CALIFORNIA INVESTMENT TRUST
AND
CALIFORNIA INVESTMENT TRUST II
AND
CCM PARTNERS
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CODE OF ETHICS
(Revised October, 2000)
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I. Legal Requirement
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Rule 17j-I 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 "insider trading" by "access persons." Access Persons
are defined to include officers of California Investment Trust and California
Investment Trust II (each, a "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 Trusts (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 insider trading 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 insider trading 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 money market
instruments, certain Government Securities and non-affiliated mutual funds) at
least quarterly within 10 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 Trusts, 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 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
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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 (see 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 Trusts.
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.
II. Implementation
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In order to implement this Code of Ethics, a compliance officer and
one alternate should be designated. These individuals are:
Steve Rogers, Compliance Officer
Matthew Clark, 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 signed and
returned to the compliance officer by each Access Person. 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 be responsible for giving special
prior approval to transactions that would otherwise be prohibited pursuant to
Section IV of this Code of Ethics.
III. 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.
(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 Trusts, 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, 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.
(e) "Control" has the same meaning as in Section 2(a) (9) of the 1940
Act.
(f) "Purchase or sale of a security" includes the writing of an
option to purchase or sell a security
(g) "Security" shall have the meaning set forth in Section 2(a) (36)
of the 1940 Act, except that it shall not include shares of registered open-end
investment companies (other than the CIT Funds), securities issued by the
Government of the United States (including Government agencies), 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 other money market instruments.
IV. Prohibited Purchases and Sales
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No Access Person 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:
(a) is being considered for purchase or sale by a 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) has been purchased or sold by a Fund within the most recent
7 days if such person participated in the recommendation to,
or the decision by, the Fund to purchase or sell such
security (Index Funds transactions excepted).
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.
Access Persons must obtain prior written approval from the Adviser's
compliance officer before making an investment in an IPO or private placement.
EXCEPTIONS WITH PRIOR APPROVAL. These restrictions 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.
V. Exempted Transactions/Securities
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The prohibitions of Section IV of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.
(b) Purchases or sales of securities which are not eligible for
purchase or sale by any Fund (except IPOs and private
placements).
(c) 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).
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) 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.
(f) Purchases and sales which have received the prior approval of the
compliance officer.
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(g) Purchases and sales or securities which are not included in the
definition of "Security" in Part III.g - i.e., non-CIT mutual
fund shares, government securities and money market instruments.
(h) Purchases and sales of securities which are in an Index Fund.
VI. Reporting
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(a) Subject to the exceptions set forth below, all Access Persons
shall report to the Trusts 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 ten (10) days after the
end of each calendar quarter and shall contain the following information:
(1) 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;
(2) The nature of the transaction (i.e., purchase, sale, or any
other type of acquisition of disposition);
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer, or bank with or through whom
the transaction was effected.
(5) The date that the report is being submitted.
(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 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) the title, number of shares and principal amount of each
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 maintained an account where such security was held;
and
(3) the date that the report is being submitted.
VII. 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
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) While an independent Trustee is exempt from the reporting
requirements of Section VI(b) of this Code pursuant to this Section VII(a), such
Trustee may voluntarily file a report representing that he or she did not engage
in any securities transactions which, to his or her knowledge, involved
securities that were being purchased or sold or considered for purchase by any
Fund during the 15-day period preceding or after the date(s) of any
transaction(s) by such Trustee. Any failure to regularly file such a report,
however, shall not be considered a violation of this Code of Ethics.
(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-CIT mutual fund shares).
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VIII. 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. 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 Trusts, 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 have submitted reports in a timely manner. Failure to
submit timely reports will be communicated to the Board of Trustees.
IX. Board Oversight
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The Board of Trustees must initially approve the Code of Ethics for
the Trusts and the Adviser, and the Board of Trustees must approve any material
changes to the Code of Ethics within 6 months of such change. The compliance
officer shall provide to the Board a written report outlining any material
issues that arose during the previous year and annually certify that the Adviser
has adopted procedures in compliance with this rule.
X. 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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I fully understand and hereby subscribe to this Code of Ethics.
Date Signature
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