MATRIX ASSET ADVISORS
MATRIX ADVISORS VALUE FUND
UNDERTAKING REGARDING CODE OF ETHICS
1. BACKGROUND
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the
"Investment Company Act") requires Matrix Advisors Value Fund (the "Fund"),
as a registered investment company, to adopt a written Code of Ethics. The
Rule also requires Matrix Asset Advisors as investment adviser to and
principal underwriter for the Fund ("MAA") to adopt a written Code of
Ethics and to report to the Board of Directors of the Fund (the "Board")
any material compliance violations. The Board may only approve a Code of
Ethics after it has made a determination that the Code of Ethics contains
provisions designed to prevent "access persons" (as the term is explained
below) from engaging in fraud. In addition, certain key "investment
personnel" (as the term is explained below) are subject to further
pre-clearance procedures with respect to their investment in securities
offered through an initial public offering (an "IPO") or private placements
(a "Limited Offerings").
2. KEY DEFINITIONS
The term "Access Person" is generally defined by the Rule to include: (i)
any director, officer, general partner or key investment personnel of the
Fund or an investment adviser to the Fund;
The term "Investment Personnel" is generally defined by the Rule to include
(i) any employee of the Fund or an investment adviser to the Fund who
regularly participates in making recommendations regarding the purchase or
sale of securities of a Fund; and (ii) any natural person who controls a
Fund or an investment adviser to a Fund who obtains information concerning
recommendations made to a Fund regarding the purchase or sale of securities
by a Fund. Investment Personnel are also Access Persons.
3. PROCEDURES IN PLACE
In order to meet the requirements of the Rule, a Code of Ethics should
provide a procedure for detecting and preventing material trading abuses
and, for the Fund, should require Access Persons to report personal
securities transactions on an initial, quarterly and annual basis. A
compliance officer should be designated within the organization to receive
and review these reports. Any subsequent material change to the Code of
Ethics must be approved by the Board. The following components should be
included in the Code of Ethics
* the maintenance by the compliance officer of a current list of all
Access Persons and Investment Personnel;
* an initial holdings report within ten days of the start of employment
of an Access Person;
* a requirement that all Access Persons are to report transactions
within ten days of the end of each quarter;
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* a requirement that all Access Persons report certain securities
holdings on an annual basis;
* a review procedure by the compliance officer of all Access Person
reports.
* a method by which Access Persons are disciplined and/or sanctioned for
failure to adhere to the Code of Ethics including the failure by an
Access Person to submit reports on a timely basis; and
* a procedure in place whereby Investment Personnel receive
pre-clearance for an investment in an IPO or a Limited Offering.
4. ANNUAL ISSUES AND CERTIFICATION REPORT
The Fund and MAA are required to periodically report to the Board on issues
raised under the Code of Ethics. Specifically, on an annual basis (see
paragraph 6 below), the Board must be provided with (i) a written report
that describes issues that arose during the previous year under the Code of
Ethics including material code or procedure violations and sanctions
imposed in response to those material violations and (ii) a certification
that the Fund and MAA have adopted procedures reasonably necessary to
prevent Access Persons from violating the Code of Ethics.
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INITIAL CERTIFICATION
The following duly authorized representative of Matrix Advisors Value Fund
and Matrix Asset Advisors certifies that the Fund and MAA have adopted the
attached Code of Ethics and procedures reasonably necessary to prevent its
Access Persons from violating the Code of Ethics.
Acknowledged and Certified:
By:
--------------------------------
Name:
Title:
Date: September 1, 2000
Name of Compliance Officer:
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ANNUAL RE-CERTIFICATION
(to be certified before each fall meeting of the Board of Directors)
[ ] The Fund and MAA have had no material violations of the Code of Ethics or
the procedures adopted to implement the Code of Ethics, other than those
specified on the attached report.
[ ] The Fund and MAA acknowledge and certify that they have procedures in place
reasonably necessary to prevent Access Persons from violating the Code of
Ethics.
