity to invest in the Private Placement may
be a reward for past business deals. In some cases, the conflict may occur later
when the issuer of the privately placed security is considering making a public
offering.
To ensure that the potential conflicts associated with these investments can be
addressed before they arise, the Code requires that Investment Personnel obtain
approval from World before directly or indirectly acquiring any beneficial
ownership in securities in an IPO or Private Placement. The Code does not
prohibit these investments because it is recognized that there may be situations
in which investment in these offerings does not raise the types of conflicts
that the Code is designed to address. In some circumstances, an investment
opportunity clearly may be available to Investment Personnel for reasons other
than the individual's position with the Fund. World therefore could determine
that, based on the particular nature of the offering or the particular facts of
the purchase, the investment would create no material conflict. In other
circumstances, the investment may raise only potential conflicts from which the
Fund and its investors can be protected. Because World is in the best position
to evaluate whether an investment in an IPO or limited offering creates or may
create a conflict of interest, the Code permits World to protect the Fund's
shareholders by determining whether to approve the proposed investment.
Pre-Clearance Procedures
After March 1, 2000, Investment Personnel may not directly or indirectly acquire
any beneficial interest in securities in an IPO or in a Private Placement
without the prior approval of World. In fulfilling its pre-clearance
responsibilities, World shall assign appropriate compliance personnel to
carefully review each request for approval. Such compliance personnel will use
judgment to distinguish between serious conflicts that must be avoided and those
less serious conflicts that Fund and World can monitor and manage consistent
with the protection of the Fund and its investors.
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SECTION VI
REPORTING REQUIREMENTS
Registration Statement Disclosures
The Fund has filed a registration statement (the "Registration Statement"),
including a prospectus (the "Prospectus") with the SEC under both the 1933 Act
and the 1940 Act. The Registration Statement and the Prospectus contain various
statements, restrictions and policies relating to the Fund, World and their
operations, which in part are also applicable to those persons subject to the
Code. Such persons should promptly advise the Fund or World of any changes in
the information relating to them in the Registration Statement or the Prospectus
as currently in effect.
Holdings Reports
Each Access Person shall make periodic reports to the Fund as set forth below of
any transaction in which such Access person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership in any Covered
Security. However, no person shall be required to report any transaction
effected for any account for which such person has no direct or indirect
influence or control. A Director of the Fund who is not an "interested person"
of the Fund, and who would be required to make a report solely by reason of
being a Fund director, need not make:
(A) An Initial Holdings Report or an Annual Holdings Report as described
below; or
(B) A Quarterly Transaction report as described below, unless the Director
knew or, in the ordinary course of fulfilling his or her official duties as a
Fund director, should have known that during the 15-day period immediately
before or after the director's transaction in a Covered Security, the Fund
purchased or sold the Covered Security, or the Fund or its investment adviser
considered purchasing or selling the Covered Security.
1. Initial Holdings Report
Each Access Person, other than a disinterested director, shall provide an
Initial Holdings Report to the Fund and World listing all securities
beneficially owned by the Access Person. In the case of any existing Access
Person, such report shall be filed no later than September 1, 2000. In the case
of a new Access Person such report shall be filed no later than 10 days after he
or she becomes an access person.
The Initial Holdings Report shall contain the following information:
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person;
(B) The name of any broker, dealer or bank with whom the Access Person
maintained an account in which any securities were held for the direct or
indirect benefit of the Access Person as of the date the person became an Access
Person; and
(C) The date that the report is submitted by the Access Person.
2. Quarterly Transactions Reports
No later than 10 days after the end of a calendar quarter, each Access Person
other than a disinterested director subject to the exception described above
shall file a Quarterly Transaction Report containing the following information:
(A) With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect beneficial
ownership:
1. The date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the principal
amount of each Covered Security involved;
2. The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
3. The price of the Covered Security at which the transaction was
effected;
4. The name of the broker, dealer or bank with or through which the
transaction was effected; and
5. The date that the report is submitted by the Access Person.
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(B) With respect to any account established by the Access Person in which
any securities were held during the quarter for the direct or indirect benefit
of the Access Person:
1. The name of the broker, dealer or bank with whom the Access Person
established the account;
2. The date the account was established; and
3. The date that the report is submitted by the Access Person.
Any such Quarterly Transaction Report may contain a statement that the report
shall not be construed as an admission by the person making such report that he
has any direct or or indirect beneficial ownership in the security to which the
report relates. Each Quarterly Transaction Report filed for the calendar quarter
ending March 31, 2000 (due April 10, 2000), and for subsequent quarters must
include all information set forth above.
3. Annual Holdings Report
On or before September 1 of each year, each Access Person, other than a
disinterested director shall file an Annual Holdings Report containing the
following information (which information must be current as of a date no more
than 30 days before the report is submitted):
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any director indirect beneficial
ownership;
(B) The name of any broker, dealer or bank with whom the Access Person
maintains an account in which any securities are held for the direct or indirect
benefit of the Access Person; and
(C) The date that the report is submitted by the Access Person.
