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Exhibit (p)(4)
PIMCO FUNDS DISTRIBUTORS LLC
CODE OF ETHICS
Effective June 1, 2000
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INTRODUCTION
Fiduciary Duty
This Code of Ethics is based on the principle that you, as an officer or
employee of PIMCO Funds Distributors LLC ("PFD"), 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 PFD serves as
an underwriter or fiduciary. 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.
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 Investment Person (as
defined in Appendix VII hereto), 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. PFD 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.
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3. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, gifts or gratuities from persons seeking
business with PFD 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.
Appendices
The following appendices are attached to this Code and are a part of this
Code:
I. The PIMCO Advisors Insider Trading Policy and Procedures.
II. Form for Preclearance of Securities Transactions.
III. Form for Initial and Annual Report of Personal Securities Holdings.
IV. Form for Personal Securities Transactions/Brokerage Account Reports.
V. Form for Acknowledgment of Receipt of this Code.
VI. Form for Annual Certification of Compliance with this Code.
VII. Definition.
Questions
Questions regarding this Code should be addressed to a Compliance Officer.
As of the effective date of this Code, the Compliance Officers are Newton B.
Schott, Jr. and Deborah P. Brennan. The Compliance Committee is comprised of
the Compliance Officers and Stephen J. Treadway.
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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 Securities (other than Exempt Securities) 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
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categories by a Nationally Recognized Statistical Rating
Organization), including repurchase agreements.
3. Shares of registered open-end investment companies.
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) under the Securities 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:
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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.
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 convertible into or exchangeable for, or represent the right
to purchase or otherwise acquire, 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 do not involve any realistic possibility of a violation
of 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.
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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.
Additional Exempt Transactions
The following classes of transactions have been designated as Exempt
Transactions by the Compliance Committee:
8. Purchases or sales of up to $100,000 per calendar month per issuer of
fixed-income Securities.
9. Any purchase or sale of fixed-income Securities issued by agencies or
instrumentalities of, or unconditionally guaranteed by, the Government
of the United States.
10. 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
$50 billion.
11. 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 $1 billion and an average daily trading volume during the
preceding three calendar months, 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 was issued by a large-cap issuer,
contact a Compliance Officer.
12. Purchases or sales of up to the lesser of 1,000 shares or $10,000 per
calendar week, per issuer, of stock of issuers other than large-cap
issuers.
13. Purchases or sales of exchange-traded options on broadly based indices
and units and/or exchange-traded trusts representing a group, or a
basket, of securities (e.g., HHH, QQQ, SPY).
14. Any purchase or sales of shares of registered closed-end investment
companies other than Municipal Advantage Fund and PIMCO Commercial
Mortgage Trust Inc.
15. If you are not an Investment Person, short sales of any Securities
otherwise permitted hereunder or puts, calls, straddles, or options
where the underlying amount of Securities controlled is an amount
otherwise permitted hereunder.
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CAUTION
The qualified foreign governments, large-cap issuers and broadly-based
indices that are exempt may change from time to time. Accordingly, you may
purchase Securities in an Exempt Transaction, only to find that you cannot sell
them later in an Exempt Transaction. In that case, you will be able to sell
them only if you preclear the sale in compliance with the procedures set forth
in the Code.
Circumstances Requiring Preclearance
If you have (or wish to acquire) Beneficial Ownership of Securities which
are not Exempt Securities and which cannot be sold in Exempt Transactions, such
Securities may be sold ( or acquired) only in compliance with the procedures set
forth below under Preclearance Procedures.
The Compliance Committee may designate as Exempt Transactions purchases and
sales of Securities which are purchased or sold in compliance with the
procedures set forth below under Preclearance Procedures.
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,
or (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. 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. Preclearance will not be given unless a determination is made
that the purchase or sale complies with this Code and the foregoing
restrictions. The form for requesting preclearance is attached to
this Code as Appendix II.
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Initial Public Offerings
If you are an Investment Person of any investment company that is an
Advisory Client (a "Trust"), you may not acquire Beneficial Ownership of any
Securities in an Initial Public Offering, unless you have received the prior
written approval of the Compliance Committee.
