CALIFORNIA INVESTMENT TRUST AND CODE OF ETHICS (Revised March 2009)
AND
CCM
PARTNERS
________________________________
CODE OF
ETHICS
(Revised
March 2009)
________________________________
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I.
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Legal
Requirement
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Rule
17j-1 under the Investment Company Act of 1940, as amended (the “1940 Act”),
requires every investment company (as well as its investment advisor and
principal underwriter) to have a written Code of Ethics, which specifically
deals with “xxxxxxx xxxxxxx” by “access persons.” Access Persons are
defined to include officers of California Investment Trust, a Delaware statutory
trust (the “Trust”), directors and officers of CCM Partners (the “Adviser”),
advisory personnel of the Adviser with substantial responsibility or with
knowledge of the investments of the Funds constituting series of the Trust
(each, a “Fund”), and each member of the Board of Trustees. The Rule
also requires that reasonable diligence be used and procedures instituted to
prevent violations of this Code of Ethics.
The Code
of Ethics is designed to provide a program for detecting and preventing xxxxxxx
xxxxxxx and other violations of fiduciary duties by requiring Access Persons to
report personal holdings and securities transactions of securities of the types,
which the Funds may purchase. The reason underlying this reporting
requirement is the potential for insiders who have knowledge of what a Fund is
doing to take advantage of this information to trade in advance of a
Fund. If the security involved is thinly traded or if the Fund buys
or sells in big enough blocks to move the market, this type of xxxxxxx xxxxxxx
could disadvantage the Fund or unfairly benefit the insider. The Code
of Ethics is also aimed at minimizing conflicts of interest and the appearance
of such conflicts.
Under the
Code of Ethics, all Access Persons, except Independent
Trustees (who meet the exemptions in Sections VII), are required to
file reports of their personal holdings and securities transactions (excluding
securities issued or guaranteed by the United States Government, its agencies or
instrumentalities; bankers’ acceptances; bank certificates of deposit;
commercial paper and high quality short-term debt instruments, repurchase
agreements, other money market instruments, and non-Reportable Funds) at least
quarterly within 30 days after the close of the applicable
quarter. These reports are then compared against the activities of
the Funds and if a pattern emerges that indicates abusive trading of Access
Persons of the Trust, the matter is referred to the Board of Trustees who will
review the pattern and makes appropriate inquiries and decides what action, if
any, is then necessary and for Access Persons of the Advisor, the Advisor will
review the matter and make a report to the
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Board of
Trustees upon the resolution of the matter. Additionally, Access
Persons are required to obtain prior written approval before making any
investment in an Initial Public Offering (“IPO”) or private placement
offering. Before approval of any such investment, the transaction
will be carefully reviewed for any immediate or future potential conflicts of
interest.
Independent
Trustees who do not have day-to-day contact with the Funds and who do not have
specific knowledge of the Funds’ intended investments are not required to file
any reports, and there is no restriction on their personal securities trading
activities (excepted as provided for in Section VII).
This Code
of Ethics is not intended to cover all possible areas of potential liability
under the 1940 Act or under the federal securities laws in
general. For example, other provisions of Section 17 of the 1940 Act
prohibit various transactions between a registered investment company and
affiliated persons, including the knowing sale or purchase of property to or
from a registered investment company on a principal basis, and joint
transactions (e.g., combining to
achieve a substantial position in a security or commingling of funds) between an
investment company and an affiliated person. Persons covered by this
Code of Ethics are advised to seek advice before engaging in any transactions
involving securities held or under consideration for purchase or sale by a Fund
of the Trust.
In
addition, the Securities Exchange Act of 1934 may impose fiduciary obligations
and trading restrictions on Access Persons in certain situations. It
is expected that Access Persons will be sensitive to these areas of potential
conflict, even though this Code of Ethics does not address specifically these
other areas of fiduciary responsibility.
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II.
