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CODE OF ETHICS
OF
Pacific Financial Research, Inc.
Clipper Fund, Inc.
PREAMBLE
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This Code of Ethics (the "Code") is being adopted in compliance with the
requirements of Rule 17j-1 (the "Rule") adopted by the United States Securities
and Exchange Commission under the Investment Company Act of 1940 (the "Act"),
and Sections 204A and 206 of the Investment Advisers Act of 1940 (the "Advisers
Act"), specifically Rule 204-2 thereunder, to effectuate the purposes and
objectives of those provisions. Section 204A of the Advisers Act requires the
establishment and enforcement of policies and procedures reasonably designed to
prevent the misuse of material, nonpublic information by investment advisers.
Rule 204-2 imposes record-keeping requirements with respect to personal
securities transactions of advisory representatives (defined below). Rule 17j-1
of the Act and Section 206 of the Advisers Act make the following activities
unlawful for certain persons, including any employee of Pacific Financial
Research, Inc. (the "Firm") in connection with the purchase or sale by such
person of a security held or to be acquired by any Portfolio or any Fund
managed by the Firm:
1. To employ a device, scheme or artifice to defraud a Portfolio, a Fund,
any client or prospective client;
2. To make to a Portfolio, a Fund, any client or prospective client, any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances in which
they are made, not misleading;
3. To engage in any act, practice or course of business which operates or
would operate as a fraud or deceit upon a Portfolio, a Fund, any client
or prospective client; or
4. Acting as principal for his/her own account, knowingly to sell any
security to or purchase any security from a client, or acting as a
broker for a person other than such client, knowingly to effect any
sale or purchase of any security for the account of such client,
without disclosing to such client in writing before the completion of
such transaction the capacity in which he/she is acting and obtaining
the consent of the client to such transaction. The prohibitions of this
paragraph (4) shall not apply to any transaction with a customer of a
bank broker or dealer if such broker or dealer is not acting as an
investment adviser in relation to such transaction; or
5. To engage in any act, practice, or course of business which is
fraudulent, deceptive or manipulative.
This Code contains provisions reasonably necessary to prevent persons from
engaging in acts in violation of the above standard and procedures reasonably
necessary to prevent violations of the Code.
The Board of Directors of the Firm adopts this Code. This Code is based
upon the principle that the directors and officers of the Firm, and certain
affiliated persons of the Firm, owe a fiduciary duty to, among others, the
clients of the Firm to conduct their affairs, including their personal
securities transactions, in such a manner as to avoid (i) serving their own
personal interests ahead of clients; (ii) taking inappropriate advantage of
their position with the Firm; and (iii) any actual or potential conflicts of
interest or any abuse of their position of trust and responsibility. This
fiduciary duty includes the duty of the Compliance Officer of the Firm to report
violations of this Code to the Firm's Board of Directors and to the Board of
Directors of any Fund advised or sub-advised by the Firm.
POLICY STATEMENT ON INSIDER TRADING
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The Firm forbids any officer, director or employee from trading, either
personally or on behalf of others, including accounts managed by the Firm, on
material nonpublic information or communicating material nonpublic information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." The Firm's
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policy applies to every officer, director and employee and extends to activities
within and outside their duties at the Firm. Any questions regarding the Firm's
policy and procedures should be referred to the Compliance Officer.
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material nonpublic information to
trade in securities (whether or not one is an "insider") or to communications of
material nonpublic information to others.
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 nonpublic
information, or
2) trading by a non-insider, while in possession of material nonpublic
information, where the information either was disclosed to the non-insider
in violation of an insider's duty to keep it confidential or was
misappropriated, or
3) communicating material nonpublic information to others.
The concept of "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if
he or she enters a special confidential relationship in the conduct of a
company's affairs and consequently is given access to information solely for the
company's purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the employees of
such organizations. In addition, the Firm may become a temporary insider of a
company it advises or for which it performs other services. For that to occur
the company must expect the Firm to keep the disclosed nonpublic information
confidential and the relationship must at least imply such a duty before the
Firm will be considered an insider.
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. Information that officers, directors and
employees should consider material includes, but is not limited to: dividend
changes, earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
Information is nonpublic until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, The
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Wall Street Journal or other publications of general circulation would be
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considered public.
Before trading for yourself or others in the securities of a company about
which you may have potential inside information, ask yourself the following
questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is this
information that would substantially effect the market price of the
securities if generally disclosed?
ii. Is the information nonpublic? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace?
If, after consideration of the above, you believe that the information is
material and nonpublic, or if you have questions as to whether the information
is material and nonpublic, you should take the following steps:
i. Report the matter immediately to the Firm's Compliance Officer.
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ii. Do not purchase or sell the securities on behalf of yourself or
others.
iii. Do not communicate the information inside or outside the Firm, other
than to the Firm's Compliance Officer.
iv. After the Firm's Compliance Officer has reviewed the issue, you will
be instructed to continue the prohibitions against trading and
communication, or you will be allowed to trade and communicate the
information.
Information in your possession that you identify as material and nonpublic
may not be communicated to anyone, including persons within the Firm, except as
provided above. In addition, care should be taken so that such information is
secure. For example, files containing material nonpublic information should be
sealed; access to computer files containing material nonpublic information
should be restricted.
The role of the Firm's Compliance Officer is critical to the implementation
and maintenance of the Firm's policy and procedures against insider trading.
The Firm's Supervisory Procedures can be divided into two classifications -
prevention of insider trading and detection of insider trading.
To prevent insider trading, the Firm will:
i. provide, on a regular basis, an educational program to familiarize
officers, directors and employees with the Firm's policy and procedures,
and
ii. when it has been determined that an officer, director or employee of
the Firm has material nonpublic information,
1. implement measures to prevent dissemination of such information,
and
2. if necessary, restrict officers, directors and employees
from trading the securities.
