CODE OF ETHICS
WHATIFI ASSET MANAGEMENT, INC.
A. Introduction
Rule 17j-1 under the Investment Company Act of 1940 (the "Act")
requires registered investment companies and their investment advisers
to adopt codes of ethics and reporting requirements to prevent
fraudulent, deceptive and manipulative practices. The Whatifi Funds
(the "Trust") is registered as an open-end management investment
company under the Act. Whatifi Asset Management Inc. ("WAM") is the
investment adviser of the Trust. Except as otherwise specified herein,
this Code applies to all employees, officers, directors and trustees of
WAM and the Trust.
This Code of Ethics is based on the principle that the officers,
directors, trustees and employees of WAM and the Trust have a fiduciary
duty to place the interests of the Trust before their own interests, to
conduct all personal securities transactions consistently with this
Code of Ethics (the "Code"), and in such a manner which does not
interfere with the portfolio transactions of the Trust, or otherwise
take unfair advantage of their relationship to the Trust. Persons
covered by this Code must adhere to this general principle as well as
comply with the specific provisions of this Code. Technical compliance
with this Code will not insulate from scrutiny trades which indicate an
abuse of an individual's fiduciary duties to the Trust.
B. Definitions
1. "Access person" means (i) any employee, director, principal,
trustee or officer of the Trust or WAM, (ii) any employee of
any company in a control relationship to the Trust or WAM
who, in the ordinary course of his or her business, makes,
participates in or obtains information regarding the
purchase or sale of securities for the Trust or whose
principal function or duties relate to the making of any
recommendation to the Trust regarding the purchase or sale
of securities and (iii) any natural person in a control
relationship to the Trust or WAM who obtains information
concerning recommendations made to the Trust with regard to
the purchase or sale of a security. A natural person in a
control relationship or an employee of a company in a
control relationship does not become an "access person"
simply by virtue of the following:
normally assisting in the preparation of public reports, but
not receiving information about current recommendations or
trading; a single instance of obtaining knowledge of current
recommendations or trading activity; or, infrequently and
inadvertently obtaining such knowledge. The Compliance
Officer(s) for the Trust and WAM are responsible for
determining who are access persons.
2. A security is "being considered for purchase or sale" when the
order to purchase or sell such security has been given, or
prior thereto when, in the opinion of an investment manager, a
decision, whether or not conditional, has been made (even
though not yet implemented) to make the purchase or sale, or
when the decision-making process has reached a point where
such a decision is imminent.
3. "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 and the rules and regulations thereunder, except that the
determination of direct or indirect beneficial ownership shall
apply to all securities which an access person has or
acquires. (See Appendix A for a more complete description.)
4. "Compliance Officer" means Steven J. Dixon or, in his absence, an
alternative Compliance Officer or their respective successors in
such positions.
5. "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act.
6. "Disinterested trustee" means a trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the Act.
7. "Equivalent security" means any security issued by the same
entity as the issuer of a subject security, including options,
rights, warrants, preferred stock, restricted stock, phantom
stock, bonds and other obligations of that company, or a
security convertible into another security.
8. "Immediate family" of an individual means any of the following
persons who reside in the same household as the individual:
child grandparent son-in-law
stepchild spouse daughter-in-law
grandchild sibling brother-in-law
parent mother-in-law sister-in-law
step-parent father-in-law
Immediate family includes adoptive relationships and any other
relationship (whether or not recognized by law) which the
applicable Compliance Officer determines could lead to
possible conflicts of interest, diversions of corporate
opportunity, or appearances of impropriety which this Code is
intended to prevent.
9. "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 Section 13 or 15(d) of the
Securities Exchange Act of 1934.
10. "Investment personnel" means those employees who provide
information and advice to an investment manager or who help
execute the investment manager's decisions.
11. "Investment manager" means any employee entrusted with the direct
responsibility and authority to make investment decisions
affecting the Trust.
12. "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to
Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule
505, or Rule 506 under the Securities Act of 1933.
13. "Purchase or sale of a security" includes, without limitation,
the writing, purchase or exercise of an option to purchase or
sell a security, conversions of convertible securities and
short sales.