[ ] The Fund and MAA have materially changed the Code of Ethics, the revised
Code of Ethics was sent to the Board immediately for its approval and the
Board approved the revised Code of Ethics within six months of the material
change.
Acknowledged and Certified:
By:
--------------------------------
Name:
Title:
Date: September 1, 2000
Name of Compliance Officer:
----------------------------------
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MATRIX ADVISORS VALUE FUND
MATRIX ASSET ADVISORS
CODE OF ETHICS
1. BACKGROUND
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the
"Investment Company Act") requires Matrix Advisors Value Fund (the "Fund"),
as a registered investment company, to adopt a written Code of Ethics. The
Rule also requires Matrix Asset Advisors ("MAA") as investment adviser to
the Fund to adopt a written Code of Ethics and to report to the Board of
Directors of the Fund (the "Board") any material compliance violations. The
Board may only approve a Code of Ethics after it has made a determination
that the Code of Ethics contains provisions designed to prevent "access
persons" (summarized below and further defined in Appendix 1) from engaging
in fraud. In addition, certain key "investment personnel" (summarized below
and defined in Appendix 1) are subject to further pre-clearance procedures
with respect to their investment in securities offered through an initial
public offering (an "IPO") or private placement (a "Limited Offering").
2. KEY DEFINITIONS For other definitions, see Appendix 1
The term "Access Person" is generally defined by the Rule to include: (i)
any director, officer, general partner or key investment personnel of the
Fund or an investment adviser to the Fund; and (ii) any director, officer,
or general partner of a principal underwriter, if any, who has knowledge of
the investment activities of the Fund. The Fund Compliance Officer (defined
below) will notify an employee if that person fits the above definition and
maintain a list of all Access Persons (see Appendix 2)
The term "Investment Personnel" is generally defined by the Rule to include
(i) any employee of the Fund or an investment adviser to the Fund who
regularly participates in making recommendations regarding the purchase or
sale of securities of a series of the Fund (a "Fund"); and (ii) any natural
person who controls the Fund or an investment adviser to the Fund who
obtains information concerning recommendations made to a Fund regarding the
purchase or sale of securities by a Fund. The Fund Compliance Officer
(defined below) will notify an employee if that person fits the above
definition and maintain a list of all Investment Personnel. (see Appendix
2). Investment Personnel are also Access Persons.
3. GENERAL PROHIBITIONS UNDER THE RULE
The Rule prohibits fraudulent activities by affiliated persons of Fund.
Specifically, it is unlawful for any of these persons to:
1. employ any device, scheme or artifice to defraud a Fund;
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2. make any untrue statement of a material fact to a Fund or omit to
state a material fact necessary in order to make the statements made
to a Fund, in light of the circumstances under which they are made,
not misleading;
3. to engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on a Fund; or
4. to engage in any manipulative practice with respect to a Fund.
4. COMPLIANCE OFFICER
In order to meet the requirements of the Rule, the Code of Ethics includes
a procedure for detecting and preventing material trading abuses and
requires all Access Persons to report personal securities transactions on
an initial, quarterly and annual basis (the "Reports"). The officers of the
Fund will appoint a compliance officer ( "Compliance Officer") to receive
and review Reports in accordance with Section 5 below. In turn, the
officers of the Fund will report to the Board any material violations of
the Code of Ethics in accordance with Section 7 below.
5. ACCESS PERSON REPORTS
All Access Persons are required to submit the following reports to the Fund
Compliance Officer for THEMSELVES AND ANY IMMEDIATE FAMILY MEMBER residing
at the same address. In lieu of providing the Reports, an Access Person may
submit brokerage statements or transaction confirmations that contain
duplicate information. The Access Person should arrange to have brokerage
statements and transaction confirmations sent directly to the Compliance
Officer (see Appendix 3 for the form of an Authorization Letter):
(a) INITIAL HOLDINGS REPORT. Within ten days of beginning employment, each
Access Person must report the following information:
(1) 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;
(2) 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; and
(3) The date the report is submitted by the Access Person.