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Implementation
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In order
to implement this Code of Ethics, a compliance officer and two alternates should
be designated. These individuals are:
Xxxxxx
Xxxxx, Compliance Officer
Xxxxx Xxxxxx, Alternate
Xxxxxx Xxx, Alternate
The
compliance officer shall create a list of advisory persons and other Access
Persons and update the list with reasonable frequency. The compliance
officer shall circulate a copy of this Code of Ethics to each Access Person,
together with an acknowledgment of receipt, which shall be signedand returned to
the compliance officer by each Access Person, except Independent
Trustees. The compliance officer is charged with responsibility for
insuring that the reporting requirements of this Code of Ethics (see Section VI)
are adhered to by all Access Persons. The compliance officer shall be
responsible for ensuring that the review requirements of this Code of Ethics
(see Section VIII) are performed in a prompt manner. The compliance
officer shall also
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be
responsible for giving special prior approval to transactions that would
otherwise be prohibited pursuant to Section IV of this Code of
Ethics.
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III.
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Definitions
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(a)
“Access person” means any trustee, director or general partner, officer or
advisory person of a Fund or Trust or the Adviser. Spouses, children
and “immediate family members” sharing the household of such persons may also be
considered an “Access Person” under this Code to the extent provided in the
definition of “Beneficial ownership” below.
(b) “Advisory
person” means (i) any employee of (A) a Trust, (B) an investment advisor to a
Trust or (C) any company in control relationship to a Trust, who, in connection
with his regular functions or duties, makes, participates in, or obtains
information regarding, the purchase or sale of a security by a Fund of the
Trust, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (ii) any natural person in a control
relationship to a Trust or an investment adviser to a Trust who obtains
information concerning recommendations made to a Trust with regard to the
purchase or sale of a security.
(c) A
security is “being considered for purchase or sale” when a recommendation to
purchase or sell a security has been made and communicated and, with respect to
the person making the recommendation, when such person seriously considers
making such a recommendation.
(d) “Beneficial
ownership” shall be interpreted in the same manner as it would be in determining
whether a person is subject to the provisions of Section 16 of the Securities
Exchange Act of 1934, as amended (the “1934 Act”), and the rules and regulations
thereunder, with the exception that the determination of direct or indirect
beneficial ownership shall apply to all securities which an Access Person has or
acquires. The rules promulgated under Section 16 of the 1934 Act
provide that persons are presumed to have an indirect pecuniary interest, and
therefore “Beneficial ownership” of, securities that are held by members of a
person’s “immediate family” sharing the same household, and that “immediate
family” includes any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, and includes adoptive
relationships.
(e) “Control”
has the same meaning as in Section 2(a) (9) of the 1940 Act.
(f) A
Security “Held or to be Acquired” by any Fund means (i) any Security which,
within the most recent 15 days from the date of determination (A) is or has been
held by any Fund; or (B) is being or has been considered by any Fund or its
investment adviser for purchase by the Fund; and (ii) any option to purchase or
sell,
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and any
security convertible into or exchangeable for, a Security in sub-clause (i) of
this definition.
(g) “Investment
Personnel” of a Trust or of the Adviser means (i) any employee of a Trust or the
Adviser (or of any company in a control relationship to the Trust or the
Adviser) who, in connection with his or her regular functions or duties, makes
or participates in making recommendations regarding the purchase or sale of
securities by a Fund; or (ii) any natural person who controls the Trust or the
Adviser and who obtains information concerning recommendations made to a Fund
regarding the purchase or sale of securities by a Fund.
(h) “Purchase
or sale of a security” includes the writing of an option to purchase or sell a
security.
(i) “Reportable
Fund” means, for a particular Access Person, any mutual fund for which the
investment adviser with whom the Access Person is associated, if any (the
“Associated Adviser”), serves as investment adviser (including any sub-adviser)
or any mutual fund whose investment adviser or principal underwriter controls
the Associated Adviser, is controlled by the Associated Adviser, or is under
common control with the Associated Adviser.
(j) “Security”
shall have the meaning set forth in Section 2(a) (36) of the 1940 Act, except
that it shall not include shares of mutual funds that are not Reportable Funds,
securities issued by the Government of the United States (including Government
agencies or instrumentalities), short term debt securities which are “government
securities” within the meaning of Section 2(a) (16) of the 1940 Act, bankers’
acceptances, bank certificates of deposit, commercial paper and high quality
short-term debt instruments, repurchase agreements and other money market
instruments.
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IV.