To detect insider trading, the Compliance Officer will:
i. review the trading activity reports filed by each officer, director
and employee, and
ii. review the trading activity of accounts managed by the Firm.
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A. DEFINITIONS
1. "Access person" means any director, officer, general partner, advisory
representative, or employee of the Firm. This definition does not
include the non-interested/independent directors of the Clipper Fund,
Inc.
2. "Advisory representative means any employee, who in connection with
his or her regular functions or duties, normally makes, participates
in, or otherwise obtains current information regarding the purchase or
sale of a security by the Firm, or whose functions relate to the
making of any recommendations with respect to such purchases or sales;
and any natural person in a control relationship to the Firm who
obtains information concerning recommendations made concerning a
purchase or sale of a Security. This definition includes but is not
limited to the following: partner, officer, director, "Investment
Person", "Portfolio Manager" and any other employee of the Adviser
designated as an "Advisory Representative" from time to time by the
Compliance Officer.
3. "Non-Advisory Representative" means any individual who has no contact
with information regarding the purchases or sales of Securities made
by the Firm in his or her regular functions or duties. However, such
individuals are subject to the Preamble and Policy Statement on
Insider Trading contained in this Code.
4. "Affiliated company" means a company which is an affiliated person, as
defined in the 1940 Act.
5. "Affiliated person" of another person means (a) any person directly or
indirectly owning, controlling, or holding with power to vote, five
(5%) percent or more of the outstanding voting securities of such
other person; (b) any person five (5%) percent or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote, by such other person; (c) any
person directly or indirectly controlling, controlled by, or under
common control with, such other person; (d) any officer, director,
partner, copartner, or employee of such other person; (e) if such
other person is an investment company, any investment adviser thereof
or any member of an advisory board thereof; and (f) if such other
person is an unincorporated investment company not having a board of
directors, the depositor thereof.
6. "Beneficial ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) of the Securities Exchange Act of
1934, as amended (the "1934 Act") in determining whether a person is
the beneficial owner of a security for purposes of Section 16 of the
1934 Act and the rules and regulations thereunder, that, generally
speaking, encompasses those situations where the beneficial owner has
the right to enjoy a direct or indirect economic benefit from the
ownership of the security. A person is normally regarded as the
beneficial owner of securities held in (i) the name of his or her
spouse, domestic partner, minor children, or other relatives living in
his or her household; (ii) a trust, estate or other account in which
he/she has a present or future interest in the income, principal or
right to obtain title to the securities; or (iii) the name of another
person or entity by reason of any contract, understanding,
relationship, agreement or other arrangement whereby he or she obtains
benefits substantially equivalent to those of ownership.
7. "Compliance Officer" for pre-clearance of all personal trading
transactions, including short-term trading, is the President of the
Firm or any one of the four remaining principals in his absence. The
compliance officer responsible for the development of the Firm's
supervisory procedures for the prevention and detection of insider
trading and the Firm's reporting and certification requirements is the
Operations Manager.
8. "Control" means the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
result of an official position with such company. Any person who owns
beneficially, either directly or through one or more controlled
companies, more than twenty-five (25%) percent of the voting
securities of a company shall be presumed to control
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such company. Any person who does not so own more than twenty-five
(25%) percent of the voting securities of any company shall be
presumed not to control such company. A natural person shall be
presumed not to be a controlled person.
9. "Disclosable transaction" means any transaction in a security pursuant
to which an access person would have a beneficial ownership.
10. "Firm" means the investment adviser registered with the Securities and
Exchange Commission under the Investment Advisers Act of 1940, subject
to this Code of Ethics.
11. "Fund" means any investment vehicle registered under the Investment
Company Act of 1940 for which the Firm acts as manager, adviser or
sub-adviser.
12. "Non-interested" Director means a director or trustee who is not an
interested person.
13. "Interested Person" of another person, when used with respect to a
Fund, means (i) any affiliated person of the Fund; (ii) any member of
the immediate family of any natural person who is an affiliated person
of the Fund; (iii) any interested person of any investment adviser of
or principal underwriter for the Fund; (iv) any person or partner or
employee of any person who at any time since the beginning of the last
two completed fiscal years of the Fund has acted as legal counsel for
the Fund; (v) any broker or dealer registered under the Securities
Exchange Act of 1934 or any affiliated person of such a broker or
dealer; or (vi) any natural person whom the Commission by order shall
have determined to be an interested person by reason of having had, at
any time since the beginning of the last two completed fiscal years of
the Fund, a material business or professional relationship with the
Fund or with the principal executive officer of such company or with
any other investment company having the same investment adviser or
principal underwriter or with the principal executive officer of such
other investment company, provided, that no person shall be deemed to
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be an interested person of an investment company solely by reason of
(aa) his being a member of its Board of Directors or advisory board or
an owner of its securities, or (bb) his membership in the immediate
family of any person specified in clause (aa) of this proviso.
14. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Sections 13 or 15(d) of the 1934 Act.
15. "Investment Personnel" means (a) any Portfolio Manager of the Firm;
(b) any employee of the Firm (or of any company in a control
relationship to a Fund or the Firm) who, in connection with his
regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the
Firm, including securities analysts and traders; or (c) any person who
controls a Fund or the Firm and who obtains information concerning
recommendations made to any Fund or Portfolio regarding the purchase
or sale of securities by the Fund or Portfolio.
16. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act")
pursuant to Section 4(2) or Section 4(6) or Rules 504, 505 or 506
under the Securities Act. Limited offerings are commonly referred to
as private placements.
17. "Person" means a natural person or a company.
18. "Portfolio" means any account, trust or other investment vehicle
(except "Fund") over which the Firm has investment management
discretion.
19. "Portfolio Manager" means an employee of the Firm entrusted with the
direct responsibility and authority to make investment decisions
affecting the Portfolios or Funds managed by the Firm.
