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PIMCO CODE OF ETHICS
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Effective as of March 31, 2000
INTRODUCTION
GENERAL PRINCIPLES
This Code of Ethics is based on the principle that you, as a director,
officer or other Advisory Employee of Pacific Investment Management Company
("PIMCO"), owe a fiduciary duty to, among others, the shareholders of the Funds
and other clients (together with the Funds, the "Advisory Clients") for which
PIMCO serves as an advisor or subadvisor. 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 observe the following GENERAL RULES:
1. YOU MUST 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 must adhere to this general fiduciary
principle as well as comply with the Code's specific provisions.
Technical compliance with the Code's procedures will not
automatically insulate from scrutiny any trades that indicate an
abuse of your fiduciary duties or that create an appearance of
such abuse.
Your fiduciary obligation applies not only to your personal
trading activities but also to actions taken on behalf of
Advisory Clients. In particular, 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 or Futures Contract you owned for
the purpose of increasing the value of that Security or Futures
Contract. If you are a portfolio manager or an employee who
provides information or advice to a portfolio manager or helps
execute a portfolio manager's decisions, you would also violate
this Code if you made a personal investment in a Security or
Futures Contract that might be an appropriate investment for an
Advisory Client without first considering the Security or
Futures Contract as an investment for the Advisory Client.
2. YOU MUST CONDUCT ALL OF YOUR PERSONAL INVESTMENT TRANSACTIONS IN
FULL COMPLIANCE WITH THIS CODE, THE PIMCO ADVISORS L.P. INSIDER
TRADING POLICY AND PROCEDURES (THE "INSIDER TRADING POLICY"),
AND THE PIMCO ADVISORS L.P. POLICY REGARDING SPECIAL TRADING
PROCEDURES FOR SECURITIES OF PIMCO
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ADVISORS L.P. (THE "SPECIAL TRADING PROCEDURES")(1) AND IN SUCH
A MANNER AS TO AVOID ANY ACTUAL OR POTENTIAL CONFLICT OF
INTEREST OR ANY ABUSE OF YOUR POSITION OF TRUST AND
RESPONSIBILITY. PIMCO encourages you and your family to develop
personal investment programs. However, those investment programs
must remain within boundaries reasonably necessary to ensure
that appropriate safeguards exist to protect the interests of
our Advisory Clients and to avoid 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 INVESTMENT TRANSACTIONS. In addition, you must
comply with the policies and procedures set forth in the INSIDER
TRADING POLICY AND SPECIAL TRADING PROCEDURES, which are
attached to this Code as Appendix II and III, respectively.
Doubtful situations should be resolved in favor of our Advisory
Clients and against your personal trading.
3. YOU MUST NOT TAKE INAPPROPRIATE ADVANTAGE OF YOUR POSITION. The
receipt of investment opportunities, perquisites, gifts or
gratuities from persons seeking business with PIMCO 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 GIFTS AND SERVICE AS A DIRECTOR. Doubtful
situations should be resolved against your personal interest.
THE GENERAL SCOPE OF THE CODE'S
APPLICATIONS TO PERSONAL INVESTMENT ACTIVITIES
The Code reflects the fact that PIMCO specializes in the management of
fixed income portfolios. The vast majority of assets PIMCO purchases and sells
on behalf of its Advisory Clients consist of corporate debt Securities, U.S. and
foreign government obligations, asset-backed Securities, money market
instruments, foreign currencies, and futures contracts and options with respect
to those instruments. For its StocksPLUS Funds, PIMCO also purchases futures and
options on the S & P 500 index and, on rare occasions, may purchase or sell
baskets of the stocks represented in the S & P 500. For its Convertible Bond
Fund and other Advisory Clients, PIMCO purchases convertible securities that may
be converted or exchanged into underlying shares of common stock. Other PIMCO
Funds may also invest in convertible securities. The Convertible Bond Fund and
other Advisory Clients may also invest a portion of their assets in common
stocks.
Rule 17j-1 under the Investment Company Act of 1940 requires REPORTING
of all personal transactions in Securities (other than certain Exempt
Securities) by certain persons, whether or
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(1) PIMCO expects Allianz of America ("AZOA") to acquire a majority
interest in PIMCO Advisors L.P. ("PALP") in the second quarter of 2000. When
that acquisition is consummated, the Special Trading procedures for PALP
securities will no longer apply since PALP securities will not be publicly owned
or traded.
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not they are Securities that might be purchased or sold by PIMCO on behalf of
its Advisory Clients. The Code implements that reporting requirement.
However, since the purpose of the Code is to avoid conflicts of interest
arising from personal trading activities in Securities and other instruments
that are held or might be acquired on behalf of our Advisory Clients, this Code
only places RESTRICTIONS on personal trading activities in such investments. As
a result, this Code does not place restrictions (beyond reporting) on personal
trading in most individual equity Securities. Except for the small number of
Portfolio Employees who are responsible for PIMCO's Municipal Bond Fund, this
Code also does not place restrictions (beyond reporting) on personal trading in
Tax-Exempt Municipal Bonds. Although equities and Tax-Exempt Municipal Bonds are
Securities, they are not purchased or sold by PIMCO on behalf of the vast
majority of PIMCO's Advisory Clients and PIMCO has established special
procedures to avoid conflicts of interest that might otherwise arise from
personal trading in those Securities. On the other hand, this Code does require
reporting and restrict trading in certain Futures Contracts which, although they
are not Securities, are instruments in which PIMCO frequently trades for many of
its Advisory Clients.
This Code applies to PIMCO's officers and directors as well as to all of
its Advisory Employees. The Code recognizes that portfolio managers and the
investment personnel who provide them with advice and who execute their
decisions occupy more sensitive positions than other Advisory Employees and that
it is appropriate to subject their personal investment activities to greater
restrictions.