A form of the INITIAL HOLDINGS REPORT is attached as Appendix 4.
(a) Quarterly Transaction Reports. Within ten days of the end of each
calendar quarter, each Access Person must report the following
information:
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(1) With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect
beneficial ownership:
(i) 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;
(ii) The nature of the transaction (I.E., purchase, sale);
(iii) The price of the Covered Security at which the transaction
was effected;
(iv) The name of the broker, dealer or bank with or through
which the transaction was effected; and
(v) The date that the report is submitted by the Access Person.
(1) 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:
(i) The name of the broker, dealer or bank with whom the Access
Person established the account;
(ii) The date the account was established; and
(iii) the date that the report is submitted by the Access Person.
A form of the QUARTERLY TRANSACTION REPORT is attached as Appendix 5.
(a) ANNUAL HOLDINGS REPORTS. Each year, the Access Person must report the
following information:
(1) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership;
(2) 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; and
(3) The date the report is submitted by the Access Person.
A form of the ANNUAL HOLDINGS REPORT is attached as Appendix 6.
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6. EXCEPTION TO REPORTING REQUIREMENTS
(a) INDEPENDENT DIRECTOR. A director of the Fund who is not an "interested
person" of the Fund within the meaning of Section 2(a)(19) of the
Investment Company Act (an "Independent Director") is not required to:
(1) file an INITIAL HOLDINGS REPORT or ANNUAL HOLDINGS REPORT; and
(2) file a QUARTERLY TRANSACTION REPORT, unless the Independent
Director knew, or, in the ordinary course of fulfilling his or
her official duties as a Director, should have known that during
a 15 day period immediately before or after his or her
transaction in a Covered Security, that a Fund purchased or sold
the Covered Security, or a Fund or its investment adviser
considered purchasing or selling the Covered Security.
7. ADMINISTRATION OF THE CODE OF ETHICS REPORTING VIOLATIONS AND CERTIFYING
COMPLIANCE
(a) The Fund and MAA must use reasonable diligence and institute policies
and procedures reasonably necessary to prevent its Access Persons from
violating this Code of Ethics;
(b) The Compliance Officer shall circulate the Code of Ethics and receive
an acknowledgment from each Access Person that the Code of Ethics has
been read and understood;
(c) The Compliance Officer shall review all reports to determine whether a
possible violation of the Code of Ethics and/or other applicable
trading policies and procedures may have occurred.
No Access Person shall review his or her own Report(s). The Compliance
Officer shall appoint an alternate to review his or her own Reports.
(d) On an annual basis, the Compliance Officer shall prepare a written
report describing any issues arising under the Code of Ethics or
procedures, including information about any material violations of the
Code of Ethics or its underlying procedures and any sanctions imposed
due to such violations and submit the information for review by the
Board; and
(e) On an annual basis, the Fund and MAA shall certify to the Board of
Directors that they have adopted procedures reasonably necessary to
prevent Access Persons from violating the Code of Ethics.
8. COMPLIANCE WITH OTHER SECURITIES LAWS
This Code of Ethics is not intended to cover all possible areas of
potential liability under the Investment Company Act or under the federal
securities laws in general. For example, other provisions of Section 17 of
the Investment Company 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 (I.E., combining to achieve a
substantial position in a security or commingling of funds) between an
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investment company and an affiliated person. Access 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 or if a transaction directly or indirectly involves
themselves and the Fund other than the purchase or redemption of shares of
a Fund or the performance of their normal business duties.
In addition, the Securities Exchange Act of 1934 may impose fiduciary
obligations and trading restrictions on access persons and others 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.
9. PROHIBITED TRADING PRACTICES
(a) No Access Person may 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 if MAA has either an
active buy or sell program in the security for the Fund or any other client
account until such program is completed.