For the purposes hereof, "Initial Public Offering" means an offering of
securities registered under the Securities Act of 1933 (the "Securities Act"),
the issuer of which, immediately before the registration, was not subject to the
reporting requirements of Sections 13 or 15(d) of the Exchange Act.
Private Placements
If you are an Investment Person of a Trust, you may not acquire Beneficial
Ownership of any Securities in a Private Placement, unless you have received the
prior written approval 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.
For the purposes hereof, "Private Placement" means an offering that is
exempted from registration under the Securities Act pursuant to Section 4(2) or
Section 4(6) or pursuant to Rule 504, 505 or 506 under the Securities Act.
If 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 an Investment Person, you may not profit from the purchase and
sale, or sale and purchase, within 60 calendar days, of the same (or equivalent)
Securities (other than Exempt Securities) of which you have Beneficial
Ownership. 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. Any such short-term trade must be unwound, or if that is not practical,
the profits must be contributed to a charitable organization.
You are considered to profit from a short-term trade if Securities of which
you have Beneficial Ownership are sold for more than their purchase price, even
though the Securities purchased and the Securities sold are held of record or
beneficially by different persons or entities.
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Reporting
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Use of Broker-Dealers
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.
Reporting of Transactions and Brokerage Accounts
Each employee must report the employee's brokerage accounts and all
Securities transactions that are not Exempt Transactions or transactions in
Exempt Securities. To satisfy these requirements, (i) you must cause each
registered broker-dealer, who maintains an account for Securities of which you
have Beneficial Ownership, to provide to a Compliance Officer of PFD, within 10
days of the end of each calendar quarter, duplicate copies of: (a) confirmations
of all transactions in the account and (b) periodic statements for the account
and (ii) you must report (on the form attached as Appendix IV hereto) to a
Compliance Officer of PFD, within 10 days of the occurrence, the opening of any
brokerage account and all transactions effected without the use of a registered
broker-dealer in Securities (other than Exempt Securities) of which you have
Beneficiary 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 Personal
Securities Transactions/Brokerage Account Report attached to this Code as
Appendix IV. If they do not, you must complete and submit a Personal Securities
Transactions/Brokerage Account 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.
Disclaimer
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 PFD directly or on behalf of an Advisory Client.
You may accept gifts from a single
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giver so long as their aggregate annual value does not exceed $100, and you may
attend business meals, 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.
Service as a Director
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 Chief Executive Officer and the General Counsel of PFD. 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
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 V.
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 of which you had or
acquired Beneficial Ownership. A form for this purpose is attached to this Code
as Appendix VI.
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
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Reports of Material Remedial Action
The members of PFD and the directors or trustees of each Fund which is an
Advisory Client will be informed on a timely basis of each material remedial
action taken in response to a violation of this Code. For this purpose, a
material remedial action will include any action
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that has a significant financial effect on the violator, such as disgorgement of
profits, imposition of a substantial fine, demotion, suspension or termination.
Annual Reports
Management of PFD will report in writing annually to the members of PFD and
the directors or trustees of each Trust which is an Advisory Client with regard
to efforts to ensure compliance by the officers and employees of PFD 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 members or Board, 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 PFD has adopted procedures reasonably necessary to
prevent Access Persons from violating the Code.
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Appendix I
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PIMCO Advisors L.P.
Insider Trading Policy and Procedures
Section I. Policy Statement on Insider Trading.
A. Policy Statement on Insider Trading.
PIMCO Advisors L.P. ("PALP"), its affiliated Subpartnerships, PIMCO
Partners, G.P. ("PIMCO GP") and PIMCO Funds Distributors LLC ("PFD")
(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 PALP or its affiliated
Subpartnerships), 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".
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 PIMCO Advisors. 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 PALP or the applicable
subpartnership.
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?
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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 direct or
indirect control over the partnership.
2. What is Material Information?
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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.
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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
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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
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disclosing to others the dates that reports on various companies would appear in
the Journal and whether those reports would be favorable or not.
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3. What is Non-public Information?
