Exhibit 10(a)(l)
WASATCH FUNDS, INC.
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
I. COVERED OFFICERS/PURPOSE OF THE CODE
This Code of Ethics (the "Code") shall apply to Wasatch Funds, Inc.'s (the
"Company") Principal Executive Officer and Principal Financial Officer (the
"Covered Officers," each of whom is named in Exhibit A attached hereto),
consistent with and in furtherance of their fiduciary duties, and for the
purpose of promoting:
- honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
- full, fair, accurate, timely and understandable disclosure in
reports and documents that the Company files with, or submits to,
the Securities and Exchange Commission ("SEC") and in other public
communications made by the Company;
- compliance with applicable laws and governmental rules and
regulations;
- the prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
- accountability for adherence to the Code.
Each Covered Officer should adhere to a high standard of business ethics
and should be sensitive to situations that may give rise to actual as well as
apparent conflicts of interest.
II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF
INTEREST
OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private
interest has the potential to interfere with the interests of, or his or her
service to, the Company. For example, a conflict of interest would arise if a
Covered Officer, or a member of his or her family, receives improper personal
benefits as a result of his or her position with the Company. Covered Officers
must avoid conduct that conflicts, or appears to conflict, with their duties to
the Company. All Covered Officers should conduct themselves such that any
reasonable observer would have no grounds for belief that a conflict of
interest has not been appropriately addressed and resolved. Covered Officers
are not permitted to self-deal or otherwise to use their positions with the
Company to further their own or any other related person's business
opportunities.
This Code does not, and is not intended to, repeat or replace the programs
and procedures or codes of ethics of the Company's investment advisor.
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Although typically not presenting an opportunity for improper personal
benefit, conflicts may arise from, or as a result of, the contractual
relationship between the Company and its investment advisor and administrator
of which the Covered Officers may be officers or employees. As a result, this
Code recognizes that the Covered Officers will, in the normal course of their
duties (whether formally for the Company, the investment advisor or the
administrator), be involved in establishing policies and implementing decisions
that will have different effects on the service providers and the Company. The
participation of the Covered Officers in such activities is inherent in the
contractual relationship between the Company and its service providers and is
consistent with the performance by the Covered Officers of their duties as
officers of the Company. Thus, if performed in conformity with the provisions
of the Investment Company Act of 1940, as amended ("Investment Company Act")
and the Investment Advisers Act of 1940, as amended, such activities will be
deemed to have been handled ethically.
The following list provides examples of conflicts of interest under the
Code, but Covered Officers should keep in mind that these examples are not
exhaustive. The overarching principle is that the personal interest of a
Covered Officer should be properly disclosed to the Company and resolved by
persons who do not have a personal interest.
* * * *
Each Covered Officer must not:
- use his or her personal influence or personal relationship
improperly to influence investment decisions or financial reporting
by the Company whereby the Covered Officer would benefit personally;
- cause the Company to take action, or fail to take action, for the
improper personal benefit of the Covered Officer; or
- retaliate against any other Covered Officer or any employee of the
Company or its affiliated persons for reports that are made in good
faith of actual or of potential violations by the Company or such
affiliated persons of applicable rules and regulations.
Each Covered Officer must discuss certain material conflict of interest
situations with the Company's Audit Committee. Examples of such situations
include:
- service as a director on the Board of a publicly traded company held
by a Wasatch Fund;
- accepting directly or indirectly investment opportunities, gifts or
other gratuities from individuals conducting or seeking to conduct
business with the Company or the Company's investment advisor.
However, Covered Officers may accept gifts from a single giver in
aggregate amounts not exceeding $100, and may attend business meals,
sporting events and other entertainment events at the expense of a
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giver as long as the expense is reasonable and both the giver(s) and
the Covered Officer(s) are present;
- any direct or indirect ownership interest in, financial
relationships with, or any consulting or employment relationship
with, any of the Company's service providers; and
- a direct or indirect financial interest in commissions, transaction
charges or spreads paid by the Company for effecting portfolio
transactions or for selling or redeeming shares.
III. DISCLOSURE AND COMPLIANCE
- Each Covered Officer should familiarize himself or herself with the
disclosure requirements generally applicable to the Company.
- Each Covered Officer should not knowingly or negligently
misrepresent, or cause others to misrepresent, facts about the
Company to others, whether within or outside the Company, including
to the Company's Board, Audit Committee and independent auditors,
and to governmental regulators, self-regulators and self-regulatory
organizations.
