PROFESSIONALLY MANAGED PORTFOLIOS
UNDERTAKING REGARDING CODE OF ETHICS
1. BACKGROUND
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the
"Investment Company Act") requires Professionally Managed Portfolios (the
"Trust"), as a registered investment company, to adopt a written Code of
Ethics. The Rule also requires investment advisers to and principal
underwriters for (each a "Fund Organization") the Trust to adopt a written
Code of Ethics and to report to the Board of Trustees of the Trust (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) of a Fund
Organization 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
Trust or an investment adviser to the Trust; and (ii) any director,
officer, or general partner of a principal underwriter who has knowledge of
the investment activities of a series of the Trust (a "Fund").
The term "Investment Personnel" is generally defined by the Rule to include
(i) any employee of the Trust or an investment adviser to the Trust 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 the 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 each Fund, should require Access Persons to report personal
securities transactions on an initial, quarterly and annual basis. At least
two compliance officers should be designated within each Fund Organization
to receive and review these reports.
A Fund Organization may adopt its own Code of Ethics, subject to the review
and approval of the Board. Any subsequent material change to the Fund
Organization's Code of Ethics must be approved by the Board.
In the alternative, a Fund Organization may adopt the standard Code of
Ethics for the Trust which is attached to this Undertaking. An investment
adviser to a Fund should take care that its Form ADV properly reflects the
terms of its Code of Ethics.
1
<PAGE>
In the event a Fund Organization adopts its own Code of Ethics, the Board
will review that code to ensure that, at a minimum, the following
components are included:
* the appointment of a compliance officer and alternate to review
personal securities transactions of Access Persons;
* 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 Person are to report quarterly
transactions within ten days of the end of each quarter;
* 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.
A Fund Organization may combine its Code of Ethics with other trading
policies and procedures. However, in the event the Code of Ethics conflicts
with the Fund Organization's trading policies and procedures, the terms of
the Code of Ethics shall prevail.
The Trust will file all Codes of Ethics with its registration statement.
4. ANNUAL ISSUES AND CERTIFICATION REPORT
A Fund Organization is required to periodically report to the Board on
issues raised under its Code of Ethics. Specifically, on an annual basis
(see paragraph 6 below), each Fund Organization must provide the Board (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 it has adopted procedures reasonably necessary to
prevent its Access Persons from violating its Code of Ethics.
================================================================================
Professionally Managed Portfolios
Undertaking Regarding Code of Ethics 2
<PAGE>
5. INITIAL CERTIFICATION
On behalf of the undersigned Fund Organization, the following duly
authorized representative of the Fund Organization certifies that:
[ ] The Fund Organization has adopted the Trust's Code of Ethics and it
has adopted procedures reasonably necessary to prevent its Access
Persons from violating the Code of Ethics.
[ ] The Fund Organization has adopted its own Code of Ethics, which is
attached to this Certification. Further, the Fund Organization
acknowledges and certifies that it has adopted procedures reasonably
necessary to prevent its Access Persons from violating its Code of
Ethics.
Acknowledged and Certified:
By:
Name:
Title:
Date:
Name of Fund Organization:
(the investment adviser or principal underwriter)
Name of Compliance Officer:
Name of Alternate Officer:
Name of Fund:
(the series of Professionally Managed Portfolios)
================================================================================
Professionally Managed Portfolios
Undertaking Regarding Code of Ethics 3
<PAGE>
7. ANNUAL RE-CERTIFICATION (to be certified before each August meeting of the
Board of Trustees)
[ ] The Fund Organization has had no material violations of its Code of
Ethics or the procedures adopted to implement its Code of Ethics,
other than those specified on the attached report.
[ ] The Fund Organization acknowledges and certifies that it has
procedures in place reasonably necessary to prevent Access Persons
from violating its Code of Ethics.
[ ] The Fund Organization has materially changed its 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:
Name of Fund Organization:
(the investment adviser or principal underwriter)
Name of Compliance Officer:
Name of Alternate Officer:
Name of Fund:
(the series of Professionally Managed Portfolios)
================================================================================
Professionally Managed Portfolios
Undertaking Regarding Code of Ethics 4
<PAGE>
PROFESSIONALLY MANAGED PORTFOLIOS
CODE OF ETHICS
REVISED FEBRUARY 2000
1. BACKGROUND
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the
"Investment Company Act") requires Professionally Managed Portfolios (the
"Trust"), as a registered investment company, to adopt a written Code of
Ethics. The Rule also requires investment advisers to and principal
underwriters for (each a "Fund Organization") of the Trust to adopt a
written Code of Ethics and to report to the Board of Trustees of the Trust
(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) of a Fund Organization 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
Trust or an investment adviser to the Trust; and (ii) any director,
officer, or general partner of a principal underwriter who has knowledge of
the investment activities of a series of the Trust. 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 Trust or an investment adviser to the Trust who
regular participates in making recommendations regarding the purchase or
sale of securities of a series of the Trust (a "Fund"); and (ii) any
natural person who controls the Trust or an investment adviser to the Trust
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 Trust or
Fund Organization. Specifically, it is unlawful for any of these persons
to:
(a) employ any device, scheme or artifice to defraud a Fund;
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
(b) 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;
(c) to engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on a Fund; or
(d) to engage in any manipulative practice with respect to a Fund.