THE ORGANIZATION OF THE CODE
The remainder of this Code is divided into three sections. The first
section concerns PERSONAL INVESTMENT TRANSACTIONS. The second section describes
the restrictions on GIFTS AND SERVICE AS A DIRECTOR. The third section
summarizes the methods for ensuring COMPLIANCE under the Code. In addition, the
following APPENDICES are also a part of this Code:
I. Definitions of Capitalized Terms.
II. The PIMCO Advisors L.P. Insider Trading Policy and Procedures.
III. The PIMCO Advisors L.P. Policy Regarding Special Trading Procedures for
Securities of PIMCO Advisors L.P.
IV. Form for Acknowledgment of Receipt of this Code.
V. Form for Annual Certification of Compliance with this Code.
VI. Form for Initial Report of Accounts.
VII. Form for Quarterly Report of Investment Transactions.
VIII. Form for Annual Holdings Report.
IX. Preclearance Request Form
X. List of PIMCO Compliance Officers.
QUESTIONS
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Questions regarding this Code should be addressed to a Compliance
Officer listed on Appendix X. Those Compliance Officers compose the PIMCO
Compliance Committee.
PERSONAL INVESTMENT TRANSACTIONS
IN GENERAL
Subject to the limited exceptions described below, you are required to
report all Investment Transactions in SECURITIES AND FUTURES CONTRACTS made by
you, a member of your Immediate Family or a trust in which you have an interest,
or on behalf of any account in which you have an interest or which you direct.
In addition, you must PRECLEAR certain Investment Transactions in SECURITIES AND
FUTURES CONTRACTS THAT PIMCO HOLDS OR MAY ACQUIRE ON BEHALF OF AN ADVISORY
CLIENT, INCLUDING CERTAIN INVESTMENT TRANSACTIONS IN RELATED SECURITIES.
The details of these reporting and preclearance requirements are
described below. This Code uses a number of capitalized terms, E.G. Advisory
Employee, Beneficial Ownership, Designated Equity Security, Exempt Security,
Fixed Income Security, Fund, Futures Contract, Immediate Family, Initial Public
Offering, Investment Transaction, Personal Account, Portfolio Employee, Private
Placement, Qualified Foreign Government, Related Account, Related Security, and
Security. The definitions of these capitalized terms are set forth in Appendix
I. TO UNDERSTAND YOUR RESPONSIBILITIES UNDER THE CODE, IT IS IMPORTANT THAT YOU
REVIEW AND UNDERSTAND THE DEFINITIONS IN APPENDIX I.
REPORTING OBLIGATIONS
NOTIFICATION OF REPORTING OBLIGATIONS
As an Advisory Employee, you are required to report accounts and
Investment Transactions in accordance with the requirements of this Code.
USE OF BROKER-DEALERS AND FUTURES COMMISSION MERCHANTS
Unless you are an independent director, YOU MUST USE A REGISTERED
BROKER-DEALER OR REGISTERED FUTURES COMMISSION MERCHANT to engage in any
purchase or sale of a publicly-traded Security or Publicly-Traded Futures
Contract. This requirement also applies to any purchase or sale of a
publicly-traded Security or of a Publicly-Traded Futures Contract in which you
have, or by reason of the Investment Transaction will acquire, a Beneficial
Ownership interest. Thus, as a general matter, any Investment Transaction in
publicly-traded Securities or Publicly-Traded Futures Contracts by members of
your Immediate Family will need to be made through a registered broker-dealer or
futures commission merchant.
INITIAL REPORT
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Within 10 days after commencing employment or within 10 days of any
event that causes you to become subject to this Code (E.G. promotion to a
position that makes you an Advisory Employee), you shall supply to a Compliance
Officer copies of the most recent statements for each and every Personal Account
and Related Account that holds or is likely to hold a Security or a Futures
Contract in which you have a Beneficial Ownership interest, as well as copies of
confirmations for any and all Investment Transactions subsequent to the
effective date of those statements. These documents shall be supplied to the
Compliance Officer by attaching them to the form appended hereto as Appendix VI.
On that same form you shall supply the name of any broker, dealer, bank
or futures commission merchant and the number for any Personal Account and
Related Account that holds or is likely to hold a Security or a Futures Contract
in which you have a Beneficial Ownership interest for which you cannot supply
the most recent account statement. You shall also certify, where indicated on
the form, that the contents of the form and the documents attached thereto
disclose all such Personal Accounts and Related Accounts.
In addition, you shall also supply, where indicated on the form, the
following information for each Security or Futures Contract in which you have a
Beneficial Ownership interest, to the extent that this information is not
available from the statements attached to the form:
1. A description of the Security or Futures Contract, including its
name or title;
2. The quantity (E.G. in terms of numbers of shares, units or
contracts) and principal amount (in dollars) of the Security or
Futures Contract; and
3. The name of any broker, dealer, bank or futures commission
merchant with which you maintained an account in which the
Security or Futures Contract was held.
NEW ACCOUNTS
Immediately upon the opening of a NEW Personal Account or a Related
Account that holds or is likely to hold a Security or a Futures Contract, you
shall supply a Compliance Officer with the name of the broker, dealer, bank or
futures commission merchant for that account, the identifying number for that
Personal Account or Related Account, and the date the account was established.
TIMELY REPORTING OF INVESTMENT TRANSACTIONS
You must cause each broker, dealer, bank or futures commission merchant
that maintains a Personal Account or a Related Account that holds a Security or
a Futures Contract in which you have a Beneficial Ownership interest to provide
to a Compliance Officer, on a timely basis, duplicate copies of trade
confirmations of all Investment Transactions in that account and of periodic
statements for that account ("duplicate broker reports").