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20. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a Security.
21. "Security Held or to be Acquired" means (i) any security which, within
the most recent 15 days, is or has been held by a Fund or Portfolio,
or is being or has been considered for purchase by a Fund or
Portfolio, or (ii) any option to purchase or sell and any security
convertible into or exchangeable for a Security.
22. "Security" shall have the meaning set forth in Section 202(a)(18) of
the Advisers Act and Section 2(a)(36) of the 1940 Investment Company
Act. Further, for purposes of this Code, "Security" shall include any
commodities contracts as defined in Section 2(a)(1)(A) of the
Commodity Exchange Act. This definition includes but is not limited to
futures contracts on equity indices.
"Security" shall not include direct obligations of the Government of
the United States, , bankers' acceptances, bank certificates of
deposit, high quality short-term debt instruments (maturity of less
than 366 days at issuance and rated in one of the two highest rating
categories by a Nationally Recognized Statistical Rating
Organization), including repurchase agreements, commercial paper and
shares of money market funds that limit their investments to the
exempted securities enumerated above. Also excluded from the
definition are any registered open-end investment companies (e.g.
open-end mutual funds). Any question as to whether a particular
investment constitutes a "Security" should be referred to the
Compliance Officer of the Firm.
B. PROHIBITED TRANSACTIONS
No access person or advisory representative shall engage in any act,
practice or course of conduct, which would violate the provisions of Rule 17j-1
of the Act or Section 206 of the Advisers Act as set forth above.
Note: Portfolios of the UAM Funds, Inc., UAM Funds, Inc. II and UAM Trust,
Inc. (collectively, the "UAM Portfolios") are managed by investment
advisers that are subsidiaries of or organizations otherwise affiliated
with United Asset Management Corporation (the "Management Companies").
Under the organizational structure of the Management Companies, the
entities maintain separate offices, independent operations and autonomy
when making investment decisions. In view of these circumstances, advisory
personnel of the Management Companies who are defined as "access persons"
under the 1940 Act, under normal circumstances would have no knowledge of
proposed securities transactions, pending "buy" or "sell" orders in a
security, or the execution or withdrawal of an order for any other UAM
Portfolio for which a different Management Company serves as investment
adviser. To restrict the flow of investment information related to the UAM
Portfolios, the access persons at a Management Company are prohibited from
disclosing pending "buy" or "sell" orders for a UAM Portfolio to any
employees of any other Management Company until the order is executed or
withdrawn. The Management Companies shall implement procedures designed to
achieve employee awareness of this prohibition.
1. Access Persons/Investment Personnel/Portfolio Manager
Except as provided in Section C below, no access person shall:
(a) purchase or sell, directly or indirectly, any security in
which he/she has or by reason of such transaction acquires,
any direct or indirect beneficial ownership and which to
his/her actual knowledge at the time of such purchase or
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sale:
(1) is being considered for purchase or sale by any
Portfolio or Fund managed by the Firm, or
(2) is being purchased or sold by any Portfolio or
Fund managed by the Firm; or
(b) disclose to other persons the securities activities engaged
in or contemplated for the various Portfolios or Funds
managed by the Firm.
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(c) accept any gift or other thing of more than de minimus value from
any person or entity that does business with or on behalf of the
Firm. For purposes of this Code, "de minimus" shall be considered
to be the annual receipt of gifts from the same source valued at
$500 or less per individual recipient, when the gifts are in
relation to the Firm's business.
(d) acquire a beneficial interest in any securities in an initial
public offering ("IPO") or other limited offerings commonly
referred to as private placements, without prior written approval
of the compliance officer of the Firm. The compliance officer
must maintain a record of any decision, and the reasons
supporting the decision, to approve the investment personnel's
acquisition of an IPO or private placement for at least five
years after the end of the fiscal year in which the approval was
granted.
Before granting such approval the compliance officer (or other
designee) should carefully evaluate such investment to determine
that the investment could create no material conflict between the
investment personnel and a Fund or Portfolio. The compliance
officer may make such determination by looking at, among other
things, the nature of the offering and the particular facts
surrounding the purchase. For example, the compliance officer may
consider approving the transaction if the compliance officer (or
designee) can determine that: (i) the investment did not result
from directing Fund, Portfolio or Firm business to the
underwriter or issuer of the security; (ii) the Investment
Personnel are not misappropriating an opportunity that should
have been offered to the Fund or Portfolio; and (iii) an
Investment Person's investment decisions for the Fund or
Portfolio will not be unduly influenced by his or her personal
holdings and investment decisions are based solely on the best
interests of Fund or Portfolio. Any person authorized to purchase
securities in an IPO or private placement shall disclose that
investment when they play a part in a Fund's or Portfolio's
subsequent consideration of an investment in that issuer. In such
circumstances, a Fund's or Portfolio's decision to purchase
securities of the issuer shall be subject to independent review
by investment personnel with no personal interest in the issuer.
(e) profit in the purchase and sale, or sale and purchase, of the
same (or equivalent) securities within sixty (60) calendar days.
Trades made in violation of this prohibition should be unwound,
if possible. Otherwise, any profits realized on such short-term
trades shall be subject to disgorgement to the appropriate
Portfolio(s) or Fund(s) of the Firm.
