FORUM FUNDS
MONARCH FUNDS
CODE OF ETHICS PURSUANT TO SECTION 406 OF THE SARBANES-OXLEY ACT
OF 2002 FOR PRINCIPAL EXECUTIVE, FINANCIAL AND ACCOUNTING
OFFICERS
SECTION 1: COVERED OFFICER/PURPOSE OF THE CODE
This Code of Ethics ("CODE") has been adopted by Forum Funds and
Monarch Funds (each a "TRUST") pursuant to Section 406 of the Sarbanes-Oxley Act
of 2002 (the "Act"). This Code applies to the prinicipal executive, financial,
and accounting officers of each Trust (each a "COVERED OFFICER," as identified
in ATTACHMENT A). This Code has been adopted for the purpose of promoting:
(i) honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
(ii) full, fair, accurate, timely and understandable disclosure in
reports and documents that a Trust files with, or submits to, the
Securities and Exchange Commission ("SEC") and in other public
communications made by the Trust;
(iii)compliance with applicable laws and governmental rules and
regulations;
(iv) the prompt internal reporting of violations of the Code to the
appropriate person or persons identified in the Code; and
(v) 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 conflicts of
interest.
SECTION 2: A COVERED OFFICER SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT
CONFLICTS OF INTEREST
OVERVIEW. A "conflict of interest" occurs when a Covered Officer's
private interest interferes with the interests of, or his or her service to, a
Trust. For example, a conflict of interest would arise if a Covered Officer, or
a member of the Covered Officer's family, receives improper personal benefits as
a result of the Covered Officer's position with a Trust.
Certain conflicts of interest arise out of the relationships between a
Covered Officer and a Trust and already are subject to conflict of interest
provisions in the Investment Company Act of 1940, as amended (including the
regulations thereunder, the "1940 ACT"), and the Investment Advisers Act of
1940, as amended (including the regulations thereunder, the "ADVISERS ACT"). For
example, a Covered Officer may not engage in certain transactions (such as the
purchase or sale of portfolio securities or other property) with a Trust because
of his/her status as an
"affiliated person" of the Trust. The compliance programs and procedures of a
Trust and its investment adviser(s) (the "ADVISER(S)") are designed to prevent,
or identify and correct, violations of these provisions. This Code does not, and
is not intended to, repeat or replace these programs and procedures, and such
conflicts fall outside of the parameters of this Code. See also Section V of
this Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts may arise from, or as a result of, the contractual
relationship between a Trust and its Adviser(s) or the Trust's adminstrator or
fund accounting agent ("OTHER SERVICE PROVIDERS"), of which a Covered Officer is
also an officer or employee. As a result, this Code recognizes that a Covered
Officer will, in the normal course of his/her duties (whether for a Trust or for
its Adviser(s) or other service providers, or for any of them), be involved in
establishing policies and implementing decisions that will have different
effects on the Trust, its Adviser(s) and other service providers. The
participation of a Covered Officer in such activities is inherent in the
contractual relationships between a Trust and its Adviser(s) and such other
service providers and is consistent with the performance by the Covered Officer
of his/her duties as an officer of the Trust. Thus, if performed in conformity
with the provisions of the 1940 Act and the Advisers Act, such activities will
be deemed to have been handled ethically. In addition, a Trust's Board of
Trustees ("BOARD") recognizes that a Covered Officer may also be an officer or
employee of one or more other investment companies covered by this or other
codes and that such service, by itself, does not give rise to a conflict of
interest.
Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not the subject of provisions of the 1940 Act and the
Advisers Act. The following list provides examples of conflicts of interest
under the Code, but a Covered Officer should keep in mind that these examples
are not exhaustive. The overreaching principle is that the personal interest of
a Covered Officer should not be placed improperly before the interest of a
Trust.
* * * *
A Covered Officer must not:
(i) use his or her personal influence or personal relationships
improperly to influence investment decisions or financial
reporting by a Trust whereby the Covered Officer would benefit
personally to the detriment of the Trust;
(ii) cause the Trust to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than
the benefit of the Trust; or
(iii)retaliate against any other Covered Officer or any employee of
the Trust or their service providers for reports of potential
violations that are made in good faith.
There are some conflict of interest situations that should always be
approved by a Trust's President (or, with respect to activities of the
President, by the chairman of the Trust's audit committee ("COMMITTEE")). These
conflict of interest situations are listed below:
(i) service on the board of directors or governing board of a
publicly traded entity;
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(ii) the receipt of any non-nominal gifts from persons or entities who
have or are seeking business relationships with a Trust;
(iii)the receipt of any entertainment from any company with which the
Trust has current or prospective business dealings unless such
entertainment is business-related, reasonable in cost,
appropriate as to time and place, and not so frequent as to raise
any question of impropriety;
(iv) any ownership interest in, or any consulting or employment
relationship with, any entities doing business with the Trust,
other than its Adviser(s) or another service provider or their
respective affiliates. This restriction shall not apply to or
otherwise limit the ownership of publicly traded securities so
long as a Covered Person's ownership does not exceed more than 2%
of the outstanding securities of the relevant class.