In addition, you must report to a Compliance Officer, on a timely basis,
any Investment Transaction in a Security or a Futures Contract in which you have
or acquired a Beneficial
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Ownership interest that was established without the use of a broker, dealer,
bank or futures commission merchant.
QUARTERLY CERTIFICATIONS AND REPORTING
At the end of the first, second and third calendar quarters, a
Compliance Officer will provide you with a list of all accounts that you have
previously identified to PIMCO as a Personal Account or a Related Account that
holds or is likely to hold a Security or Futures Contract. Within 10 days after
the end of that calendar quarter, you shall make any necessary additions,
corrections or deletions to that list and return it to a Compliance Officer with
a certification that: (a) the list, as modified (if necessary), represents a
complete list of the Personal Accounts and Related Accounts that hold Securities
or Futures Contracts in which you have or had a Beneficial Ownership interest
and for which PIMCO should have received or will receive timely duplicate broker
reports for the calendar quarter just ended, and (b) the broker, dealer, bank or
futures commission merchant for each account on the list has been instructed to
send a Compliance Officer timely duplicate broker reports for that account.
You shall provide, on a copy of the form attached hereto as Appendix
VII, the following information for each Investment Transaction during the
calendar quarter just ended, to the extent that the duplicate broker reports for
that calendar quarter did not supply this information to PIMCO:
1. The date of the Investment Transaction, the title, the interest
rate and maturity date (if applicable), the number of shares or
contracts, and the principal amount of each Security or Futures
Contract involved;
2. The nature of the Investment Transaction (I.E. purchase, sale or
any other type of acquisition or disposition);
3. The price of the Security or Futures Contract at which the
transaction was effected; and
4. The name of the broker, dealer, bank, or futures commission
merchant with or through which the transaction was effected.
You shall provide similar information for the fourth calendar quarter on a copy
of the form attached hereto as Appendix VIII, which form shall also be used for
the Annual Holdings Report described below.
ANNUAL HOLDINGS REPORTS
Beginning with calendar year 2000, a Compliance Officer will provide to
you, promptly after the end of the calendar year, a list of all accounts that
you have previously identified to PIMCO as a Personal Account or a Related
Account that held or was likely to hold a Security or Futures Contract during
that calendar year. Within 10 days after the end of that calendar year, you
shall make any necessary additions, corrections or deletions to that list and
return it to a
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Compliance Officer with a certification that: (a) the list, as modified (if
necessary), represents a complete list of the Personal Accounts and Related
Accounts that held Securities or Futures Contracts in which you had a Beneficial
Ownership interest as of the end of that calendar year and for which PIMCO
should have received or will receive an account statement of holdings as of the
end of that calendar year, and (b) the broker, dealer, bank or futures
commission merchant for each account on the list has been instructed to send a
Compliance Officer such an account statement.
You shall provide, on a copy of the form attached hereto as Appendix
VIII, the following information for each Security or Futures Contract in which
you had a Beneficial Ownership interest, as of the end of the previous calendar
year, to the extent that the previously referenced account statements have not
supplied or will not supply this information to PIMCO:
1. The title, quantity (E.G. in terms of numbers of shares, units
or contracts) and principal amount of each Security or Futures
Contract in which you had any Beneficial Ownership interest; and
2. The name of any broker, dealer, bank or futures commission
merchant with which you maintain an account in which any such
Securities or Futures Contracts have been held or are held for
your benefit.
In addition, you shall also provide, on that same form, Investment Transaction
information for the fourth quarter of the calendar year just ended. This
information shall be of the type and in the form required for the quarterly
reports described above.
RELATED ACCOUNTS
The reporting and certification obligations described above also apply
to any Related Account (as defined in Appendix I) and to any Investment
Transaction in a Related Account.
It is important for you to recognize that the definitions of "Related
Account" and "Beneficial Ownership" in Appendix I may require you to provide, or
to arrange for the broker, dealer, bank or futures commission merchant to
furnish, copies of reports for any account used by or for a member of your
Immediate Family or a trust in which you or a member of your Immediate Family
has any vested interest, as well as for any other accounts in which you may have
the opportunity, directly or indirectly, to profit or share in the profit
derived from any Investment Transaction in that account.
EXEMPTIONS FROM REPORTING
You need not report Investment Transactions in any account over which
neither you nor an Immediate Family Member has or had any direct or indirect
influence or control.
You also need not report Investment Transactions in Exempt Securities
(as defined in Appendix I) nor need you furnish, or require a broker, dealer,
bank or futures commission merchant to furnish, copies of confirmations or
periodic statements for accounts that hold only
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Exempt Securities. This includes accounts that only hold U.S. Government
Securities, money market interests, or shares in open-end mutual funds. This
exemption from reporting shall end immediately, however, at such time as there
is an Investment Transaction in that account in a Futures Contract or in a
Security that is not an Exempt Security.
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PROHIBITED INVESTMENT TRANSACTIONS
INITIAL PUBLIC OFFERINGS OF EQUITY SECURITIES
If you are a Portfolio Employee (as defined in Appendix I), you may not
acquire Beneficial Ownership of any equity Security in an Initial Public
Offering.
PRIVATE PLACEMENTS AND INITIAL PUBLIC OFFERING OF DEBT SECURITIES
If you are a Portfolio Employee, you may not acquire a Beneficial
Ownership interest in any Security through a Private Placement (or subsequently
sell it), or acquire a Beneficial Ownership interest in any debt Security in an
Initial Public Offering unless you have received the prior written approval of
the Chief Executive Officer of PIMCO or of a Compliance Officer listed on
Appendix X. Approval will 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 with PIMCO.