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In order for issues concerning insider trading to arise, information must
not only be "material", it must be "non-public". "Non-public" information is
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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
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Street Journal or The New York Times), or a publicly disseminated disclosure
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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,
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officers, or employees of companies in PIMCO Advisors may become temporary
"insiders" because of a fiduciary or commercial relationship. For example,
personnel at PALP or an Affiliated Subpartnership may become insiders when an
external source, such as a company whose securities are held by one or more of
the accounts managed by PALP or a subpartnership, entrusts material, non-public
information to the Company 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
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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
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at PIMCO Advisors 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?
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Before trading for yourself or others, including investment companies or
private accounts managed by PALP or its Affiliated Subpartnerships, 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 Reuters,
The Wall Street Journal, or other publications of general circulation?
Given the potentially severe regulatory, civil and criminal sanctions
to which you and PIMCO Advisors 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 Chief
Executive Officer of PALP;
16
<PAGE>
ii. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
PALP or the applicable Affiliated Subpartnership; and
iii. Do not communicate the information inside or outside the Company,
other than to Compliance Officer or the Chief Executive Officer of
PALP.
After a Compliance Officer or the Chief Executive Officer 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 PIMCO Advisors, including dismissal of the
persons involved.
17
<PAGE>
Section II. Procedures to Implement PIMCO Advisors' Policy.
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 the Company 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 the Company who possesses material non-
public information relating to the Company or any of its affiliates or
subsidiaries, may buy or sell any securities of the Company 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 the Company 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 the Company shall engage in a
securities transaction with respect to the securities of PIMCO Advisors,
except in accordance with the specific procedures - published from time to
------
time by the Company.
4. Each employee, officer and director of the Company shall submit reports of
every securities transaction involving securities of PIMCO Advisors
securities to a Compliance Officer in accordance with the terms of the
Company's Code of Ethics as they relate to any other securities
transaction.
5. No Employee (as such term is defined in the applicable Code of Ethics)
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 the Company's 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 the Company should not discuss any potentially material non-
public information concerning the Company or other companies, including
other officers, employees and directors, except as specifically required in
the performance of their duties.
18
<PAGE>
B. Chinese Wall Procedures.
The Insider Trading and Securities Fraud Enforcement Act requires the
establishment and strict enforcement of procedures reasonably designed to
prevent the misuse of "inside" information.1 Accordingly, you should not discuss
material non-public information about the Company 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 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 a 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.
---------------
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.
5/25/00
19
<PAGE>
Appendix II
-----------
PIMCO FUNDS DISTRIBUTORS LLC
PRECLEARANCE OF SECURITIES TRANSACTION FORM
(1) Name of employee requesting authorization: ___________________
(2) If different from #1, name of the account ___________________
where the trade will occur:
(3) Relationship of (2) to (1): ___________________
(4) Name of the firm at which the account is held: ___________________
(5) Name of Security: ___________________
(6) Maximum number of shares or units to be
purchased or sold or amount of bond: ___________________
(7) Check those that are applicable:
___ Purchase ___ Sale ___ Market Order
___ Limit Order (Price of Limit Order: ___)
If the answer to any of the following questions is made by checking the answer
in Column I, the Compliance Officer may have to reject the proposed transaction:
COLUMN I COLUMN II
(8) Do you possess material nonpublic information
regarding the security or the issuer of the
security?/1/ ___ Yes ___ No
(9) To your knowledge, are the securities or
"equivalent securities" subject to a pending
buy or sell order on behalf of an Advisory
Client of PFD? ___ Yes ___ No
(10) To your knowledge, are there any outstanding
purchase or sell orders for this security or
any equivalent security by any Advisory Client
of PFD? ___ Yes ___ No
(11) To your knowledge, are the securities or
equivalent securities being considered for
purchase or sale for any Advisory Client of PFD? ___ Yes ___ No
---------------
/1/ Please note that officers and employees of PFD generally are not permitted
to acquire or sell securities when they possess material nonpublic
information regarding the security or the issuers of the security.
20
<PAGE>
Appendix II (cont.)
-----------
COLUMN I COLUMN II
(12) Are the securities being acquired in an
initial public offering? ___ Yes ___ No
(13) If you are an Investment Person,2 are the
securities being acquired in a private
placement? ___ Yes ___ No
(14) If you are an Investment Person,2 has any
account you manage purchased or sold these
securities or equivalent securities within
the past seven calendar days or do you expect
the account to purchase or sell these securities
or equivalent securities within seven calendar
days of your purchase or sale? ___ Yes ___ No
I have read the PIMCO Funds Distributors LLC Code of Ethics dated June 1,
2000 within the prior 12 months and believe that the proposed trade fully
complies with the requirements of the Code.