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Prohibited Purchases
and Sales
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No Access
Person (except for any independent Trustees, who are presumed to have no actual
knowledge of the following matters described in sub-clauses (a) and (b) below)
shall purchase or sell directly or indirectly, any Security in which he or she
has, or by reason of such transactions acquires, any direct or indirect
beneficial ownership, which Security to his or her actual knowledge at the time
of such purchase or sale:
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(a)
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is
being considered for purchase or sale by a Reportable Fund (Index Funds
excepted, where an “Index Fund” is a Fund which seeks to match the
performance of an Index);
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(b)
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has
been purchased or sold by a Reportable Fund within the most recent 7 days
if such person participated in the recommendation to, or the decision by,
the Reportable Fund to purchase or sell such security (Index Funds
transactions excepted).
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These
restrictions shall continue to apply until the recommendation has been rejected
or any trade instruction to buy or sell has been completed or
canceled. Knowledge of any such consideration, intention,
recommendation or purchase or sale is always a matter of strictest
confidence.
Investment
Personnel must obtain prior written approval from the Adviser’s compliance
officer before making an investment in an IPO or private placement.
Exceptions. These
restrictions and the requirement for prior approval shall not apply to purchases
or sales which receive the prior approval of the compliance officer because they
are only remotely potentially harmful to a Fund, or because they would be very
unlikely to affect a highly institutional market, or because they clearly are
not related economically to the securities to be purchased, sold or held by a
Fund.
General Anti-Fraud
Obligation. It is unlawful and prohibited for any affiliated
person of a Fund, or any affiliated person of the investment adviser for the
fund, in connection with the purchase or sale, directly or indirectly, by the
person of a Security Held or to be acquired by a Fund:
A. To employ
any device, scheme or artifice to defraud any Fund;
B. To make
any untrue statement of a material fact to the any Fund or omit to state a
material fact necessary in order to make the statements made to any Fund, in
light of the circumstances under which they are made, not
misleading;
C. To engage
in any act, practice or course of business that operates or would operate as a
fraud or deceit on any Fund; or
X. Xx engage
in any manipulative practice with respect to any Fund.
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V.
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Exempted
Transactions/Securities
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The
prohibitions of Section IV of this Code (except for the General Anti-Fraud
Obligations, to which there no exceptions applies) shall not apply
to:
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(a)
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Purchases
or sales effected in any account over which the Access Person has no
direct or indirect influence or
control.
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(b)
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Purchases
or sales, which fall below either 1,000 shares or $50,000, whichever is
greater (except IPOs and private
placements).
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(c)
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Purchases
or sales of securities, which are not eligible for purchase, or sale by
any Fund (except IPOs and private
placements).
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(d)
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Purchases
or sales, which are non-volitional on the part of either the Access Person
or a Trust (except IPOs and private placements) (e.g., receipt
of gifts).
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(e)
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Purchases,
which are part of an automatic dividend reinvestment,
plan.
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(f)
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Purchases
effected upon the exercise of rights issued by an issuer pro rata to all
holders of a class of its securities, to the extent such rights were
acquired from such issuer, and sales of such rights so
acquired.
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(g)
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Purchases
and sales, which have received the prior approval of the compliance
officer.
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(h)
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Purchases
and sales or securities, which are not, included in the definition of
“Security” in Part III.g – i.e.,
non-Reportable Fund shares, government securities and money market
instruments.
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(i)
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Purchases
and sales of securities, which are in an Index
Fund.
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VI.
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Reporting
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(a) Subject
to the exceptions set forth below, all Access Persons, with the exception of the
Independent Trustees who meet the requirements of Section VII(a), shall report
to the Trust or the Adviser the information described in this Section VI(b) with
respect to transactions in any security in which such Access Person has, or by
reason of such transaction acquires, any direct or indirect beneficial ownership
in the security.
(b) Every
report shall be made not later than thirty (30) days after the end of each
calendar quarter and shall contain the following information:
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(1)
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The
date of the transaction, the title and the number of shares, the interest
rate and maturity date (if applicable), and the principal amount of each
security involved;
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(2)
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The
nature of the transaction (i.e., purchase,
sale, or any other type of acquisition of
disposition);
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(3)
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The
price at which the transaction was
effected;
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(4)
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The
name of the broker, dealer, or bank with or through whom the transaction
was effected; and
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(5)
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The
date that the report is being
submitted.