(b) No Access Person may 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 of a security
recommended to or purchased by the Fund or clients where such
recommendation or purchase by the Fund or clients could result in
transactions unduly influencing the market value of the securities to the
undue benefit of the Access Person.
(c) Investment Personnel of a Fund or its investment adviser must obtain
approval from the Compliance Officer before directly or indirectly
acquiring beneficial ownership in any securities in an IPO or Limited
Offering.
(d) No Access Person may trade ahead of a Fund - a practice known as "front
running."
10. SANCTIONS
Sanctions for violation of the Code may include, but are not limited to:
(1) a written reprimand in the Access Person's employment file; (2) a
suspension from employment; and/or (3) termination from employment.
The Board may also impose sanctions as it deems appropriate, including
sanctions against MAA and its Compliance Officer for failure to adequately
supervise its Access Persons.
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ACKNOWLEDGED AND AGREED:
I have read, and I understand the terms of, this Code of Ethics.
By:
--------------------------------
Name:
Title:
Date:
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APPENDIX 1
DEFINITIONS
ACCESS PERSON
(i) any director, officer, general partner or Advisory Person of a Fund or of a
Fund's investment adviser; and (ii) any director, officer or general partner of
a principal underwriter who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or sale of
Covered Securities by the Fund for which the principal underwriter acts, or
whose functions or duties in the ordinary course of business relate to the
making of any recommendation to the Fund regarding the purchase or sale of
Covered Securities.
ADVISORY PERSON
(i) any employee of the Fund or investment adviser (or of any company in a
control relationship to the Fund or investment adviser) who, in connection with
his or her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of Covered Securities by a Fund, or
whose functions relate to the making of any recommendations with respect to the
purchases or sales; and (ii) any natural person in a control relationship to the
Fund or investment adviser who obtains information concerning recommendations
made to the Fund with regard to the purchase or sale of Covered Securities by
the Fund.
CONTROL
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.
COVERED SECURITY
Includes any Security (see below) but does not include (i) direct obligations of
the Government of the United States; (ii) bankers' acceptances, bank
certificates of deposit, commercial paper and high quality short-term debt
instruments, including repurchase agreements; and (iii) shares issued by
open-end investment companies (I.E., mutual funds).
FUND
An investment company registered under the Investment Company Act.
INVESTMENT PERSONNEL
(i) any employee of the Fund or investment adviser (or of any company in a
control relationship to the Fund or investment adviser) who, in connection with
his or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of security by the Fund; and (ii)
any natural person who controls the Fund or investment adviser and who obtains
information concerning recommendations made to the Fund regarding the purchase
or sale of securities by the Fund.
LIMITED OFFERING
An offering that is exempt from registration under the Securities Act of 1933
(the "Securities Act") pursuant to Section 4(2) or Section 4(6) or pursuant to
Rule 504, Rule 505, or Rule 506 under the Securities Act.
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PURCHASE OR SALE OF A COVERED SECURITY
Includes, among other things, the writing of an option to purchase or sell a
Covered Security.
SECURITY
Any note, stock, treasury stock, bond, debenture, evidence of indebtedness,
certificate of interest or participation in any profit-sharing agreement,
collateral Fund certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-Fund certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or other
mineral rights, any put, call, straddle, option, or privilege on any security
(including a certificate of deposit) or on any group or index of securities
(including any interest therein or based on the value thereof), or any put,
call, straddle, option, or privilege entered into on a national securities
exchange relating to foreign currency, or, in general, any interest or
instrument commonly known as a "security," or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.
SECURITY HELD OR TO BE ACQUIRED BY A FUND
(i) any Covered Security which, within the most recent ___ days: (a) is or has
been held by the Fund; or (b) is being or has been considered by the Fund or its
investment adviser for purchase by the Fund; and (ii) any option to purchase or
sell, and any security convertible into or exchangeable for, a Covered Security
described in paragraphs (a) or (b) above.
