Exhibit (p)(1)
FORUM FUNDS
CODE OF ETHICS
MAY 15, 2000
SECTION 1. INTRODUCTION
This Code of Ethics ("Code") has been adopted by Forum Funds (the
"Trust") with respect to each of its investment portfolios (each a "Fund") to
establish standards and procedures for the detection and prevention of
activities by which persons having knowledge of the investments and investment
intentions of a Fund may abuse their fiduciary duties to the Trust and to deal
with other types of conflict of interest situations.
Upon discovering a violation of the Code, the Board of Trustees (the
"Board") may impose such sanctions as it deems appropriate, including, among
other things, a letter of censure or suspension or termination of the employment
or other position of the violator.
SECTION 2. DEFINITIONS
(A) Access Person means:
(i) any Trust officer;
(ii) any trustees, including any independent trustee; and
(iii) any individual in a control relationship with a Fund who
obtains information concerning recommendations made to a Fund
about the purchase or sale of a security.
(B) Beneficial Owner means "beneficial owner" as defined in Rule
16a-1(a)(2) under the securities and Exchange Act of 1934 Act except that the
determination of direct or indirect beneficial ownership shall apply to all
Covered Securities which an Access Person owns or acquires. A beneficial owner
of a security is any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares a direct or
indirect pecuniary interest (the opportunity, directly or indirectly, to profit
or share in any profit derived from a transaction in the subject securities) in
a security.
Indirect pecuniary interest in a security includes securities held by a
person's immediate family sharing the same household. Immediate family means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships).
(C) 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.
(D) Covered Security means any security except:
(i) direct obligations of the Government of the United States;
(ii) bankers' acceptances and bank certificates of deposit;
(iii) commercial paper and debt instruments with a maturity at
issuance of less than 366 days and that are rated in one of
the two highest rating categories by a nationally recognized
statistical rating organization;
(iv) repurchase agreements covering any of the foregoing; and
(v) shares of registered open-end investment companies.
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(E) Investment Personnel means any individual who controls the
Trust and who obtains information concerning recommendations made to the Trust
regarding the purchase or sale of securities by the Trust.
(F) Security Held or to be Acquired by the Trust means
(i) any Covered Security which, within the most recent 15 days (i)
is or has been held by the Trust or (ii) is being or has been
considered by the Trust or an investment adviser to the Trust
for purchase by the applicable Trust; and
(ii) any option to purchase or sell, and any security convertible
into or exchangeable for, a Covered Security.
(G) Purchase or sale includes, among other things, the writing of
an option to purchase or sell.
SECTION 3. PROHIBITED TRANSACTIONS
(A) PROHIBITION AGAINST FRAUDULENT CONDUCT. No Access Person
shall use any information concerning the investments or investment intentions of
a Fund, or the Access Person's ability to influence such investmentintentions,
for personal gain or in a manner detrimental to the interests of a Fund.
In addition, no affiliated person of a Fund shall, directly or
indirectly in connection with the purchase or sale of a security held or to be
acquired by a Fund:
(i) employ any device, scheme or artifice to defraud a Fund;
(ii) make to a Fund or to a Fund's investment advisers or
distributor any untrue statement of a material fact or omit to
state to any of the foregoing a material fact necessary in
order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(iii) engage in any act, practice, or course of business that
operates or would operate as a fraud or deceit upon a Fund; or
(iv) engage in any manipulative practice with respect to a Fund.
(B) OTHER PROHIBITED TRANSACTIONS. Access Persons are prohibited
from:
(i) inducing or causing a Fund to take action or to fail to take
action, for personal benefit rather than for the benefit of
the Fund;
(ii) accepting anything other than of de minimus value or any other
preferential treatment from any entity with which a Fund does
business;
(iii) establishing or maintaining an account at any entity through
which securities transactions may be effected without written
notice to the designated Review Officer prior to establishing
such an account;
(iv) using knowledge of portfolio transactions of a Fund for their
personal benefit or the personal benefit of their friends or
relatives;
(v) violating the anti-fraud provisions of the federal or state
securities laws;
(vi) serving on the boards of directors of publicly traded
companies, absent prior authorization based upon a
determination by the Review Officer that the board service
would be consistent with the interests of the Fund and its
shareholders.
(C) UNDUE INFLUENCE; DISCLOSURE OF PERSONAL INTEREST. No Access
Person shall cause or attempt to cause any Fund to purchase, sell or hold any
security in a manner calculated to create any personal benefit to the Access
Person. No Access Person shall recommend any securities transactions for a
Fund without having disclosed the Access Person's interest, if any, in such
securities or the issuer thereof, including, without limitation:
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(i) the Access Person's direct or indirect beneficial ownership of any
securities of such issuer; (ii) any position with such issuer or its
affiliates; and (iii) any present or proposed business relationship
between such issuer or its affiliates, on the one hand, and such
person or any party in which such person has a significant interest,on
the other hand.