If, after receiving the necessary approval, you have acquired a
Beneficial Ownership interest in Securities through a Private Placement, you
must DISCLOSE that investment when you play a part in any consideration of any
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 a Beneficial Ownership interest in any
Securities of the issuer.
PIMCO ADVISORS L.P.
You may not engage in any Investment Transaction in interests in PIMCO
Advisors L.P. ("PALP"), except in compliance with the Special Trading Procedures
applicable to such transactions.(2)
PRECLEARANCE
All Investment Transactions in Securities and Futures Contracts in a
Personal Account or Related Account, or in which you otherwise have or will
acquire a Beneficial Ownership interest, must be precleared by a Compliance
Officer unless an Investment Transaction, Security or Futures Contract falls
into one of the following categories that are identified as "exempt from
preclearance."
PRECLEARANCE PROCEDURE
Preclearance shall be requested by completing and submitting a copy of
the preclearance request form attached hereto as Appendix IX to a Compliance
Officer. No Investment Transaction subject to preclearance may be effected prior
to receipt of written authorization of
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(2) As indicated in Note 1, above, those procedures will expire and no
longer be effective after AZOA completes its acquisition of a majority interest
in PALP.
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the transaction by a Compliance Officer. The authorization and the date of
authorization will be reflected on the preclearance request form. Unless
otherwise specified, that authorization shall be effective, unless revoked,
until the earlier of: (a) the close of business on the day the authorization is
given, or (b) until you discover that the information on the preclearance
request form is no longer accurate.
The Compliance Officer from whom authorization is sought may undertake
such investigation as he or she considers necessary to determine that the
Investment Transaction for which preclearance has been sought complies with the
terms of this Code and is consistent with the general principles described at
the beginning of the Code.
Before deciding whether to authorize an Investment Transaction in a
particular Security or Futures Contract, the Compliance Officer shall determine
and consider, based upon the information reported or known to that Compliance
Officer, whether within the most recent 15 days: (a) the Security, the Futures
Contract or any Related Security is or has been held by an Advisory Client, or
(b) is being or has been considered for purchase by an Advisory Client. The
Compliance Officer shall also determine whether there is a pending BUY or SELL
order in the same Security or Futures Contract, or in a Related Security, on
behalf of an Advisory Client. If such an order exists, authorization of the
personal Investment Transaction shall not be given until the Advisory Client's
order is executed or withdrawn. This prohibition may be waived by a Compliance
Officer if he or she is convinced that: (a) your personal Investment Transaction
is necessary, (b) your personal Investment Transaction will not adversely affect
the pending order of the Advisory Client, and (c) provision can be made for the
Advisory Client trade to take precedence (in terms of price) over your personal
Investment Transaction.
EXEMPTIONS FROM PRECLEARANCE
Preclearance shall NOT be required for the following Investment
Transactions, Securities and Futures Contracts. They are exempt only from the
Code's preclearance requirement, and, unless otherwise indicated, remain subject
to the Code's other requirements, including its reporting requirements.
INVESTMENT TRANSACTIONS EXEMPT FROM PRECLEARANCE
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Preclearance shall NOT be required for any of the following Investment
Transactions:
1. Any transaction in a Security or Futures Contract in an account
that is managed or held by a broker, dealer, bank, futures
commission merchant, investment adviser, commodity trading
advisor or trustee and over which you do not exercise investment
discretion, have notice of transactions prior to execution, or
otherwise have any direct or indirect influence or control.
There is a presumption that you can influence or control
accounts held by members of your Immediate Family sharing the
same household. This presumption may be rebutted only by
convincing evidence.
2. Purchases of Securities under dividend reinvestment plans.
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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 in which you have a
Beneficial Ownership interest.
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 in which you have a Beneficial Ownership interest.
SECURITIES EXEMPT FROM PRECLEARANCE
REGARDLESS OF TRANSACTION SIZE
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Preclearance shall NOT be required for an Investment Transaction in the
following Securities or Related Securities, regardless of the size of that
transaction:
1. All "Exempt Securities" defined in Appendix I, I.E. U.S.
Government Securities, shares in open-end mutual funds, and high
quality short-term debt instruments.
2. All closed-end mutual funds (other than PIMCO Commercial
Mortgage Securities Trust, Inc.), and rights distributed to
shareholders in closed-end mutual funds.
3. All options on any index of equity Securities.
4. All Fixed Income Securities issued by agencies or
instrumentalities of, or unconditionally guaranteed by, the
Government of the United States.
5. All options on foreign currencies or baskets of foreign
currencies (whether or not traded on an exchange or board of
trade).
6. EXCEPT FOR DESIGNATED EQUITY SECURITIES (as defined in Appendix
I and discussed below), all equity Securities or options,
warrants or other rights to equity Securities.
SECURITIES EXEMPT FROM PRECLEARANCE
DEPENDING ON TRANSACTION SIZE
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Preclearance shall NOT be required for an Investment Transaction in the
following Securities or Related Securities if they do not exceed the specified
transaction size thresholds (which thresholds may be increased or decreased by
PIMCO upon written notification to employees in the future depending on the
depth and liquidity of Fixed Income Securities or Tax-Exempt Municipal Bonds
market):
1. Purchases or sales of up to $1,000,000 (in market value or face
amount whichever is greater) per calendar month per issuer of
Fixed Income Securities issued by a Qualified Foreign
Government.