4. COMPLIANCE OFFICERS
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
Trust will appoint a compliance officer for each Fund Organization (a "Fund
Compliance Officer") to receive and review Reports delivered to a Fund
Compliance Officer in accordance with Section 5 below. In turn, the
officers of the Trust 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 of Fund Organizations 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 Fund 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.
(b) QUARTERLY TRANSACTION REPORTS. Within ten days of the end of each
calendar quarter, each Access Person must report the following
information:
================================================================================
Professionally Managed Portfolios
Code of Ethics 2
<PAGE>
(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.
(2) 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.
6. EXCEPTIONS TO REPORTING REQUIREMENTS
(a) PRINCIPAL UNDERWRITER. An Access Person of a Fund's principal
underwriter is not required to make any Reports under Section 5 above
if the principal underwriter:
================================================================================
Professionally Managed Portfolios
Code of Ethics 3
<PAGE>
(1) is not an affiliated person of the Trust or any investment
adviser to a Fund.
(2) has no officer, director or general partner who serves as an
officer, director or general partner of the Trust or of any
investment adviser to a Fund.
(b) INDEPENDENT TRUSTEE. A trustee of the Trust who is not an "interested
person" of the Trust within the meaning of Section 2(a)(19) of the
Investment Company Act (an "Independent Trustee") is not required to:
(1) file an INITIAL HOLDINGS REPORT or ANNUAL HOLDINGS REPORT; and
(2) file a QUARTERLY TRANSACTION REPORT, unless the Independent
Trustee knew, or, in the ordinary course of fulfilling his or her
official duties as a trustee, 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) Each Fund Organization must use reasonable diligence and institute
policies and procedures reasonably necessary to prevent its Access
Persons from violating this Code of Ethics;
(b) Each Fund Compliance Officer shall circulate the Code of Ethics and
receive an acknowledgement from each Access Person that the Code of
Ethics has been read and understood;
(c) Each Fund Compliance Officer shall compare all Reports with completed
and contemplated portfolio transactions of a Fund 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 Fund
Compliance Officer shall appoint an alternate to review his or her own
Reports if the Fund Compliance Officer is also an Access Person.
(d) On an annual basis, each Fund 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 to the
Compliance Officer for review by the Board; and
(e) On an annual basis, each Fund Organization shall certify to the Board
of Trustees that it has adopted procedures reasonably necessary to
prevent its Access Persons from violating the Code of Ethics.
================================================================================
Professionally Managed Portfolios
Code of Ethics 4
<PAGE>
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
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 Trust 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 such security
to his or her actual knowledge at the time of such purchase or sale:
(i) is being considered for purchase or sale by a Fund;
(ii) is in the process of being purchased or sold by a Fund (except
that an access person may participate in a bunched transaction
with the Fund if the price terms are the same in accordance with
trading policies and procedures adopted by the Fund
Organization).; or
(iii) is or has been held by a Fund within the most recent 15 day
period.
(b) Investment Personnel of a Fund or its investment adviser must obtain
approval from the Fund or the Fund's investment adviser before
directly or indirectly acquiring beneficial ownership in any
securities in an IPO or Limited Offering.
(c) No Access Person may trade ahead of a Fund - a practice known as
"frontrunning."
9. SANCTIONS
As to any material violation of this Code of Ethics, each Fund Organization
shall adopt trading policies and procedures that provide for sanctions of
================================================================================
Professionally Managed Portfolios
Code of Ethics 5
<PAGE>
the Access Persons. Such sanctions 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 the Fund Organization or the Fund Compliance Officer for
failure to adequately supervise its Access Persons.
ACKNOWLEDGED AND AGREED:
I have read, and I understand the terms of, this Code of Ethics.
By:
-----------------------------------------
Name:
Title:
Fund Organization:
Date:
================================================================================
Professionally Managed Portfolios
Code of Ethics 6
<PAGE>
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.
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,
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
certificate of interest or participation in any profit-sharing agreement,
collateral trust certificate, preorganization certificate or subscription,
transferable share, investment contract, voting-trust 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 THE FUND
(i) any Covered Security which, within the most recent 15 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.
================================================================================
Professionally Managed Portfolios
Code of Ethics 2
<PAGE>
APPENDIX 2
LIST OF ACCESS PERSONS AND INVESTMENT PERSONNEL
--------------------------------------------------------------------------------
Acknowledge- Is this Person
ment of also an
Name Title Receipt of Investment
Code of Ethics Personnel?
--------------------------------------------------------------------------------
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
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 [name of Fund Organization].
Federal securities laws require that we monitor the personal securities
transactions of certain key personnel. By this Authorization Letter, and the
acknowledgement of the employee below, please forward duplicate copies of the
employee's brokerage statements and transaction confirmations to:
[Compliance Officer]
[Fund Organization]
[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:
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
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:
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
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
--------------------------------------------------------------------------------
NAME OF COVERED BROKER NUMBER OF NATURE OF PURCHASE DATE OF
SECURITY SHARES TRANSACTION PRICE TRANSACTION
(I.E, BUY, SALE)
--------------------------------------------------------------------------------
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:
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
<PAGE>
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
--------------------------------------------------------------------------------
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:
================================================================================
Professionally Managed Portfolios
Code of Ethics 1