Exception: The compliance officer of the Firm may allow
exceptions to this policy on a case-by-case basis when the
abusive practices that the policy is designed to prevent, such as
front running or conflicts of interest, are not present and the
equity of the situation strongly supports an exemption. An
example is the involuntary sale of securities due to unforeseen
corporate activity such as a merger. [See Pre-Clearance
Procedures below]. The ban on short-term trading profits is
specifically designed to deter potential conflicts of interest
and front running transactions, which typically involve a quick
trading pattern to capitalize on a short-lived market impact of a
trade by one of the Funds or Portfolios. The respective
compliance officer shall consider the policy reasons for the ban
on short-term trades, as stated herein, in determining when an
exception to the prohibition is permissible. The compliance
officer may consider granting an exception to this prohibition if
the securities involved in the transaction are not (i) being
considered for purchase or sale by a Fund or Portfolio that
serves as the basis of the individual's "investment personnel"
status or (ii) being purchased or sold by a Fund or Portfolio
that serves as the basis of the individual's "investment
personnel" status and, are not economically related to such
securities. In order for a proposed transaction to be considered
for exemption from the short-term trading prohibitions, the
investment personnel must complete, sign and submit to the
compliance officer a completed Securities Transactions Report
Relating to Short-Term Trading (Exhibit D), certifying that the
proposed transaction is in compliance with this Code of Ethics.
The compliance officer shall retain a record of exceptions
granted and the reasons supporting the decision.
(f) serve on the Board of Directors of any publicly traded company
without prior authorization of the compliance officer of the
Firm. Any such authorization shall be based upon a
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determination that the board service would be consistent with the
interests of the Firm, any Portfolios or Funds. Authorization of
board service shall be subject to the implementation by the Firm
of "Chinese Wall" or other procedures to isolate such investment
personnel from making decisions about trading in that company's
securities. Notification of such directorships shall be made to
the compliance officer of the Funds.
(g) buy or sell a security within seven (7) calendar days before or
two (2) calendar days after any portfolio of the Firm trades in
that security. Any trades made within the proscribed period shall
be unwound, if possible. Otherwise, any profits realized on
trades within the proscribed period shall be disgorged to the
appropriate client portfolio.
C. EXEMPTED TRANSACTIONS
Transactions described in Sections B(1) above, which appear upon
reasonable inquiry and investigation to present no reasonable likelihood of
harm to a Fund or Portfolio and which are otherwise transacted in
accordance with the Act's Rule 17j-1 and Section 206 of the Adviser's Act
may be permitted within the discretion of the compliance officer of the
Firm on a case-by-case basis. Such exempted transactions may include:
1. purchases or sales of securities which are not eligible for
purchase by a Fund or Portfolio and which are not related
economically to securities purchased, sold or held by the Fund or
a Portfolio.
2. securities of companies with a market capitalization in excess of
$1 billion.
3. purchases or sales of a de minimus amount of securities. A de
minimus amount of securities shall be defined in this section of
the Code as:
(a) up to an aggregate $25,000 principal amount of a fixed
income security within any three-consecutive month period;
(b) up to an aggregate 100 shares of an equity security within
any three-consecutive month period; or
(c) any amount of securities if the proposed acquisition or
disposition by a Fund or Portfolio is in the amount of 1,000
shares or less and the security is listed on a national
securities exchange or the National Association of
Securities Dealers Automated Quotation System.
4. Securities which the access person, Fund and/or Portfolio has no
influence or control, including:
(a) purchases or sales effected in any account over which the
access person has no direct or indirect influence or
control;
(b) purchases or sales which are non-volitional on the part of
either the access person or the Fund and/or Portfolio;
(c) purchases which are part of an automatic dividend
reinvestment plan or direct stock plan (pending pre-
clearance of the original purchase); and
(d) securities acqu ired by the exercise of rights issued pro
rata by an issuer to all holders of a class of its
securities (to the extent such rights were acquired from
such issuer), and sales of such rights so acquired.
5. Holdings in direct obligations of the U.S. government, municipal
bonds, bankers' acceptances, bank certificates of deposit,
commercial paper, high quality short-term debt instruments and
registered open-end investment companies.
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D. COMPLIANCE PROCEDURES
With respect to the pre-clearance and reporting requirements contained
herein, access persons shall pre-clear through and report to the respective
compliance officers of the Firm:
1. Pre-clearance Procedures
All access persons must receive prior written approval from the Firm's
compliance officer, or other officer designated by the Board of Directors,
before purchasing or selling securities in an account that such access
person has beneficial ownership. The access person should request pre-
clearance by completing, signing and submitting Personal Securities
Transactions Pre-Clearance Form (Exhibit E) to the compliance officer.
Pre-clearance approval will expire at the close of business on the
trading date thirty (30) business days after the date on which
authorization is received. If the trade is not completed before such pre-
clearance expires, the access person is required to again obtain pre-
clearance for the trade. In addition, if an access person becomes aware of
any additional information with respect to a transaction that was pre-
cleared, such person is obligated to disclose such information to the
appropriate compliance officer prior to executing the pre-cleared
transaction. Exempted transactions, identified in Section C above, do not
expire once pre-clearance is approved.
Access persons are excluded from pre-clearing securities purchased,
sold or acquired in the following transactions:
(a) purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) purchases or sales which are non-volitional on the part of either
the access person or a Fund or Portfolio.
(c) purchases which are part of an automatic dividend reinvestment
plan or direct stock plan (pending pre-clearance of the original
purchase).
(d) securities acquired by the exercise of rights issued pro rata by
an issuer to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
(e) holdings in direct obligations of the U.S. government, municipal
bonds, bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments and registered open-
end investment companies are not disclosable transactions.
2. Disclosure of Personal Holdings
All access persons shall disclose to the compliance officer:
(a) all personal securities holdings (including securities acquired
before the person became an access person) within ten (10)
calendar days upon the later of commencement of employment or
adoption of this Code of Ethics; and
(b) The name of any broker, dealer or bank with whom the access
person maintains an account in which any securities were held for
the direct or indirect benefit of the access person must also be
reported.
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Holdings in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality
short-term debt instruments and registered open-end investment companies
are not disclosable transactions.
The compliance officer of the Firm requires each access person to
provide duplicate copies of confirmation of each disclosable transaction in
the accounts and account statements.