14. "Security" shall have the meaning set forth in Section
2(a)(36) of the Act, except that it shall not include shares
of unaffiliated registered open-end investment companies,
securities issued by the Government of the United States,
short-term debt securities which are "government securities"
within the meaning of Section 2(a)(16) of the Act, bankers'
acceptances, bank certificates of deposit, commercial paper,
and such other money market instruments as designated by WAM
and the Board of Trustees of the Trust.
Security does not include futures contracts or options on
futures contracts (provided these instruments are not used to
indirectly acquire an interest which would be prohibited under
this Code).
C. Notification of Subject Persons
The Compliance Officer shall notify each "Access Person" of the Trust
that may be required to make reports pursuant to this Code that such
person is subject to this Code and its reporting requirements and shall
deliver a copy of this Code to each such person.
D. Pre-Clearance Requirements
All access persons shall clear in advance of execution through the
applicable Compliance Officer, or in the case of a request by the
Compliance Officer, through the alternative Compliance Officer, any
purchase or sale, direct or indirect, of any Security in which such
access person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership interest, including any
acquisition of any direct or indirect beneficial ownership interest in
any securities in an initial public offering or in a limited offering.
The applicable Compliance Officer shall retain written records of such
clearance requests.
The applicable Compliance Officer will not grant clearance for any
purchase or sale if the Security is currently being considered for
purchase or sale or being purchased or sold by the Trust. If the
Security proposed to be purchased or sold by the access person is an
option, clearance will not be granted if the Securities subject to the
option are being considered for purchase or sale as indicated above. If
the Security proposed to be purchased or sold is a convertible
security, clearance will not be granted if either that security or the
securities into which it is convertible are being considered for
purchase or sale as indicated above.
The applicable Compliance Officer may refuse to preclear a transaction
if he or she deems the transaction to involve a conflict of interest,
possible diversion of corporate opportunity, or an appearance of
impropriety.
Clearance is effective, unless earlier revoked, until the earlier of
(1) the close of business on the fifth trading day, beginning on and
including the day on which such clearance was granted, or (2) the
access person learns that the information provided to the Compliance
Officer in such access person's request for clearance is not accurate.
If an access person places an order for a transaction within the five
trading days but such order is not executed within the five trading
days (e.g., a limit order), clearance need not be reobtained unless the
person who placed the original order amends such order in any way.
Clearance may be revoked at any time and is deemed revoked if,
subsequent to receipt of clearance, the access person has knowledge
that a security to which the clearance relates is being considered for
purchase or sale.
E. Exempted Transactions
The pre-clearance requirements in Section D of this Code shall not
apply to:
1. Purchases or sales which are non-volitional on the part of either
the access person or the Trust.
2. Purchases or sales which are part of an automatic dividend
reinvestment plan, systematic cash purchase plan or systematic
withdrawal plan.
3. Purchases or sales of shares of the Trust or any other investment
company affiliated with the
Trust or WAM.
4. 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.
5. Purchases or sales by a disinterested trustee or a member of his
or her immediate family.
6. A purchase or sale of securities effected in any account over
which the access person has no direct or indirect influence,
control, or beneficial interest.
Access persons must remember that regardless of the transaction's
status as exempt or not exempt, the access person's fiduciary
obligations remain unchanged.
F. Prohibited Actions and Transactions
Notwithstanding a grant of clearance under Section D hereof, the
following actions and transactions are prohibited and will result in
sanctions including but not limited to the sanctions expressly provided
for in this Section.
1. Investment personnel and investment managers shall not
acquire, for any account in which such investment personnel or
investment manager has a beneficial ownership interest, any
security in an initial public offering.
2. Access persons shall not execute a securities transaction on a
day during which the Trust has a pending buy or sell order in
that same security or an equivalent security until that order
is executed or withdrawn. An access person shall disgorge any
profits realized on trades within such period. This
prohibition does not apply to disinterested trustees and their
immediate families.
3. An investment manager shall not buy or sell a security within
seven calendar days before or after the Trust trades in that
security or an equivalent security unless the Trust's entire
position in that security or equivalent securities has been
sold prior to the investment manager's transaction and the
investment manager is also selling the security. An investment
manager shall disgorge any profits realized on trades within
such period.