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2. Purchases or sales of the following dollar values (measured in
market value or face amount, whichever is greater) of corporate
debt Securities, mortgage-backed and other asset-backed
Securities, Tax-Exempt Municipal Bonds, taxable state, local and
municipal Fixed Income Securities, structured notes and loan
participations, and foreign government debt Securities issued by
non-qualified foreign governments (hereinafter collectively
referred to as "Relevant Debt Securities"):
a. Purchases or sales of up to $100,000 per calendar month
per issuer if the original issue size of any Relevant
Debt Security being purchased or sold was less than $50
million;
b. Purchases or sales of up to $500,000 per calendar month
per issuer if the original issue size of any Relevant
Debt Security being purchased or sold was at least $50
million but less than $100 million; or
c. Purchases or sales of up to $1,000,000 per calendar
month per issuer if the original issue size of any
Relevant Debt Security being purchased or sold was at
least $100 million.
PRECLEARANCE OF DESIGNATED EQUITY SECURITIES
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If a Compliance Officer receives notification from a Portfolio Employee
that an equity Security or an option, warrant or other right to an equity
Security is being considered for purchase or sale by PIMCO on behalf of one of
its Advisory Clients, the Compliance Officer will send you an e-mail message or
similar transmission notifying you that this equity Security or option, warrant
or other right to an equity Security is now a "Designated Equity Security." A
current list of Designated Equity Securities (if any) will also be available on
the PIMCO intranet site. You must preclear any Investment Transaction in a
Designated Equity Security or a Related Security during the period when that
designation is in effect.
FUTURES CONTRACTS EXEMPT FROM PRECLEARANCE
REGARDLESS OF TRANSACTION SIZE
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Preclearance shall NOT be required for an Investment Transaction in the
following Futures Contracts, regardless of the size of that transaction (as
indicated in Appendix I, for these purposes a "Futures Contract" includes a
futures option):
1. Currency Futures Contracts.
2. U.S. Treasury Futures Contracts.
3. Eurodollar Futures Contracts.
4. Futures Contracts an any index of equity Securities.
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5. Futures Contracts on physical commodities or indices thereof
(E.G. contracts for future delivery of grain, livestock, fiber
or metals whether for physical delivery or cash).
6. Privately-Traded Contracts.
FUTURES CONTRACTS EXEMPT FROM PRECLEARANCE
DEPENDING ON TRANSACTION SIZE
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Preclearance shall NOT be required for an Investment Transaction in the
following Futures Contracts if the total number of contracts purchased or sold
during a calendar month does not exceed the specified limitations:
1. Purchases or sales of up to 50 PUBLICLY-TRADED FUTURES CONTRACTS
to acquire Fixed Income Securities issued by a particular
Qualified Foreign Government.
2. Purchases or sales of up to 10 OF EACH OTHER INDIVIDUAL
PUBLICLY-TRADED FUTURES CONTRACT if the open market interest for
such Futures Contract as reported in THE WALL STREET JOURNAL on
the date of your Investment Transaction (for the previous
trading day) is at least 1,000 contracts. Examples of Futures
Contracts for which this exemption would be available include a
Futures Contract on a foreign government debt Security issued by
a non-qualified foreign government as well as a 30-day federal
funds Futures Contract.
For purposes of these limitations, a Futures Contract is defined by its
expiration month. For example, you need not obtain preclearance to purchase 50
December Futures Contracts on German Government Bonds and 50 March Futures
Contracts on German Government Bonds. Similarly, you may roll over 10 September
Fed Funds Futures Contracts by selling those 10 contracts and purchasing 10
October Fed Funds Futures Contracts since the contracts being sold and those
being purchased have different expiration months. On the other hand, you could
not purchase 10 January Fed Funds Future Contracts if the open interest for
those contracts was less than 1,000 contracts, even if the total open interest
for all Fed Funds Futures Contracts was greater than 1,000 contracts.
ADDITIONAL EXEMPTIONS FROM PRECLEARANCE
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The Compliance Committee may exempt other classes of Investment
Transactions, Securities or Futures Contracts from the Code's preclearance
requirement upon a determination that they do not involve a realistic
possibility of violating the general principles described at the beginning of
the Code.
PRECLEARANCE REQUIRED
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Given the exemptions described above, preclearance shall be required for
Investment Transactions in:
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1. Designated Equity Securities.
2. Relevant Debt Securities (as defined under the section
"Securities Exempt from Preclearance Depending on Transaction
Size, paragraph 2") in excess of the per calendar month per
issuer thresholds specified for purchases or sales of those
Securities.
3. More than $1,000,000 per calendar month in debt Securities of a
Qualified Foreign Government.
4. Related Securities that are exchangeable for or convertible into
one of the Securities requiring preclearance under (1), (2), or
(3) above.
5. More than 50 Publicly-Traded Futures Contracts per calendar
month to acquire Fixed Income Securities issued by a particular
Qualified Foreign Government.
6. More than 10 of any other individual Publicly-Traded Futures
Contract or any Publicly-Traded Futures Contract for which the
open market interest as reported in THE WALL STREET JOURNAL on
the date of your Investment Transaction (for the previous
trading day) is less than 1,000 contracts, unless the Futures
Contract is exempt from preclearance regardless of transaction
size.
7. Any other Security or Publicly-Traded Futures Contract that is
not within the "exempt" categories listed above.
8. PIMCO Commercial Mortgage Securities Trust, Inc.
SHORT-TERM TRADING PROFITS
You may not profit from the purchase and sale, or the sale and purchase,
within 60 calendar days, of FIXED INCOME SECURITIES, TAX-EXEMPT MUNICIPAL BONDS
OR RELATED SECURITIES. Portfolio Employees may not profit from the purchase and
sale, or the sale and purchase, within 60 calendar days, of DESIGNATED EQUITY
SECURITIES. Any such short-term trade must be unwound, or if that is not
practical, the profits must be contributed to a charitable organization.