In addition to reporting securities holdings, every access person
shall certify in their initial report that:
(a) they have received, read and understand the Code of Ethics
and recognize that they are subject thereto; and
(b) they have no knowledge of the existence of any personal
conflict of interest relationship which may involve a Fund or
Portfolio, such as any economic relationship between their
transactions and securities held or to be acquired by a Fund or a
Portfolio.
This initial report shall be made on the form attached as Initial
Report of Access Person (Exhibit A) and shall be delivered to the
compliance officer of the Firm.
3. Quarterly Reporting Requirements
All access persons shall disclose to the Firm's compliance officer all
personal securities transactions conducted during the period as of the
calendar quarter ended within ten (10) calendar days after quarter end.
Transactions in direct obligations of the U.S. government, municipal bonds,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and registered open-end investment
companies are not disclosable transactions.
In addition to reporting securities holdings, every access person
shall disclose quarterly the:
(a) date of the transaction, title of the security, interest rate and
maturity date (if applicable), trade date, number of shares, and
principal amount of each security involved;
(b) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) the name of the broker, dealer or bank with or through whom the
transaction was effected; and
(d) the date the report is submitted to the compliance officer.
In addition, with respect to any account established by an access
person in which any securities were held during the quarter for the direct
or indirect benefit of the access person, the access person must provide:
(a) the name of the broker, dealer or bank with whom the access
person established the account;
(b) the date the account was established; and
(c) the date the report is submitted by the access person.
This quarterly report shall be made on the form attached as Securities
Transactions for the Calendar Quarter Ended (Exhibit C) and shall be
delivered to the compliance officer of the Firm. In lieu of manually
filling out all of the information required by the form, access persons may
attach confirms and/or account statements to a signed form.
10
<PAGE>
4. Annual Certification of Compliance with Code of Ethics
All access persons shall disclose to the compliance officer of the
Firm all personal securities holdings as of the calendar year ended within
thirty (30) calendar days after year end. Holdings in direct obligations of
the U.S. government, bankers' acceptances, bank certificates of deposit,
commercial paper, high quality short-term debt instruments and registered
open-end investment companies are not disclosable holdings.
In addition to reporting securities holdings, every access person
shall certify annually that:
(a) they have read and understand the Code and recognize that they
are subject thereto;
(b) they have complied with the requirements of the Code; and that
they have reported all personal securities transactions required
to be reported pursuant to the requirements of the Code of
Ethics;
(c) they have not disclosed pending "buy" or "sell" orders for a
Portfolio or Fund to any employees of any other Management
Company, except where the disclosure occurred subsequent to the
execution or withdrawal of an order; and
(d) they have no knowledge of the existence of any personal conflict
of interest relationship which may involve any Portfolio or Fund,
such as any economic relationship between their transactions and
securities held or to be acquired by a Fund or Portfolio.
This annual report shall be made on the form attached as Annual Report
of Access Person (Exhibit B) and shall be delivered to the compliance
officer of the Firm.
5. Reports to Compliance Officer
The compliance officer of the Firm shall provide, by the twelfth (12)
calendar day after each quarter end, certification to the compliance
officer of a Fund that, as of the prior quarter end:
(a) the compliance officer of the Firm has collected all
documentation required by the Code and Rule 17j-1 and is
retaining such documentation on behalf of the Fund;
(b) there have been no violations to the Fund's Code and, if there
have been violations to the Fund's Code, the violation has been
documented and reported to the Fund's compliance officer; and
(c) the Firm has appointed appropriate management or compliance
personnel, such as the compliance officer, to review transactions
and reports filed by access persons under the Code of Ethics, and
adopted procedures reasonably necessary to prevent Access Persons
from violating the Firm's Code of Ethics.
Each quarter the compliance officer of the Firm shall also provide to
the compliance officer of each Fund a list of access persons who are
subject to the Fund's Code and the name of the compliance officer of the
Firm responsible for pre-clearing and reviewing personal securities
transactions.
The compliance officer of the Firm shall provide such information,
including, but not limited to, initial, quarterly and annual reports for
all access persons, pre-clearance reports and approval for short term
transactions, IPO and private placement securities, as is requested by the
Fund's compliance officer.
6. General Reporting Requirements
The compliance officer of the Firm shall notify each access person
that he or she is subject to this Code and the reporting requirements
contained herein, and shall deliver a copy of this Code to each such person
when they become an access person, or upon request.
Reports submitted pursuant to this Code shall be confidential and
shall be provided only to the officers and Directors of the Firm and each
Fund, counsel and/or regulatory authorities upon appropriate request.
11
<PAGE>
7. Excessive Trading
The Firm understands that it is appropriate for access persons to
participate in the public securities markets as part of their overall
personal investment programs. As in other areas, however, this should be
done in a way that creates no potential conflicts with the interests of any
Fund or Portfolio. Further, it is important to recognize that otherwise
appropriate trading, if excessive (measured in terms of frequency,
complexity of trading programs, numbers of trades or other measure as
deemed appropriate by the Fund's compliance officer, compliance officer of
the Firm, or senior management at the Firm), may compromise the best
interests of any Funds or Portfolios if such excessive trading is conducted
during work-time or using Fund/Portfolio resources. Accordingly, if
personal trading rising to such dimension as to create an environment that
is not consistent with the Code, such personal transactions may not be
approved or may be limited by the compliance officer of the Firm.
8. Conflict of Interest
Every access person, shall notify the compliance officer of the Firm
of any personal conflict of interest relationship which may involve a Fund
or Portfolio, such as the existence of any economic relationship between
their transactions and securities held or to be acquired by any Portfolio
or Fund. The Firm's compliance officer shall notify the compliance officer
of a Fund of any personal conflict of interest relationship which may
involve the Fund. Such notification shall occur in the pre-clearance
process.
E. REPORTING OF VIOLATIONS TO THE BOARD OF DIRECTORS
The compliance officer of the Firm shall promptly report to the compliance
officer of the Fund and the Board of Directors of the Firm all apparent
violations of this Code and the reporting requirements thereunder.