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(c) For
periods in which no reportable transactions were effected, the report shall
contain a representation that no transactions subject to the reporting
requirements were effected during the relevant time period.
(d) Any
such report may contain a statement that the report shall not be construed as an
admission by the person making such report that he has any director indirect
beneficial ownership in the security to which the report relates.
(e) Copies
of statements or confirmations containing the information specified in paragraph
(b) above may be submitted in lieu of listing the transactions.
(f) Each
Access Person (with the exception of the Independent Trustees) must make an
Initial Holdings Report within 10 days of becoming an Access Person and an
Annual Holdings Report, which must contain information, current within 30 days
before the report is submitted. Each of these reports must contain
the following information:
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(1)
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the
title, number of shares and principal amount of each security in which the
Access Person had any direct or indirect beneficial
ownership;
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(2)
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the
name of any broker, dealer or bank with whom the Access Person maintained
an account where such security was held;
and
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(3)
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the
date that the report is being
submitted.
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VII.
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Exceptions to
Reporting Requirements
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(a) An
independent Trustee, i.e., a Trustee of a
Trust who is not an “interested person” (as defined in Section 2(a) (19) of the
1940 Act) of a Trust, is not required to file
a report on a transaction in a security; provided, however, that such
Trustee neither knew nor, in the ordinary course of fulfilling his or her
official duties as a trustee of a Trust, should have known that, during the
15-day period immediately preceding or after the date of the transaction by the
Trustee, such security is or was purchased or sold by a Trust or is or was being
considered for purchase by its investment adviser.
(b) An
independent Trustee is not required to
furnish the Initial Holdings Report or the Annual Holdings Report specified in
Section VI(f).
(c) Access
Persons also need not make a report with respect to an exempted transaction
security as described in Section V of this Code (e.g., non-Reportable
Fund shares).
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VIII.
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Review
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The
compliance officer (or the alternate, as appropriate) shall compare all reports
of personal securities transactions with completed and contemplated portfolio
transactions of each Fund to determine whether a violation of the Code of Ethics
may have occurred (except the Exempted Transactions/Securities described in
Section V). No person shall review his or her own
report. Before making any determination that a violation has been
committed by any person, the compliance officer shall give such person an
opportunity to supply additional explanatory material. If a
securities transaction of the compliance officer is under consideration, the
Chairman shall act in all respects in the manner prescribed herein for the
compliance officer.
If the
compliance officer determines that a violation of the Code of Ethics has or may
have occurred, he or she shall, following consultation with counsel to the
Trust, submit his or her written determination, together with the transaction
report, if any, and any additional explanatory material provided by the
individual, to the President or, if the President shall be the compliance
officer, the Treasurer, who shall make an independent determination of whether a
violation has occurred.
The
compliance officer shall be responsible for maintaining a current list of all
Access Persons (including all Trustees) and for identifying all reporting Access
Persons on such list, and shall take steps to ensure that all reporting Access
Persons, except
Independent Trustees, have submitted reports in a timely
manner. Failure to submit timely reports will be communicated to the
Board of Trustees.
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IX.
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Board
Oversight
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The Board
of Trustees must initially approve the Code of Ethics for the Trust and the
Adviser, and the Board of Trustees must approve any material changes to the Code
of Ethics within six (6) months of such change. The compliance
officer shall (i) promptly notify the Board of any material violation of the
Code; (ii) provide to the Board a written report summarizing any and all
material issues that arose during the previous year, and (iii) annually certify
that the Adviser has adopted procedures in compliance with the Code of Ethics
and Rule 17j-1 under the 1940 Act.
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X.
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Sanctions
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If a
material violation of this Code occurs or a preliminary determination is made
that a violation may have occurred, a report of the alleged violation shall be
made to the Board of Trustees. The Board of Trustees or the Adviser
may impose such sanctions as it deems appropriate, including, a letter of
censure, suspension, or termination of the employment of the violator, and/or a
disgorging of any profits made by the violator.
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