Review of Reports
The purposes of the Code will be served only if the holdings and transactions
reports are reviewed to detect conflicts of interest and abusive practices.
Accordingly management of World shall establish procedures to review all
securities transaction and holdings reports required by this Code and to report
any conflicts of interest, abusive practices or violations of the Code, and any
action taken as a result thereof.
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SECTION VII
PERIODIC REVIEWS
Board Approval
A majority of the Fund's board, including a majority of its independent
directors shall be required to approve the Fund's code and the codes of any
investment adviser or principal underwriter to the Fund. In the event the Fund
engages another investment advisor or principal underwriter, the Board must
approve the code of ethics of such organization upon their engagement. If an
investment adviser or principal underwriter makes a material change to its code
of ethics, the Board shall have six months in which to approve the material
change.
In all cases, the Fund's board must base its approval of a code of ethics, or a
material change to a code of ethics, upon a determination that the code contains
provisions reasonably necessary to prevent Access Persons from violating the
anti-fraud provision of the rule.
Annual Issues and Certification Report
The board's involvement in the personal investment policies applicable to the
Fund will not end after the board's initial approval of a code. Continued
oversight of the personal investment policies applicable to the Fund is in the
interest of its shareholders because it subjects these policies to independent,
objective analysis by the "watch dog" for fund shareholders.
Accordingly, the management of the Fund and of World shall annually provide the
Fund's board on or prior to September 1 of each year, a written report that: (i)
describes issues that arose during the previous year under the Code or
applicable procedures under rule 17j-1, including, but not limited to,
information about material Code or procedure violations and sanctions imposed in
response to those material violations; and (ii) certify to the Fund's board that
the Fund and World have adopted procedures reasonably necessary to prevent its
Access Persons from violating the Code.
The Fund's board shall at its third quarterly meeting of each year, examine and
consider the report carefully and determine if it is necessary to amend the Code
or procedures, or to suggest to World that it consider amending its code or
procedures.
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SECTION VIII
RECORD KEEPING REQUIREMENTS
The Fund and World shall maintain at its principal place of business, records in
the manner and to the extent set out in this Section. Such records shall be
available to the Commission or any representative of the Commission at any time
and from time to time for reasonable periodic, special or other examination.
Such records shall include:
A A copy of each code of ethics for the Fund or World that is in effect,
or at any time within the past five years was in effect, which copy
shall be maintained in an easily accessible place;
B A record of any violation of the Code, and of any action taken as a
result of the violation, each which record shall be maintained in an
easily accessible place for at least five years after the end of the
fiscal year in which the violation occurs;
C A copy of each report made by an Access Person as required by Section
VI, including any information provided in lieu of such reports, each
which record shall be maintained for at least five years after the end
of the fiscal year in which the report is made or the information is
provided, the first two years in an easily accessible place;
D A record of all persons, currently or within the past five years, who
are or were required to make reports under Section VI, or who are or
were responsible for reviewing these reports, which record shall be
maintained in an easily accessible place; and
E A copy of each Annual Issues and Certification report required by
Section VII which report shall be maintained for at least five years
after the end of the fiscal year in which it is made, the first two
years in an easily accessible place.
In addition World shall maintain a record of any decision, and the reasons
supporting the decision, to approve the acquisition by Investment Personnel of
securities under Section V for at least five years after the end of the fiscal
year in which the approval is granted.
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SECTION IX
SANCTIONS
Upon discovering a violation of the Code, the Board of Directors of the Fund or
the General Partners of World may impose such sanctions as they deem
appropriate, including, among other things, a letter of censure or suspension or
termination of the employment of the violator. Violations of the prohibitions
and restrictions set forth herein, as well as other fraudulent conduct, may also
subject such person to the civil and criminal laws and sanctions of federal and
state governments.
SECTION X
DISCLOSURES
The Fund shall file with the Commission all codes of ethics applicable to the
Fund as an exhibit to its Registration Statement. The Fund shall disclose in its
Registration Statement or Statement of Additional Information ("SAI"): (i) that
the Fund and its World have adopted the Code, (ii) that the Code permits
personnel to invest in securities for their own accounts, and (iii) that the
Code is on public file with, and is available from, the Commission.
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ACCESS PERSONS OF
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
AND
WORLD MONEY MANAGERS
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
BOARD OF DIRECTORS
Disinterested Directors Interested Directors
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David P. Bergland Terry Coxon
Hugh Butler Robert B. Martin, Jr.
Mark Tier Michael J. Cuggino
OFFICERS
Terry Coxon, President
Michael J. Cuggino, Treasurer
Robert B. Martin, Jr., Secretary
WORLD MONEY MANAGERS
General Partners
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Terry Coxon
Terry Coxon, Inc. (of which Terry Coxon is the sole shareholder,
officer, director and employee)