When the compliance officer of the Firm finds that a transaction otherwise
reportable to the Board of Directors pursuant to the Code could not reasonably
be found to have resulted in a fraud, deceit or manipulative practice in
violation of Rule 17j-1(a) of the Act, he/she may, in his/her discretion, lodge
a written memorandum of such finding and the reasons therefor with the reports
made pursuant to this Code, in lieu of reporting the transaction to the Board of
Directors. Such findings shall, however, be reported to the compliance officer
of any respective Funds.
The Board of Directors of the Firm or any Fund, or a Committee of Directors
created by such Board of Directors for that purpose, shall consider reports made
to the Board of Directors hereunder and shall determine whether or not this Code
has been violated and what sanctions, if any, should be imposed.
F. ANNUAL REPORTING TO THE BOARD OF DIRECTORS
The compliance officer of the Firm shall prepare an annual report relating
to this Code to the Board of Directors of the Firm and the Funds. Such annual
report shall:
(a) summarize existing procedures concerning personal investing and any
changes in the procedures made during the past year;
(b) identify any violations requiring significant remedial action during
the past year; and
(c) identify any recommended changes in the existing restrictions or
procedures based upon the Firm's experience under its Code, evolving
industry practices or developments in applicable laws or regulations;
and
(d) state that the Firm had adopted procedures reasonably necessary to
prevent access persons from violating the Code.
12
<PAGE>
G. SANCTIONS
Upon discovering a violation of this Code, the Board of Directors of the
Firm or a Fund may impose such sanctions as they deem appropriate, including,
among other things, a letter of censure or suspension or termination of the
employment of the violator.
H. RETENTION OF RECORDS
The Firm shall maintain the following records as required under Rule 17j-1:
(a) a copy of any Code of in effect within the most recent five years;
(b) a list of all persons required to make reports hereunder within the
most recent five years and a list of all persons who were responsible
for reviewing the reports, as shall be updated by the compliance
officer of the Firm;
(c) a copy of each report made by an access person hereunder and submitted
to the Firm's compliance officer for a period of five years from the
end of the fiscal year in which it was made;
(d) each memorandum made by the compliance officer of the Firm hereunder,
for a period of five years from the end of the fiscal year in which it
was made;
(e) a record of any violation hereof and any action taken as a result of
such violation, for a period of five years following the end of the
fiscal year in which the violation occurred; and
(f) a copy of every report provided to the Firm's Board of Directors or a
Fund's compliance officer which describes any issues arising under the
Code and certifies that the Firm has adopted procedures reasonably
necessary to prevent access persons from violating the Code.
Approved by Management: June 8, 2000.
13
<PAGE>
EXHIBIT A
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
INITIAL REPORT OF ACCESS PERSON
1. I hereby acknowledge that (i) I received of a copy of the Code of Ethics
(the "Code") for Pacific Financial Research, Inc. (the "Firm"); (ii) I have
read and understand the Code; (iii) and I recognize that I am subject to the
Code as an "access person" of the Firm.
2. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may
involve the Firm or a Fund or Portfolio, such as any economic relationship
between my transactions and securities held or to be acquired by the Firm or
a Fund or Portfolio.
3. As of the date below I had a direct or indirect beneficial ownership in the
following securities. You do not need to report transactions in direct
obligations of the U.S. government, bankers' acceptances, bank certificates
of deposit, commercial paper, high quality short-term debt instruments and
registered open-end investment companies (mutual funds). Please check
this box if an addendum is attached listing additional securities [_]
<TABLE>
<CAPTION>
=========================================================================================================
SECURITY NO. OF PRICE PRINCIPAL TYPE OF BROKER, DEALER OR BANK
(include interest SHARES PER SHARE AMOUNT PURCHASE THROUGH WHOM EFFECTED
rate and maturity (Direct or
date, if applicable) Indirect)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
=========================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
4. As of the date below I maintain accounts with the brokers, dealers or banks
listed below to hold securities for my direct or indirect benefit.
Please check this box if an addendum is attached listing additional accounts
[_]
<TABLE>
<CAPTION>
=====================================================================================================
BROKER, DEALER OR BENEFICIAL OWNER OF ACCOUNT NUMBER DATE ACCOUNT
BANK THROUGH WHOM ACCOUNT OPENED
EFFECTED
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
=====================================================================================================
</TABLE>
<TABLE>
<S> <C>
Signature: _____________________________ Signature: ______________________________
Access Person Compliance Officer
Name: _____________________________ Name: Michael Kromm
------------------------------
Date: _____________________________ Date: ______________________________
(First date of access person status)
</TABLE>
14
<PAGE>
EXHIBIT B
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
ANNUAL REPORT OF ACCESS PERSONS
1. I hereby acknowledge that I have read and understand the Code of Ethics
(the "Code") for Pacific Financial Research, Inc. (the "Code") and
recognize that I am subject thereto in the capacity of an access person of
the Firm.
2. I hereby certify that, during the year ended December 31, 200__, I have
complied with the requirements of the Code and I have reported all
securities transactions required to be reported pursuant to the Code.
3. I hereby certify that I have not disclosed pending "buy" or "sell" orders
for a Portfolio or a Fund to any employees of any other Management Company,
except where the disclosure occurred subsequent to the execution or
withdrawal of an order.
4. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may
involve a Fund or a Portfolio, such as any economic relationship between my
transactions and securities held or to be acquired by a Fund or a
Portfolio.
5. As of December 31, 200__, I had a direct or indirect beneficial ownership
in the securities listed below. You do not need to report transactions in
direct obligations of the U.S. government, bankers' acceptances, bank
certificates of deposit, commercial paper, high quality short-term debt
instruments and registered open-end investment companies (mutual funds).