4. Investment personnel and investment managers shall not profit in
the purchase and sale, or sale and purchase, of the same (or
equivalent) securities within sixty (60) calendar days. Upon
review by the applicable Compliance Officer of such short-term
trading by investment personnel and investment managers, that
Compliance Officer may, in his or her sole discretion, allow
exceptions when he or she has determined that an exception would
be equitable and that no abuse is involved. Investment personnel
and investment managers profiting from a transaction for which
the applicable Compliance Officer has not granted an exception
shall disgorge any profits realized on such transaction.
5. Investment personnel and investment managers shall not accept
from any person or entity that does or proposes to do business
with or on behalf of the Trust a gift or other thing of more
than de minimis value or any other form of advantage. The
solicitation or giving of such gifts by investment personnel
and investment managers is also prohibited. For purposes of
this subparagraph, "de minimis" means $100 or less if received
in the normal course of business.
6. Investment personnel and investment managers shall not serve on
the board of trustees of publicly traded companies, absent prior
authorization from the applicable Compliance Officer provided,
however, that any trusteeships held by such investment personnel
or investment managers as of the date of the adoption of this
Code of Ethics shall be deemed to be authorized. The applicable
Compliance Officer will grant authorization only if it is
determined that the board service would be consistent with the
interests of the Trust. In the event board service is authorized,
such individuals serving as trustees shall be isolated from those
making investment decisions through procedures designed to
safeguard against potential conflicts of interest, such as a
Chinese Wall policy or investment restrictions.
7. Investment personnel and investment managers shall not acquire a
security in a private placement, absent prior authorization from
the applicable Compliance Officer. The applicable Compliance
Officer will not grant clearance for the acquisition of a
security in a private placement if it is determined that the
investment opportunity should be reserved for the Trust or that
the opportunity to acquire the security is being offered to the
individual requesting clearance by virtue of such individual's
position with WAM or the Trust (as applicable). An individual who
has been granted clearance to acquire securities in a private
placement shall disclose such investment when participating in a
subsequent consideration by the Trust of an investment in the
issuer. A subsequent decision by the Trust to purchase such a
security shall be subject to independent review by investment
personnel with no personal interest in the issuer.
8. Investment personnel and investment managers shall not
purchase during the underwriting of the security any security
which would be contrary to the Conduct Rules of the National
Association of Securities Dealers.
9. Investment personnel and investment managers shall not engage in
short sales or margin trades of securities.
10. An access person shall not execute a securities transaction while
in possession of material
non-public information regarding the security or its issuer.
11. An access person shall not execute a securities transaction
which is intended to raise, lower, or maintain the price of
any security or to create false appearance of active trading
(anti-market manipulation).
12. An access person shall not execute a securities transaction
involving the purchase or sale of a security at a time when
such access person intends, or knows of another's intention,
to purchase or sell that security (or an equivalent security)
on behalf of the Trust. This prohibition would apply whether
the transaction is in the same (e.g., two purchases) or the
opposite (a purchase and sale) direction as the transaction of
the Trust.
13. An access person shall not cause or attempt to cause the
Trust to purchase, sell, or hold any security in a manner
calculated to create any personal benefit to such access
person or his or her immediate family. If an access person
or his or her immediate family stands to materially benefit
from an investment decision for the Trust that the access
person is recommending or in which the access person is
participating, the access person shall disclose to the
persons with authority to make investment decisions for the
Trust, any beneficial ownership interest that the access
person or his or her immediate family has in such security
or an equivalent security, or in the issuer thereof, where
the decision could create a material benefit to the access
person or his or her immediate family or the appearance of
impropriety.
G. Reporting
1. Each access person, except a disinterested trustee, shall
arrange for the applicable Compliance Officer to receive
directly from the broker-dealer effecting a transaction in any
security in which such access person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership interest, duplicate copies of each confirmation for
each securities transaction and periodic account statements
for each brokerage account in which such access person has any
beneficial ownership interest, unless such information is
provided pursuant to paragraph 2 of this Section.
2. In the event an access person, other than a disinterested
trustee, does not arrange for the provision of information
by broker-dealers as required in the preceding paragraph 1,
the access person shall report to the applicable Compliance
Officer no later than 10 days after the end of each calendar
quarter the information described below 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 interest in the security;
provided, however, that an access person shall not be
required to make a report with respect to transactions
effected for any account over which such access person does
not have any direct or indirect influence:
a. The date of the transaction, the title, the interest rate
and maturity date (if applicable) and number of shares, and
the 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 price of the security at which the transaction was
effected;
d. The name of the broker, dealer or bank with or through whom
the transaction was effected; and
e. The date that the report is submitted by the access person.