(v) a direct or indirect financial interest in commissions,
transaction charges or spreads paid by the Trust for effecting
portfolio transactions or for selling or redeeming shares other
than an interest arising from the Covered Officer's employment
with a Trust's Adviser(s), the Trust's principal underwriter or
their respective affiliates. This restriction shall not apply to
or otherwise limit (i) the ownership of publicly traded
securities so long as the Covered Person's ownership does not
exceed more than 2% of the particular class of security
outstanding or (ii) the receipt by a Trust's Adviser(s) or an
affiliate of research or other benefits in exchange for "soft
dollars."
SECTION 3. DISCLOSURE AND COMPLIANCE
(i) A Covered Officer should familiarize himself or herself with the
disclosure requirements generally applicable to a Trust;
(ii) a Covered Officer should not knowingly misrepresent, or cause
others to misrepresent, facts about the Trust to others, whether
within or outside the Trust, including to the Trust's Board and
auditors, and to governmental regulators and self-regulatory
organizations;
(iii)a Covered Officer should, to the extent appropriate within his
or her area of responsibility, consult with other officers and
employees of the Trust and its Adviser(s) and, as applicable,
other service providers with the goal of promoting full, fair,
accurate, timely and understandable disclosure in the reports and
documents the Trust files with, or submit to, the SEC and in
other public communications made by the Trust; and
(iv) it is the responsibility of a Covered Officer to promote
compliance with the standards and restrictions imposed by
applicable laws, rules and regulations.
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SECTION 4: REPORTING AND ACCOUNTABILITY
A Covered Officer must:
(i) upon adoption of this Code (or thereafter as applicable, upon
becoming a Covered Officer), affirm in writing to a Trust that he
or she has received, read and understands the Code;
(ii) annually thereafter affirm to the Trust that he or she has
complied with the requirements of the Code;
(iii)provide full and fair responses to all questions asked in the
Trust's periodic Trustee and Officer Questionnaire as well as
with respect to any supplemental request for information; and
(iv) notify the Trust's President promptly if he or she knows of any
violation of this Code (with respect to violations by the
President, the Covered Officer shall report to the chairman of
the Committee). Failure to do so is itself a violation of this
Code.
A Trust's President 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. However, any approvals or
waivers sought by a Trust's President will be considered by the audit committee
(the "COMMITTEE").
A Trust will follow these procedures in investigating and enforcing
this Code (in the case of a suspected violation of this Code by its President,
the actions specified below to be taken by the President will instead be the
responsibility of the chairman of the Committee):
(i) the Trust's President will take all appropriate action to
investigate any potential violations reported to him, which may
include the use of internal or external counsel, accountants or
other personnel;
(ii) if, after such investigation, the President believes that no
violation has occurred, the President is not required to take any
further action;
(iii)any matter that the President believes is a violation will be
reported to the Committee;
(iv) if the Committee concurs that a violation has occurred, it will
inform and make a recommendation to the Trust's Board, which will
consider appropriate action, which may include review of, and
appropriate modifications to, applicable policies and procedures;
notification to appropriate personnel of the Trust's Adviser(s)
or its board; or a recommendation to dismiss the Covered Officer;
(v) the Committee will be authorized to grant waivers, as it deems
appropriate; and
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(vi) any changes to or waivers of this Code will, to the extent
required, be disclosed as provided by SEC rules.
SECTION 5: OTHER POLICIES AND PROCEDURES
This Code shall be the sole code of ethics adopted by a Trust for
purposes of the Act and the rules and forms applicable to registered investment
companies thereunder. Insofar as other policies or procedures of a Trust or its
Adviser(s) or other service providers govern or purport to govern the behavior
or activities of a Covered Officer who is subject to this Code, they are
superseded by this Code to the extent that they conflict with the provisions of
this Code. A Trust and its Adviser(s) and service providers' codes of ethics
under Rule 17j-1 under the 1940 Act and its Adviser(s) and other service
providers' more detailed compliance policies and procedures are separate
requirements applying to the Covered Officers and others, and are not part of
this Code.
SECTION 6: AMENDMENTS
Any amendments to this Code must be approved or ratified by a majority
vote of each Trust Board, including a majority of each Board's independent
trustees.
SECTION 7: 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 except as authorized by a Trust's Board.
SECTION 8: INTERNAL USE
The Code is intended solely for the internal use by a Trust and does
not constitute an admission, by or on behalf of the Trust, as to any fact,
circumstance or legal conclusion.
As adopted August 28, 2003
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ATTACHMENT A
PERSONS COVERED BY THIS CODE OF ETHICS
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PRINCIPAL EXECUTIVE PRINCIPAL FINANCIAL PRINCIPAL ACCOUNTING
TRUST OFFICER OFFICER OFFICER
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Forum Funds David I. Goldstein Stacey E. Hong N/A
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Monarch Funds David I. Goldstein Stacey E. Hong N/A
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