Please check this box if an addendum is attached listing additional
securities [_]
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
SECURITY
(include interest rate and NO. OF PRICE PER PRINCIPAL TYPE OF PURCHASE BROKER, DEALER OR BANK
maturity date, if applicable) SHARES SHARE AMOUNT (Direct or Indirect) THROUGH WHOM EFFECTED
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
6. As of the date below I maintain accounts with the brokers, dealers or banks
listed below to hold securities for my direct or indirect benefit. Please
check this box if an addendum is attached listing additional accounts [_]
<TABLE>
<CAPTION>
=====================================================================================================
BROKER, DEALER OR BENEFICIAL OWNER OF ACCOUNT NUMBER DATE ACCOUNT
BANK THROUGH WHOM ACCOUNT OPENED
EFFECTED
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
=====================================================================================================
</TABLE>
<TABLE>
<S> <C>
Signature: ________________________ Signature: ______________________
Access Person Compliance Officer
Name: ________________________ Name: Michael Kromm
----------------------
Date: ________________________ Date: ______________________
(No later than 30 calendar days after
year-end)
</TABLE>
15
<PAGE>
EXHIBIT B
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
ADDENDUM TO THE
ANNUAL REPORT OF ACCESS PERSON
<TABLE>
<CAPTION>
===========================================================================================================================
SECURITY
(include interest rate and NO. OF PRICE PER PRINCIPAL TYPE OF PURCHASE BROKER, DEALER OR BANK
maturity date, if applicable) SHARES SHARE AMOUNT (Direct or Indirect) THROUGH WHOM EFFECTED
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
<TABLE>
<CAPTION>
========================================================================================================
BROKER, DEALER OR BENEFICIAL OWNER OF ACCOUNT NUMBER DATE ACCOUNT OPENED
BANK THROUGH WHOM ACCOUNT
EFFECTED
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
========================================================================================================
</TABLE>
<TABLE>
<S> <C>
Signature: _____________________________ Signature: _____________________________
Access Person Compliance Officer
Name: _____________________________ Name: Michael Kromm
-----------------------------
Date: _____________________________ Date: _____________________________
(No later than 30 calendar days after year-end)
</TABLE>
16
<PAGE>
EXHIBIT C
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
SECURITIES TRANSACTIONS REPORT FOR THE CALENDAR QUARTER ENDED:_________
1. During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are required
to be reported pursuant to the Code of Ethics. (if none were transacted,
write "none"). You do not need to report transactions in direct obligations
of the U.S. government, bankers' acceptances, bank certificates of deposit,
commercial paper, high quality short-term debt instruments and registered
open-end investment companies (mutual funds). Please check this box if an
addendum is attached listing additional securities [_]
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
SECURITY DATE OF NO. OF PRICE PER PRINCIPAL NATURE OF BROKER, DEALER OR BANK
(include interest TRADE SHARES SHARE AMOUNT TRANSACTION THROUGH WHOM EFFECTED
rate and (Purchase, Sale,
maturity date, Other)
if applicable)
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
2. During the quarter referred to above, I established on the dates indicated
the following accounts in which securities were held during the quarter for
my direct or indirect benefit (if none were opened, write "none"). Please
check this box if an addendum is attached listing additional accounts [_]
<TABLE>
<CAPTION>
=============================================================================================================
BROKER, DEALER OR BANK THROUGH BENEFICIAL OWNER ACCOUNT NUMBER DATE ACCOUNT OPENED
WHOM EFFECTED OF ACCOUNT
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
=============================================================================================================
</TABLE>
3. Except as noted on the reverse side of this report, I hereby certify that I
have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Firm, a Fund or a Portfolio, such as the
existence of any economic relationship between my transactions and
securities held or to be acquired by the Firm, a Fund or a Portfolio.
<TABLE>
<S> <C>
Signature: _____________________________ Signature: _____________________________________
Access Person Compliance Officer
Name: _____________________________ Name: Michael Kromm
-------------------------------------
Date: _____________________________ Date: _____________________________________
(no later than 10 calendar days after calendar
quarter-end)
</TABLE>
17
<PAGE>
EXHIBIT C
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
ADDENDUM TO THE SECURITIES TRANSACTIONS REPORT FOR THE CALENDAR QUARTER
ENDED:_________
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
SECURITY DATE OF TRADE NO. OF PRICE PRINCIPAL NATURE OF BROKER, DEALER OR
(include interest SHARES PER SHARE AMOUNT TRANSACTION BANK THROUGH WHOM
rate and maturity (Purchase, EFFECTED
date, if Sale, Other)
applicable)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
<TABLE>
<CAPTION>
==========================================================================================================
BROKER, DEALER OR BENEFICIAL OWNER OF ACCOUNT NUMBER DATE ACCOUNT OPENED
BANK THROUGH WHOM ACCOUNT
EFFECTED
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
==========================================================================================================
</TABLE>
<TABLE>
<S> <C>
Signature: _____________________________ Signature: _____________________________________
Access Person Compliance Officer
Name: _____________________________ Name: Michael Kromm
-------------------------------------
Date: _____________________________ Date: _____________________________________
(no later than 10 calendar days after calendar
quarter-end)
</TABLE>
18
<PAGE>
EXHIBIT D
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
SECURITIES TRANSACTIONS REPORT RELATING TO SHORT-TERM TRADING OF ACCESS
PERSONNEL FOR THE SIXTY-DAY PERIOD FROM _________ TO ________:
During the sixty (60) calendar day period referred to above, the following
purchases and sales, or sales and purchases, of the same (or equivalent)
securities were effected or are proposed to be effected in securities of which I
have, or by reason of such transaction acquired, direct or indirect beneficial
ownership. You do not need to report transactions in direct obligations of the
U.S. government, bankers' acceptances, bank certificates of deposit, commercial
paper, high quality short-term debt instruments and registered open-end
investment companies (mutual funds).