______________________________
Employee Signature
______________________________
Print Name
______________________________
Date Submitted
Authorized by: ___________________
Date: ___________________
---------------
2 Please see you Compliance Officer if you are not certain whether you are an
Investment Person.
21
<PAGE>
Appendix III
------------
PIMCO FUNDS DISTRIBUTORS LLC
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: _________________________
_________________________
_________________________
22
<PAGE>
(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:
Name of Security Quantity Value Custodian
1. ______________________ ______________ ______________ ______________
2. ______________________ ______________ ______________ ______________
3. ______________________ ______________ ______________ ______________
4. ______________________ ______________ ______________ ______________
5. ______________________ ______________ ______________ ______________
(Attach 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.
______________________________
Employee Signature
______________________________
Print Name
Dated: _________________
23
<PAGE>
Appendix IV (cont.)
-----------
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 Sell). 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 NOT LATER THAN 10 CALENDAR DAYS
-------------------------------
after the end of each calendar quarter with:
PIMCO Funds Distributors LLC
ATTN: Newton B. Schott, Jr.
2187 Atlantic Street - 7th Floor
Stamford, CT 06902
24
<PAGE>
Appendix V
----------
PIMCO FUNDS DISTRIBUTORS LLC
ACKNOWLEDGMENT CERTIFICATION
for the
Code of Ethics
and the
Insider Trading Policy and Procedures
I hereby certify that I have read and understand the PIMCO Funds Distributors
Code of Ethics and the Insider Trading Policy and Procedures attached hereto
(together, the "Codes"). Pursuant to the Codes, I recognize that I must
disclose or report all personal holdings and securities transactions required to
be disclosed or reported thereunder and comply in all other respects with the
requirements of the Codes. I also agree to cooperate fully with any
investigation or inquiry as to whether a possible violation of the foregoing
Codes has occurred./1/ 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
----------
/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.
25
<PAGE>
Appendix VI
-----------
PIMCO FUNDS DISTRIBUTORS LLC
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 (together, the "Codes") for
the year ended December 31, 2000. Pursuant to the Codes, 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 Codes. I also agree to cooperate fully with any
investigation or inquiry as to whether a possible violation of the foregoing
Codes has occurred.
Date: __________________________ ______________________________
Signature
______________________________
Print Name
26
<PAGE>
APPENDIX VII
------------
DEFINITION
For the purposes hereof, "Investment Person" means:
(i) any employee of a Trust or an investment adviser or sub-adviser (or
of any company in a control (as defined in Section 2(a)(9) of the
Act) relationship to such Trust or investment adviser or sub-adviser)
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 any Fund of such Trust, including any portfolio
manager and any employee who helps execute decisions of any portfolio
manager; or
(ii) any natural person who controls (as defined in Section 2(a)(9) of
the Act) a Trust or investment adviser or sub-adviser and who obtains
information concerning recommendations made to any Fund of such Trust
regarding the purchase or sale of securities by any Fund of such
Trust.
27
<PAGE>
PIMCO FUNDS DISTRIBUTORS LLC APPENDIX IV
-----------
Personal Securities Transactions/
Brokerage Account Report Quarter Ended:______________
You must cause each broker-dealer who 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 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).
If you have opened a new account with a broker-dealer since your last report,
please complete the following information for each such account:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Name Broker Account Number Date Account Opened
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Please provide information concerning non-Exempt Transactions not effected
through a registered broker-dealer (e.g., direct purchases of private placements
or limited partnerships).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Security's Name* Transaction Date Buy or Sell? No. of Shares Price Per Share Broker's Name
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
</TABLE>
* Including interest rate, principal amount and maturity date, if applicable.
By signing this document, I am certifying that I have caused duplicate
confirmations 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 PFD Code of Ethics).
Print Name: ______________________ Signature: ___________________________
Date: _______________
Return to: N.B. Schott, Jr. - PIMCO Funds Distributors LLC, 2187 Atlantic
Street, Stamford, CT 06902