This ban does NOT apply to Investment Transactions in U.S. Government
Securities, most equity Securities, mutual fund shares, index options or Futures
Contracts. This ban also does not apply to a purchase or sale in connection with
one of the four categories of Investment Transactions Exempt From Preclearance
described on pages 9-10, above.
You are considered to profit from a short-term trade if Securities in
which you have a Beneficial Ownership interest 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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BLACKOUT PERIODS
You MAY NOT purchase or sell a Security, a Related Security or a Futures
Contract at a time when you intend or know of another's intention to purchase or
sell that Security or Futures Contract on behalf of any Advisory Client.
As noted previously in the description of the Preclearance Process, a
Compliance Officer may not preclear an Investment Transaction in a Security or a
Futures Contract at a time when there is a pending BUY or SELL order in the same
Security or Futures Contract, or a Related Security, until that order is
executed or withdrawn.
These prohibitions do not apply to Investment Transactions in any
Futures Contracts that are exempt from preclearance regardless of transaction
size.
GIFTS AND SERVICE AS A DIRECTOR
GIFTS
You MAY NOT accept any investment opportunity, gift, gratuity or other
thing of more than nominal value from any person or entity that does business,
or desires to do business, with PIMCO directly or on behalf of an Advisory
Client (a "Giver"). You MAY, however, accept gifts from a single Giver so long
as their aggregate annual value does not exceed $500, and you MAY attend
business meals, sporting events and other entertainment events at the expense of
a Giver (without regard to their aggregate annual value), so long as the expense
is reasonable and both you and the Giver are present.
SERVICE AS A DIRECTOR
If you are an Advisory Employee, you may not serve on the board of
directors or other governing board of a publicly traded entity, other than of a
Fund for which PIMCO is an advisor or subadvisor, unless you have received the
prior written approval of the Chief Executive Officer and the Chief Legal
Officer of PIMCO. 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 Advisory Employees who make investment decisions
with respect to the Securities of that entity, through a "Chinese Wall" or other
procedures.
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COMPLIANCE
CERTIFICATIONS
UPON RECEIPT OF THIS CODE
Upon commencement of your employment or the effective date of this Code,
whichever occurs later, you shall be required to acknowledge receipt of your
copy of this Code by completing and returning a copy of the form attached hereto
as Appendix IV. By that acknowledgment, you will also agree:
1. To read the Code, to make a reasonable effort to understand its
provisions, and to ask questions about those provisions you find
confusing or difficult to understand.
2. To comply with the Code, including its general principles, its
reporting requirements, its preclearance requirements, and its
provisions regarding gifts and service as a director.
3. To advise the members of your Immediate Family about the
existence of the Code, its applicability to their personal
trading activity, and your responsibility to assure that their
personal trading activity complies with the Code.
4. To cooperate fully with any investigation or inquiry by or on
behalf of a Compliance Officer to determine your compliance with
the provisions of the Code.
In addition, your acknowledgment will recognize that any failure to comply with
the Code and to honor the commitments made by your acknowledgment may result in
disciplinary action, including dismissal.
ANNUAL CERTIFICATE OF COMPLIANCE
You are required to certify on an annual basis, on a copy of the form
attached hereto as Appendix V, that you have complied with each provision of
your initial acknowledgment (see above). In particular, your annual
certification will require that you certify that you have read and that you
understand the Code, that you recognize you are subject to its provisions, that
you complied with the requirements of the Code during the year just ended and
that you have disclosed, reported, or caused to be reported all Investment
Transactions required to be disclosed or reported pursuant to the requirements
of the Code.
POST-TRADE MONITORING
The Compliance Officers will review the duplicate broker reports and
other information supplied to them concerning your personal Investment
Transactions so that they can detect and prevent potential violations of the
Code. The Compliance Officers will perform such investigation and make such
inquiries as they consider necessary to perform this function. You agree to
cooperate with any such investigation and to respond to any such inquiry. You
should
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expect that, as a matter of course, the Compliance Officers will make inquiries
regarding any personal Investment Transaction in a Security or Futures Contract
that occurs on the same day as a transaction in the same Security or Futures
Contract on behalf of an Advisory Client.
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 fine,
censure, demotion, suspension or dismissal. As part of any sanction, you may be
required to reverse an Investment Transaction and to forfeit any profit or to
absorb any loss from the transaction.
The Compliance Committee shall have the ultimate authority to determine
whether you have violated the Code and, if so, the remedial actions it considers
appropriate. In making its determination, the Compliance Committee shall
consider, among other factors, the gravity of your violation, the frequency of
your violations, whether any violation caused harm or the potential of harm to
any Advisory Client, your efforts to cooperate with their investigation, and
your efforts to correct any conduct that led to a violation.
REPORTS TO DIRECTORS AND TRUSTEES
REPORTS OF SIGNIFICANT REMEDIAL ACTIONS
The General Counsel of PIMCO Advisors L.P. and the directors or trustees
of any affected Fund that is an Advisory Client will be informed on a timely
basis of each SIGNIFICANT REMEDIAL ACTION taken in response to a violation of
this Code. For this purpose, a significant remedial action will include any
action that has a significant financial effect on the violator.
REPORTS OF MATERIAL CHANGES TO THE CODE
PIMCO will promptly advise the directors or trustees of any Fund that is
an Advisory Client if PIMCO makes any material change to this Code.
ANNUAL REPORTS
PIMCO's management will furnish a written report annually to the General
Counsel of PIMCO Advisors L.P. and to the directors or trustees of each Fund
that is an Advisory Client. Each report, at a minimum, will:
1. Describe any significant issues arising under the Code, or under
procedures implemented by PIMCO to prevent violations of the
Code, since management's last report, including, but not limited
to, information about material violations of the Code or those
procedures and sanctions imposed in response to material
violations; and
2. Certify that PIMCO has adopted procedures reasonably necessary
to prevent Advisory Employees from violating the Code.