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Appendix 2
List of Access Persons and Investment Personnel
ACKNOWLEDGEMENT OF RECEIPT IS THIS PERSON ALSO
NAME TITLE OF CODE OF ETHICS INVESTMENT PERSONNEL?
---- ----- ----------------- ---------------------
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Appendix 3
Form of Authorization Letter
Date
Name of Broker
Address
Re: Brokerage Statements of [name of employee]
Ladies and Gentlemen:
The above referenced person is an employee of Matrix Asset Advisor. Federal
securities laws require that we monitor the personal securities transactions of
certain key personnel. By this Authorization Letter, and the acknowledgment of
the employee below, please forward duplicate copies of the employee's brokerage
statements and transaction confirmations to:
[Compliance Officer]
[Address]
Should you have any questions, please contact the undersigned at [number].
Very truly yours,
AUTHORIZATION:
I hereby authorize you to release duplicate brokerage statements and
transaction confirmations to my employer.
Signature:
------------------------------
Name:
SSN:
Account Number:
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APPENDIX 4
INITIAL HOLDINGS REPORT
(complete within ten days of employment)
Date: ___________
NOTE: IN LIEU OF THIS REPORT, YOU MAY SUBMIT DUPLICATE COPIES OF YOUR BROKERAGE
STATEMENTS
1. HOLDINGS
--------------------------------------------------------------------------------
NAME OF COVERED SECURITY NUMBER OF SHARES VALUE OF SECURITY
--------------------------------------------------------------------------------
2. BROKERAGE ACCOUNTS
--------------------------------------------------------------------------------
NAME OF INSTITUTION AND
ACCOUNT HOLDERS' NAME ACCOUNT HAVE YOU REQUESTED
(i.e., YOU, SPOUSE, CHILD) NUMBER DUPLICATE STATEMENTS?
--------------------------------------------------------------------------------
REVIEWED:
--------------------------------------------
(COMPLIANCE OFFICER SIGNATURE)
DATE:
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Appendix 5
Quarterly Transaction Report
(complete within ten days of the quarter)
Date: ___________
NOTE: IN LIEU OF THIS REPORT, YOU MAY SUBMIT DUPLICATE COPIES OF YOUR BROKERAGE
STATEMENTS
1. TRANSACTIONS
--------------------------------------------------------------------------------
NATURE OF
NAME OF NUMBER OF TRANSACTION PURCHASE DATE OF
COVERED SECURITY BROKER SHARES (i.e, BUY, SALE) PRICE TRANSACTION
--------------------------------------------------------------------------------
2. BROKERAGE ACCOUNTS OPENED DURING QUARTER
--------------------------------------------------------------------------------
NAME OF INSTITUTION AND
ACCOUNT HOLDERS' NAME ACCOUNT HAVE YOU REQUESTED
(i.e., YOU, SPOUSE, CHILD) NUMBER DUPLICATE STATEMENTS?
--------------------------------------------------------------------------------
REVIEWED:
--------------------------------------------
(COMPLIANCE OFFICER SIGNATURE)
DATE:
------------------------------------------------
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Appendix 6
Annual Holdings Report
(to be completed within thirty days of each year)
Date: ___________
NOTE: IN LIEU OF THIS REPORT, YOU MAY SUBMIT DUPLICATE COPIES OF YOUR BROKERAGE
STATEMENTS
1. HOLDINGS
--------------------------------------------------------------------------------
Name of Covered Security Number of Shares Value of Security
--------------------------------------------------------------------------------
2. BROKERAGE ACCOUNTS
--------------------------------------------------------------------------------
NAME OF INSTITUTION AND
ACCOUNT HOLDERS' NAME ACCOUNT HAVE YOU REQUESTED
(i.e., YOU, SPOUSE, CHILD) NUMBER DUPLICATE STATEMENTS?
--------------------------------------------------------------------------------
REVIEWED:
--------------------------------------------
(COMPLIANCE OFFICER SIGNATURE)
DATE:
------------------------------------------------