(D) CORPORATE OPPORTUNITIES. All Access Persons are prohibited
from taking personal advantage of any opportunity properly belonging to a Fund.
(E) CONFIDENTIALITY. Except as required in the normal course of
carrying out an Access Person's business responsibilities, Access Persons are
prohibited from revealing information relating to the investment intentions or
activities of any Fund, or securities that are being considered for purchase or
sale on behalf of any Fund.
SECTION 4. REPORTING REQUIREMENTS
(A) ACCESS PERSON REPORTING. All Access Persons (as identified in
Appendix A) must report the information described in this Section with respect
to transactions in any Covered Security in which the Access Person has, or by
reason of such transaction acquires, any direct or indirect beneficial
ownership. All Access Persons and Investment Personnel must report to the Review
Officer unless they are otherwise required to report to the distributor or an
investment adviser of the Trust or a Fund pursuant to a Code of Ethics adopted
by those entities and approved by the Trustees.
(B) TRUSTEE REPORTING. An independent trustee (a trustee who is not an
interested person of the Trust as defined in Section 2(a)(19) of the Investment
Company Act of 1940 Act) need only report a transaction if the trustee knew at
the time of the transaction or, in the ordinary course of fulfilling the
trustee's official duties as a trustee, should have known that, during the 15
day period immediately preceding or after the date of the transaction in a
Covered Security by the trustee, such Covered Security is or was purchased or
sold or was being considered for purchase or sale by a Fund or an investment
adviser to the Trust or a Fund.
(C) EXCLUSIONS FROM REPORTING. Purchases or sales of Covered Securities
in an account in which an Access Person has no direct or indirect influence or
control are not subject to the reporting requirements of this Section.
(D) INITIAL HOLDING REPORTS. No later than ten (10) days after the
person becomes an Access Person, an Access Person must report the following
information:
(i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person;
(ii) the name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held
for the direct or indirect benefit of the Access Person as of
the date the person became an Access Person; and
(iii) the date that the report is submitted by the Access Person.
(E) QUARTERLY TRANSACTION REPORTS. No later than ten (10) days after
the end of a calendar quarter, an Access Person must report the following
information:
(i) with respect to any transaction during the quarter in a Covered
Security in which the Access Person had, or by reason of such
transaction acquired, any direct or indirect beneficial
ownership:
(1) the date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and
the principal amount of each Covered Security involved;
(2) the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
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(3) the price of the Covered Security at which the transaction
was effected;
(4) the name of the broker, dealer or bank with or through which
the transaction was effected; and
(5) the date that the report is submitted by the Access Person.
(ii) with respect to any account established by the Access Person in
which any securities were held during the quarter for the direct
or indirect benefit of the Access Person:
(1) the name of the broker, dealer or bank with whom the Access
Person established the account;
(2) the date the account was established; and
(3) the date that the report is submitted by the Access Person.
(F) ANNUAL HOLDINGS REPORTS. Annually, an Access Person must report
the following information (which information must be current as of a date no
more than thirty (30) days before the report is submitted):
(i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership;
(ii) the name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
(iii) the date that the report is submitted by the Access Person.
(G) CERTIFICATION OF COMPLIANCE. Each Access Person is required to
certify annually (in the form of Appendix B) that the Access Person has read and
understood the Code and recognizes that the Access Person is subject to the
Code. Further, each Access Person is required to certify annually that the
Access Person has complied with all the requirements of the Code and that the
Access Person has disclosed or reported all personal securities transactions
pursuant to the requirements of the Code.
(H) ALTERNATIVE REPORTING. The submission to the Review Officer of
duplicate broker trade confirmations and statements on all Covered Securities
transactions shall be deemed to satisfy these reporting requirements. The annual
holdings report may be satisfied by confirming annually, in writing, the
accuracy of the records maintained by the Review Officer and recording the date
of the confirmation.
(I) REPORT QUALIFICATION. Any report may contain a statement that the
report shall not be construed as an admission by the person making the report
that he or she has any direct or indirect beneficial ownership in the Covered
Securities to which the report relates.
(J) ACCOUNT OPENING PROCEDURES. Access Persons shall provide written
notice to the Review Officer prior to opening any account with any entity
through which a Covered Securities transaction may be effected. In addition, all
Access Persons will promptly:
(i) provide full access to the Trust, its agents and attorneys to
any and all records and documents which the Trust considers
relevant to any securities transactions or other matters
subject to the Code;
(ii) cooperate with the Trust, or its agents and attorneys, in
investigating any securities transactions or other matter
subject to the Code;
(iii) provide the Trust, its agents and attorneys with an
explanation (in writing if requested) of the facts and
circumstances surrounding any securities transaction or other
matter subject to the Code; and
(iv) promptly notify the Review Officer or such other individual as
the Trust may direct, in writing, from time to time, of any
incident of noncompliance with the Code by any Access Person.