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RECORDKEEPING
Beginning on the effective date of this Code, PIMCO will maintain, at
its principal place of business, the following records, which shall be available
to the Securities and Exchange Commission or any representative of the
Commission at any time and from time to time for reasonable periodic, special or
other examination:
1. PIMCO's Chief Compliance Officer shall maintain, in any easily
accessible place:
(a) a copy of PIMCO's current Code and of each predecessor
of that Code that was in effect at any time within the
previous five (5) years;
(b) a record of any violation of the Code, and of any action
taken as a result of the violation, for at least five
(5) years after the end of the fiscal year in which the
violation occurred;
(c) a copy of each report made by an Advisory Employee
pursuant to this Code, including any duplicate broker
report submitted on behalf of that Advisory Employee,
for at least two (2) years after the end of the fiscal
year in which that report was made or that information
was provided;
(d) a record of all persons, currently or within the past
five (5) years, who are or were required to make reports
pursuant to this Code or who are or were responsible for
reviewing such reports; and
(e) a copy of each report to the General Counsel of PIMCO
Advisors L.P. or to the directors or trustees of each
Fund that is an Advisory Client for at least two (2)
years after the end of the fiscal year in which that
report was made.
2. PIMCO shall also maintain the following additional records:
(a) a copy of each report made by an Advisory Employee
pursuant to this Code, including any duplicate broker
report submitted on behalf of that Advisory Employee,
for at least five (5) years after the end of the fiscal
year in which that report was made or that information
was provided;
(b) a copy of each report to the General Counsel of PIMCO
Advisors L.P. or to the directors or trustees of each
Fund that is an Advisory Client for at least five (5)
years after the end of the fiscal year in which that
report was made; and
(c) a record of any decision, and the reasons supporting the
decision, to approve the acquisition by a Portfolio
Employee of a Beneficial Ownership interest in any
Security in an Initial Public Offering or in a
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Private Placement for at least five (5) years after the
end of the fiscal year in which such approval was
granted.
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APPENDIX I
DEFINITIONS OF CAPITALIZED TERMS
The following definitions apply to the capitalized terms used in the
Code:
ADVISORY EMPLOYEE
The term "Advisory Employee" means: (1) a director, officer, general
partner or employee of PIMCO 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 or Futures Contract by PIMCO on behalf of an
Advisory Client, or whose functions relate to the making of any recommendations
with respect to such purchases or sales, or (2) or a natural person in a control
relationship to PIMCO, or an employee of any company in a control relationship
to PIMCO, who: (a) makes, participates in, or obtains information regarding the
purchase or sale of a Security by a Fund that is an Advisory Client, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales, or (b) obtains information concerning recommendations to a
Fund with regard to the purchase or sale of a Security by the Fund.
BENEFICIAL OWNERSHIP
As a GENERAL MATTER, you are considered to have a "Beneficial Ownership"
interest in a Security or a Futures Contract if you have the opportunity,
directly or indirectly, to profit or share in any profit derived from an
Investment Transaction in that Security or Futures Contract. YOU ARE PRESUMED TO
HAVE A BENEFICIAL OWNERSHIP INTEREST IN ANY SECURITY OR FUTURES CONTRACT HELD,
INDIVIDUALLY OR JOINTLY, BY YOU OR A MEMBER OF YOUR IMMEDIATE FAMILY (AS DEFINED
BELOW). In addition, unless specifically excepted by a Compliance Officer based
on a showing that your interest in a Security or Futures Contract is
sufficiently attenuated to avoid the possibility of conflict, you will be
considered to have a Beneficial Ownership interest in a Security or Futures
Contract held by: (1) a JOINT ACCOUNT to which you are a party, (2) a
PARTNERSHIP in which you are a general partner, (3) a LIMITED LIABILITY COMPANY
in which you are a manager-member, or (4) a TRUST in which you or a member of
your Immediate Family has a vested interest.
As a TECHNICAL MATTER, the term "Beneficial Ownership" for purposes
of this Code shall be interpreted in the same manner as it would be under SEC
Rule 16a-1(a)(2) (17 C.F.R. Section 240.16a-1(a)(2)) in determining whether a
person has a beneficial ownership interest in a Security for purposes of
Section 16 of the Securities Exchange Act of 1934 and the rules and
regulations thereunder.
DESIGNATED EQUITY SECURITY
The term "Designated Equity Security" shall mean any equity Security,
option, warrant or other right to an equity Security designated as such by a
Compliance Officer, after receiving notification from a Portfolio Employee that
said Security is being considered for purchase or sale by PIMCO on behalf of one
of its Advisory Clients.
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EXEMPT SECURITY
The term "Exempt Security" shall mean any Security not included within
the definition of Covered Security in SEC Rule 17j-l(a)(4) (17 C.F.R. Section
17j-1(a)(4)), including:
1. Direct obligations of the Government of the United States;
2. Shares issued by open-end Funds; and
3. Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements. For these purposes, a "high quality
short-term debt instrument" means any instrument having a
maturity at issuance of less than 366 days and that is rated in
one of the two highest rating categories by a Nationally
Recognized Statistical Rating Organization.
FIXED INCOME SECURITY
For purposes of this Code, the term "Fixed Income Security" shall mean a
fixed income Security issued by an agency or instrumentality of, or
unconditionally guaranteed by, the Government of the United States, a corporate
debt Security, a mortgage-backed or other asset-backed Security, a taxable fixed
income Security issued by a state or local government or a political subdivision
thereof, a structured note or loan participation, a foreign government debt
Security, or a debt Security of an international agency or a supranational
agency. For purposes of this Code, the term "Fixed Income Security" shall not be
interpreted to include a U.S. Government Security or any other Exempt Security
(as defined above) nor shall it be interpreted to include a Tax-Exempt Municipal
Bond (as defined below).