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 or she has any direct or indirect beneficial
ownership in the security to which the report relates.
3. Each access person, except a disinterested trustee, shall upon
commencement of employment and annually thereafter verify in
writing that all transactions in any security in which such
access person has, or by reason of such transaction has
acquired, any direct or indirect beneficial ownership in the
security have been reported to the applicable Compliance
Officer. If an access person had no transactions during the
year, such access person shall so advise the applicable
Compliance Officer.
4. Each access person, except a disinterested trustee, shall upon
commencement of employment and annually thereafter, disclose
to the compliance officer in writing his or her current
security holdings. The holding report shall contain
information current as of a date no more than 30 days before
the report is submitted.
5. A disinterested trustee need only report a transaction in a
security if such trustee, at the time of that transaction,
knew or, in the ordinary course of fulfilling his or her
official duties as a trustee, should have known that, during
the 15-day period immediately preceding the date of the
transaction by the trustee, such security was purchased or
sold by the Trust or was being considered for purchase or sale
by the Trust.
6. WAM or the Trust may, in its discretion, require an access
person to disclose in connection with a report, recommendation
or decision of such access person to purchase or sell a
security any direct or indirect beneficial ownership by such
person of such security.
H. Confidentiality of Transactions and Information
1. Every access person shall treat as confidential information
the fact that a security is being considered for purchase or
sale by the Trust, the contents of any research report,
recommendation or decision, whether at the preliminary or
final level, and the holdings of the Trust and shall not
disclose any such confidential information without prior
consent from the applicable Compliance Officer.
Notwithstanding the foregoing, the holdings of the Trust shall
not be considered confidential after such holdings by the
Trust have been disclosed in a public report to shareholders
or to the Securities and Exchange Commission.
2. Access persons shall not disclose any such confidential
information to any person except those employees and trustees
who need such information to carry out the duties of their
position with WAM or the Trust (as applicable).
I. Sanctions
Upon discovering a violation of this Code, WAM or the Board of Trustees
of the Trust (as applicable) may impose such sanctions as it deems
appropriate, including, without limitation, a letter of censure or
suspension or termination of the employment of the violator. All
material violations of this Code and any sanctions imposed with respect
thereto shall be reported periodically to the Board of Trustees of the
Trust.
J. Prohibition Against Use of Material Inside Information
Access Persons may have access to information about Funds that is
confidential and not available to the general public, such as (but not
limited to) information concerning securities held in, or traded by,
Fund portfolios, information concerning certain underwritings of
broker/dealers affiliated with a Fund that may be deemed to be
"material inside information", and information which involves a merger
or acquisition that has not been disclosed to the public.
"Material inside information" is defined as any information about a
company which has not been disclosed to the general public and which
either a reasonable person would deem to be important in making an
investment decision or the dissemination of which is likely to impact
the market price of the company's securities.
Access Persons in possession of material inside information must not
trade in or recommend the purchase or sale of the securities concerned
until the information has been properly disclosed and disseminated to
the public.
K. Initial and Annual Certifications
Within ten (10) days following the commencement of their employment or
otherwise becoming subject to this Code and at least annually following
the end of the calendar year, all Access Persons shall be required to
sign and submit to the Compliance Officer a written certification
affirming that he/she has read and understands this Code to which
he/she is subject. In addition, the Access Person must certify annually
that he/she has complied with the requirements of this Code and has
disclosed and reported all personal securities transactions that are
required to be disclosed and reported by this Code. The Compliance
Officer will circulate the Annual Certifications and Holdings Reports
for completion following the end of each calendar year.
L. Restrictions and Reporting Requirements for all Access Persons
Each Access Person must refrain from engaging in a personal securities
transaction when the Access Person knows, or in the ordinary course of
fulfilling his/her duties would have reason to know, that at the time
of the personal securities transaction a Fund has a pending buy or sell
order in the same Covered Security.
<PAGE>
1. Initial and Annual Holdings Reports
All Access Persons must file a completed Initial and Annual
Holdings Report with the Compliance Officer within ten (10)
days of commencement of their employment or otherwise becoming
subject to this Code and thereafter on an annual basis
following the end of the calendar year in accordance with
Procedures established by the Compliance Officer.