- Each Covered Officer should, to the extent appropriate within his or
her area of responsibility, consult with other officers and
employees of the Company and its service providers with the goal of
promoting full, fair, accurate, timely and understandable disclosure
in the reports and documents that the Company files with, or submits
to, the SEC and in other public communications made by the Company.
- It is the responsibility of each Covered Officer to promote and
encourage professional integrity in all aspects of the Company's
operations.
IV. REPORTING AND ACCOUNTABILITY
Each Covered Officer must:
- upon adoption of this Code (or thereafter as applicable, upon
becoming a Covered Officer), sign and return a report in the form of
Exhibit B to the person named in Exhibit A affirming that he or she
has received, read and understands the Code;
- annually sign and return a report in the form of Exhibit C to the
person named in Exhibit A affirming that he or she has complied with
the requirements of the Code; and
- notify the Company's Audit Committee promptly if he or she knows of
any violation of this Code. Failure to do so is itself a violation
of this Code.
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The Company's Audit Committee is responsible for applying this Code to
specific situations in which questions are presented under it and has the
authority to interpret this Code in any particular situation including any
approvals or waivers sought by the Covered Officers.
The Audit Committee will follow these procedures in investigating and
enforcing this Code:
- The Audit Committee will take all appropriate actions to investigate
any potential violations reported to the Committee.
- If, after such investigation, the Audit Committee believes that no
violation has occurred, the Audit Committee is not required to take
any further action.
- Any matter that the Audit Committee believes is a violation of this
Code will be reported to the full Board.
- If the Board concurs that a violation has occurred, it will consider
appropriate action, which may include review of, and appropriate
modifications to, applicable policies and procedures; notification
to the appropriate personnel of the investment advisor,
administrator or its board; and possible dismissal of the Covered
Officer as an officer of the Company.
- The Audit Committee will be responsible for granting waivers of
provisions of this Code, as appropriate.
- Any changes to or waivers of this Code will, to the extent required,
be disclosed as provided by SEC rules.
V. OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by the Company for
purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms
applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Company or the Company's investment advisor govern
or purport to govern the behavior or activities of the Covered Officers who are
subject to this Code, they are superseded by this Code to the extent that they
overlap or conflict with the provisions of this Code. The Company's and the
investment advisor's code of ethics under Rule 17j-1 under the Investment
Company Act and the investment advisor's other policies and procedures are
separate requirements applying to the Covered Officers and others, and are not
part of this Code.
VI. AMENDMENTS
Any amendments to this Code, other than amendments to Exhibit A, must be
approved or ratified by a majority vote of the Board, including a majority of
independent directors.
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VII. CONFIDENTIALITY
All reports and records prepared or maintained pursuant to this Code will
be considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code, such matters shall not be
disclosed to anyone other than the Company's Board or Audit Committee.
VIII. INTERNAL USE
The Code is intended solely for internal use by the Company and does not
constitute an admission, by or on behalf of Company, as to any fact,
circumstance or legal conclusion.
Date: August 27, 2003
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EXHIBIT A
Persons Covered by this Code of Ethics:
Samuel S. Stewart, Jr. (Principal Executive Officer)
Venice F. Edwards (Principal Financial Officer)
Recipient of reports under Article IV
Angela M. Palmer (Senior Compliance Administrator, Wasatch Advisors, Inc.;
and Chairman of Disclosure Committee, Wasatch Funds, Inc.)
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EXHIBIT B
INITIAL CERTIFICATION FORM
This is to certify that I have read and understand the Code of Ethics for
Principal Executive and Senior Financial Officers of Wasatch Funds, Inc., dated
_______________, and that I recognize that I am subject to the provisions
thereof and will comply with the policy and procedures stated therein.
Please sign your name here:
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Please print your name here:
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Please date here:
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EXHIBIT C
ANNUAL CERTIFICATION FORM
This is to certify that I have read and understand the Code of Ethics for
Principal Executive and Senior Financial Officers of Wasatch Funds, Inc. dated
_______________, (the "Code") and that I recognize that I am subject to the
provisions thereof and will comply with the policy and procedures stated
therein.
This is to further certify that I have complied with the requirements of
the Code during the period of _____________ through ______________.
Please sign your name here:
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Please print your name here:
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Please date here:
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