<TABLE>
<CAPTION>
============================================================================================================
SECURITY PROPOSED DATE NO. OF PRICE PER PRINCIPAL NATURE OF BROKER/DEALER
OF SHARES SHARE AMOUNT TRANSACTION OR BANK THROUGH
TRADE (or (Purchase, Sale, WHOM EFFECTED
proposed Other)
price)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
============================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
With respect to the Portfolio or Fund that serves as the basis for my
"investment personnel" status with the Firm, and transactions in the securities
set forth in the table above, I hereby certify that:
(a) I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Portfolio or Fund, such as front-running
transactions or the existence of any economic relationship between my
transactions and securities held or to be acquired by the Portfolio and/or
Fund;
(b) such securities, including securities that are economically related to such
securities, involved in the transaction are not (i) being considered for
purchase or sale by the Portfolio and/or Fund, or (ii) being purchased or
sold by the Portfolio and/or Fund; and
(c) such transactions are in compliance with the Code of Ethics of the Firm.
Date: __________ Signature: ___________________________
Investment Personnel
Name: ___________________________
In accordance with the provisions of Section B(2)(c) of the Code of Ethics of
the Firm, the transaction proposed to be effected as set forth in this report
is: Authorized: [_] Unauthorized: [_]
Date: __________ Signature: ___________________________
Compliance Officer
Name: James H. Gipson
---------------------------
19
<PAGE>
EXHIBIT E
Pacific Financial Research, Inc.
Clipper Fund, Inc.
CODE OF ETHICS
Personal Securities Transactions Pre-clearance Form
(see Section D(1), Code of Ethics)
I hereby request pre-clearance of the securities listed below. You do not need
to pre-clear transactions in direct obligations of the U.S. government, bankers'
acceptances, bank certificates of deposit, commercial paper, high quality short-
term debt instruments and registered open-end investment companies (mutual
funds), or transactions listed in Section D of the Code of Ethics.
<TABLE>
<CAPTION>
===================================================================================================================
BROKER/ AUTHORIZED
SECURITY NO. OF PRICE PER PRINCIPAL NATURE OF DEALER BY
(include SHARES SHARE AMOUNT TRANSACTION OR BANK THROUGH COMPLIANCE OFFICER
interest rate (or proposed (Purchase, WHOM EFFECTED
and maturity price) Sale,
date, if Other)
applicable) YES NO
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
===================================================================================================================
</TABLE>
This report (i) excludes transactions with respect to which I had no direct or
indirect influence or control; and (ii) is not an admission that I have or had
any direct or indirect beneficial ownership in the securities listed above.
Is any proposed transaction described above within sixty (60) days of a prior
transaction in the same or equivalent security?
Yes: [_] No: [_]
If yes, the access person must submit a Securities Transactions Report Relating
to Short Term Trading (Exhibit D) for pre-approval.
Is any proposed transaction described above considered an Initial Public
Offering (IPO) or Private Placement?
Yes: [_] No: [_]
If yes, the Compliance Officer should prepare a memorandum describing the
reasons for pre-approving the transaction pursuant to Section B(2)(b) of the
Code.
Is any proposed transaction described above an exempt transaction under this
code?
Yes: [_] No: [_]
If yes, the access person must identify the kind of exempt transaction it is by
circling or otherwise high-lighting one or more of the exempt transaction
categories listed on the reverse side of this form.
<TABLE>
<S> <C>
Signature: ________________________ Signature: _______________________________
Access Person Compliance Officer
Name: ________________________ Name: James H. Gipson
-------------------------------
Date: ________________________* Date: _______________________________
</TABLE>
* This pre-clearance will expire at the close of business on the thirtieth
(30th) trading day after pre-clearance was approved, except for exempted
transactions whose pre-clearance does not expire. The access person is
required to obtain additional pre-clearance if the trade is not completed
before the authority expires.
20
<PAGE>
EXHIBIT E
EXEMPTED TRANSACTIONS
Transactions described in Sections B(1), B(2)(c) and B(3) above, which
appear upon reasonable inquiry and investigation to present no reasonable
likelihood of harm to a Fund or Portfolio and which are otherwise transacted in
accordance with the Act's Rule 17j-1 and Section 206 of the Adviser's Act may be
permitted within the discretion of the compliance officer of the Firm on a case-
by-case basis. Such exempted transactions may include:
. purchases or sales of securities which are not eligible for purchase by a
Fund or Portfolio and which are not related economically to securities
purchased, sold or held by the Fund or a Portfolio.
. securities of companies with a market capitalization in excess of $1
billion.
. purchases or sales of a de minimus amount of securities. A de minimus
amount of securities shall be defined in this section of the Code of Ethics
as:
. up to an aggregate $25,000 principal amount of a fixed income security
within any three-consecutive month period;
. up to an aggregate 100 shares of an equity security within any three-
consecutive month period; or
. any amount of securities if the proposed acquisition or disposition by
a Fund or Portfolio is in the amount of 1,000 shares or less and the
security is listed on a national securities exchange or the National
Association of Securities Dealers Automated Quotation System.
. Securities which the access person, Fund and/or Portfolio has no influence
or control, including:
. purchases or sales effected in any account over which the access
person has no direct or indirect influence or control;
. purchases or sales which are non-volitional on the part of either the
access person or the Fund and/or Portfolio;
. purchases which are part of an automatic dividend reinvestment plan or
direct stock plan (pending pre-clearance of the original purchase);
and
. securities acquired by the exercise of rights issued pro rata by an
issuer to all holders of a class of its securities (to the extent such
rights were acquired from such issuer), and sales of such rights so
acquired.
. Holdings in direct obligations of the U.S. government, municipal bonds,
bankers' acceptances, bank certificates of deposit, commercial paper, high
quality short-term debt instruments and registered open-end investment
companies.
21