2. Transaction/New Account Reports
All Access Persons must file a completed Transaction/New
Account Report with the Compliance Officer within ten (10)
days after (i) opening an account with a broker, dealer or
bank in which Securities are held; or (ii) entering into any
personal securities transaction in which an Access Person has
any direct or indirect beneficial ownership. Personal
securities transactions are those involving any Security in
which the person has, or by reason of such personal securities
transaction acquires, any direct or indirect, "beneficial
ownership."
3. Confirmations and Statements
In order to provide WAM with information to determine whether
the provisions of this Code are being observed, each Access
Person shall direct his/her broker, dealer or bank to supply
to the Compliance Officer, on a timely basis, duplicate copies
of confirmations of all personal securities transactions and
copies of monthly statements for all Securities accounts. The
confirmations should match the Transaction/New Account
Reports. These confirmations and statements should be mailed,
on a confidential basis, to the Compliance Officer.
M. Review of Reports and Assessment of Code Adequacy
The Compliance Officer shall review and maintain the Initial and Annual
Certifications, Initial and Annual Holdings Reports and Transaction/New
Account Reports (the "Reports") with the records of WAM. Following
receipt of the Reports, the Compliance Officer shall consider in
accordance with Procedures designed to prevent Access Persons from
violating this Code:
(a) whether any personal securities transaction evidences an
apparent violation of this Code; and
(b) whether any apparent violation of the reporting requirement
has occurred.
Upon making a determination that a violation of this Code, including
its reporting requirements, has occurred, the Compliance Officer shall
report such violations to the President of WAM who shall determine what
sanctions, if any, should be recommended to be taken by WAM. The
Compliance Officer shall prepare quarterly reports to be presented to
the Fund Board of Trustees with respect to any material trading
violations under this Code.
This Code, a copy of all Reports referenced herein, any reports of
violations, and lists of all Covered and Access Persons required to
make Reports, shall be preserved for the period(s) required by Rule
17j-1. WAM shall review the adequacy of the Code and the operation of
its related Procedures at least once a year.
N. Reports To Fund Board Of Trustees
WAM shall submit the following reports to the Board of Trustees of The
Whatifi Funds.
1 Code of Ethics
A copy of this Code shall be submitted to the Board of each
Fund no later than September 1, 2000. Thereafter, all material
changes to this Code shall be submitted to each Board for
review and approval not later than six (6) months following
the date of implementation of such material changes.
2. Annual Certification of Adequacy
The Compliance Officer shall annually prepare a written report
to be presented to the Board of the Funds detailing the
following:
a. Any issues arising under this Code or its related
Procedures since the preceding report, including
information about material violations of this Code or
its related Procedures and sanctions imposed in
response to such material violations; and
b. A Certification to Fund Boards that WAM has adopted
Procedures designed to be reasonably necessary to
prevent Access Persons from violating this Code.
<PAGE>
Appendix A to the Code of Ethics
"Beneficial Ownership"
For purposes of this Code, "beneficial ownership" is 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 and the rules
and regulations thereunder,
except that the determination of direct or indirect beneficial ownership applies
to all securities which an access person has or acquires. WAM and the Trust will
interpret beneficial ownership in a broad sense.
The existence of beneficial ownership is clear in certain situations, such as:
securities held in street name by brokers for an access person's account, bearer
securities held by an access person, securities held by custodians, pledged
securities, and securities held by relatives or others for an access person. An
access person is also considered the beneficial owner of securities held by
certain family members. The SEC has indicated that an individual is considered
the beneficial owner of securities owned by such individual's immediate family.
The relative's ownership of the securities may be direct (i.e., in the name of
the relative) or indirect.
An access person is deemed to have beneficial ownership of securities owned by a
trust of which the access person is the settlor, trustee or beneficiary,
securities owned by an estate of which the access person is the executor or
administrator, legatee or beneficiary, and securities owned by a partnership of
which the access person is a partner.
An access person must comply with the provisions of this Code with respect to
all securities in which such access person has a beneficial ownership interest.
If an access person is in doubt as to whether she or he has a beneficial
ownership interest in a security, the access person should report the ownership
interest to the applicable Compliance Officer. An access person may disclaim
beneficial ownership as to any security on required reports.