FUND
The term "Fund" means an investment company registered under the
Investment Company Act.
FUTURES CONTRACT
The term "Futures Contract" includes (a) a futures contract and an
option on a futures contract traded on a United States or foreign board of
trade, such as the Chicago Board of Trade, the Chicago Mercantile Exchange, the
London International Financial Futures Exchange or the New York Mercantile
Exchange (a "Publicly-Traded Futures Contract"), as well as (b) a forward
contract, a swap, a cap, a collar, a floor and an over-the-counter option (other
than an option on a foreign currency, an option on a basket of currencies, an
option on a Security or an option on an index of Securities) (a
"Privately-Traded Contract"). Consult with a Compliance Officer prior to
entering into a transaction in case of any doubt. For purposes of this
definition, a Publicly-Traded Futures Contract is defined by its expiration
month, I.E. a Publicly-Traded Futures Contract on a U.S. Treasury Bond that
expires in June is treated as a separate Publicly-Traded
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Futures Contract, when compared to a Publicly-Traded Futures Contract on a U.S.
Treasury Bond that expires in July.
IMMEDIATE FAMILY
The term "Immediate Family" means any of the following persons who
RESIDE IN YOUR HOUSEHOLD OR DEPEND ON YOU FOR BASIC LIVING SUPPORT: your spouse,
any child, stepchild, grandchild, parent, stepparent, grandparent, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including any adoptive relationships.
INITIAL PUBLIC OFFERING
The term "Initial Public Offering" means an offering of securities
registered under the Securities Act of 1933 (15 U.S.C. Section 77a), 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 (15 U.S.C. Section 78m or Section 78o(d)).
INVESTMENT TRANSACTION
For purposes of this Code, the term "Investment Transaction" means any
transaction in a Security or Futures Contract in which you have, or by reason of
the transaction will acquire, a Beneficial Ownership interest, and includes,
among other things, the writing of an option to purchase or sell a Security.
PERSONAL ACCOUNT
The term "Personal Account" means the following accounts that hold or
are likely to hold a Security (as defined below) or a Futures Contract (as
defined above) in which you have a Beneficial Ownership interest: any account in
your individual name; any joint or tenant-in-common account in which you have an
interest or are a participant; any account for which you act as trustee,
executor, or custodian; any account over which you have investment discretion or
otherwise can exercise control (other than non-related clients' accounts over
which you have investment discretion), including the accounts of entities
controlled directly or indirectly by you; and any other account in which you
have a Beneficial Ownership interest (other than such accounts over which you
have no investment discretion and cannot otherwise exercise control).
PORTFOLIO EMPLOYEE
The term "Portfolio Employee" means: (1) a portfolio manager or any
employee of PIMCO (or of any company in a control relationship with PIMCO) 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
Fund, or (2) any natural person who controls PIMCO and who obtains information
concerning recommendations made to a Fund that is an Advisory Client regarding
the purchase or sale of Securities by the Fund. For these purposes, "control"
has the same meaning as in Section 2(a)(9) of the Investment Advisers Act (15
U.S.C. Section 80a-2(a)(9)).
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PRIVATE PLACEMENT
The term "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) (15 U.S.C. Section 77d(2) or Section 7d(6)) or pursuant to SEC
Rules 504, 505 or 506 (17 C.F.R. Sections 230.504, 230.505, or 230.506) under
the Securities Act of 1933.
QUALIFIED FOREIGN GOVERNMENT
The term "Qualified Foreign Government" means a national government of a
developed foreign country with outstanding Fixed Income Securities in excess of
fifty billion dollars. A list of Qualified Foreign Governments will be prepared
as of the last business day of each calendar quarter, will be available from the
Chief Compliance Officer, and will be effective for the following calendar
quarter.
RELATED ACCOUNT
The term "Related Account" means any account, other than a Personal
Account, that holds a Security or Futures Contract in which you have a
Beneficial Ownership interest.
RELATED SECURITY
The term "Related Security" shall mean any option to purchase or sell,
and any Security convertible into or exchangeable for, a Security that is or has
been held by PIMCO on behalf of one of its Advisory Clients or any Security that
is being or has been considered for purchase by PIMCO on behalf of one of its
Advisory Clients.
SECURITY
As a GENERAL MATTER, the term "Security" shall mean any stock, note,
bond, debenture or other evidence of indebtedness (including any loan
participation or assignment), limited partnership interest or investment
contract OTHER THAN AN EXEMPT SECURITY (as defined above). The term "Security"
includes an option on a Security, on an index of Securities, on a currency or on
a basket of currencies, including such an option traded on the Chicago Board of
Options Exchange or on the New York, American, Pacific or Philadelphia Stock
Exchanges, as well as such an option traded in the over-the-counter market. The
term "Security" shall not include a Futures Contract or a physical commodity
(such as foreign exchange or a precious metal).
As a TECHNICAL MATTER, the term "Security" shall have the meaning set
forth in Section 2(a)(36) of the Investment Company Act of 1940 (15 U.S.C.
Section 80a-2(a)(36)), which defines a Security to mean:
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 of
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other
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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
instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, warrant or right to subscribe to or purchase, any of the foregoing, except
that the term "Security" shall not include any Security that is an Exempt
Security (as defined above), a Futures Contract or a physical commodity (such as
foreign exchange or precious metal).
TAX-EXEMPT MUNICIPAL BOND
The term "Tax-Exempt Municipal Bond" shall mean any Fixed Income
Security exempt from federal income tax that is issued by a state or local
government or a political subdivision thereof.
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