SECTION 5. REVIEW OFFICER
(A) DUTIES OF REVIEW OFFICER. A Review Officer shall be appointed by
the Trust's President to:
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(i) review all securities transaction and holdings reports and shall maintain
the names of persons responsible for reviewing these reports;
(ii) identify all Access Persons who are required to make these reports and
promptly inform each Access Person of the requirements of this Code;
(iii) compare, on a quarterly basis, all Access Person Covered
Securities transactions with each Fund's completed portfolio
transactions to determine whether a Code violation may have
occurred;
(iv) maintain a signed acknowledgment by each person who is then
an Access Person, in the form of Appendix A; and
(v) identify persons who are Investment Personnel of the Trust and
inform those persons of their requirements to obtain prior
written approval from the Review Officer prior to directly or
indirectly acquiring ownership of a security in any private
placement or initial public offering.
(vi) Annually prepare a written report to the Trustees that
(1) describes any issues under the code of ethics or
procedures since the last report to the Trustees,
including, but not limited to, information about
material violations of the code or procedures and
sanctions imposed in response to the material
violations; and
(2) certifies that the Fund has adopted procedures
reasonably necessary to prevent Access Persons from
violating the code.
(B) POTENTIAL TRADE CONFLICT. When there appears to be a transaction
that conflicts with the Code, the designated Review Officer shall request a
written explanation of the Access Person's transaction. If after post-trade
review, it is determined that there has been a violation of the Code, a report
will be made by the designated Review Officer with a recommendation of
appropriate action to the Board.
(C) REQUIRED RECORDS. The Review Officer shall maintain and cause to
be maintained:
(i) a copy of any code of ethics adopted by the Trust which has
been in effect during the previous five (5) years in an
easily accessible place;
(ii) a record of any violation of any code of ethics, and of any
action taken as a result of such violation, in an easily
accessible place for at least five (5) years after the end of
the fiscal year in which the violation occurs;
(iii) a copy of each report made by an Access Person as required by
Section 4 of this Code for at least five (5) years after the
end of the fiscal year in which the report is made, the first
two (2) years in an easily accessible place;
(iv) a list of all persons who are, or within the past five years
have been, required to make reports or who were responsible
for reviewing these reports pursuant to any code of ethics
adopted by a Trust, in an easily accessible place;
(v) a copy of each written report and certification required
pursuant to Section 5(c) of this Code for at least five (5)
years after the end of the fiscal year in which it is made,
the first two (2) years in an easily accessible place; and
(vi) a record of any decision, and the reasons supporting the
decision, approving the acquisition by Investment Personnel of
securities under Section 5(a)(v) of this Code, for at least
five (5) years after the end of the fiscal year in which the
approval is granted.
SECTION 6. BOARD REVIEW
The Board of Trustees, including a majority of the independent
trustees, shall:
(i) approve the code of ethics of the Trust, the code of ethics of
each investment adviser and principal underwriter of the Trust
before initially retaining their services, and any material
changes to these codes within six months of such change;
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(ii) base its approval of a code of ethics, and any material
changes to a code of ethics, on a determination that the code
contains provisions reasonably necessary to prevent access
persons (as defined in the respective codes) from engaging in
prohibited conduct;
(iii) receive, prior to approving a code or any amendment to a code,
a certification from the Trust, investment adviser or
principal underwriter that it has adopted procedures
reasonably necessary to prevent access persons from violating
the code; and
(iv) receive and consider, no less frequently than annually
(1) a written report from the Trust, investment adviser,
or principal underwriter describing any issues,
material violations or sanctions arising under the
Code; and
(2) a written certification from the Trust, investment adviser, or principal
underwriter, as applicable, that it has adopted procedures reasonably necessary
to prevent Access Persons from violating its code.
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FORUM FUNDS
CODE OF ETHICS
APPENDIX A
ACCESS PERSONS
Costas Azariadas
James C. Cheng
J. Michael Parish
A-1
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FORUM FUNDS
CODE OF ETHICS
APPENDIX B
ACCESS PERSON ACKNOWLEDGEMENT
I understand that I am an Access person as defined in the Forum Funds Code of
Ethics. I have read and I understand the Code of Ethics and will comply with it
in all respects. In addition, I certify that I have complied with the
requirements of the Code of Ethics and I have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to the
requirements of the Code.
Signature Date
Printed Name
This form must be completed and returned to the Trust's Review Officer:
Nanette K. Chern
c/o Forum Funds
Two Portland Square
Portland , ME 04101
B-1
