CODE OF ETHICS
This Code of Ethics ("Code") is adopted in compliance with the requirements
of U.S. securities laws applicable to registered investment advisers. Registered
investment advisers are required by Rule 204A-1 under the Investment Advisers
Act of 1940, as amended ("Advisers Act"), to adopt a code of ethics which, among
other things, sets forth the standards of business conduct required of their
supervised persons and requires those supervised persons to comply with the
federal securities laws.
STANDARDS OF BUSINESS CONDUCT
The Advisor seeks to foster a reputation for integrity and professionalism.
That reputation is a vital business asset. The confidence and trust placed in us
by our clients is something we value and endeavor to protect. To further that
goal, we have adopted this Code and implemented policies and procedures to
prevent fraudulent, deceptive and manipulative practices and to ensure
compliance with the Federal Securities Laws and the fiduciary duties owed to our
clients.
We are fiduciaries and as such, we have affirmative duties of care,
honesty, loyalty and good faith to act in the best interests of our clients. Our
Clients' interests are paramount and come before our personal interests. Our
Access Persons and Supervised Persons, as those terms are defined in this Code,
are also expected to behave as fiduciaries with respect to our clients. This
means that each must render disinterested advice, protect client assets
(including nonpublic information about a client or a client account) and act
always in the best interest of our clients. We must also strive to identify and
avoid conflicts of interest, however such conflicts may arise.
Access Persons and Supervised Persons of the Advisor and must not:
o employ any device, scheme or artifice to defraud a client;
o make to a client any untrue statement of a material fact or omit to
state to a client a material fact necessary in order to make the
statements made, in light of the circumstances under which they are
made, not misleading;
o engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon a client;
o engage in any manipulative practice with respect to a client;
o use their positions, or any investment opportunities presented by
virtue of their positions, to personal advantage or to the detriment
of a client; or
o conduct personal trading activities in contravention of this Code or
applicable legal principles or in such a manner as may be inconsistent
with the duties owed to clients as a fiduciary.
To ensure compliance with these restrictions and the Federal Securities Laws,
as defined in this Code, we have adopted, and agreed to be governed by, the
provisions of this Code. However, Access Persons and Supervised Persons are
expected to comply not merely with the "letter of the law," but also with the
spirit of the law, this Code, and the Advisor's Investment Adviser Compliance
Manual.
Should you have any doubt as to whether this Code applies to you, you should
contact Kenneth H. Thomas, the Chief Compliance Officer ("CCO").
1. DEFINITIONS
As used in the Code, the following terms have the following meanings:
1.1. ACCESS PERSONS include (i) any Supervised Person who (a) has access
to nonpublic information regarding any Client's purchase or sale of
securities; or (b) is involved in making securities recommendations to
clients or has access to such recommendations that are nonpublic and
(ii) any other person who the CCO determines to be an Access Person.
The CCO will inform all Access Persons of their status as such and
will maintain a list of Access Persons on Appendix A.
1.2. BENEFICIAL OWNERSHIP generally means having a direct or indirect
pecuniary interest in a security and is legally defined to be
beneficial ownership as used in Rule 16a-1(a)(2) under Section 16 of
the Securities Exchange Act of 1934, as amended ("Exchange Act").
However, transactions or holdings reports required by Section 5 of
this Code may contain a statement that the report will not be
construed as an admission that the person making the report has any
direct or indirect beneficial ownership in the security or securities
to which the report relates.
1.3. FEDERAL SECURITIES LAWS means: (i) the Securities Act of 1933, as
amended ("Securities Act"); (ii) Exchange Act; (iii) the
Sarbanes-Oxley Act of 2002; (iv) the Investment Company Act of 1940,
(v) the Advisers Act; (vi) title V of the Gramm-Leach-Bliley Act;
(vii) any rules adopted by the SEC under the foregoing statutes;
(viii) the Bank Secrecy Act, as it applies to funds and investment
advisers; and (ix) any rules adopted under relevant provisions of the
Bank Secrecy Act by the SEC or the Department of the Treasury.
1.4. LIMITED OFFERING means an offering that is exempt from registration
under Securities Act Sections 4(2) or 4(6), or pursuant to Securities
Act Rules 504, 505 or 506. Limited Offerings include, without
limitation, offerings of securities issued by the private funds
advised by the Advisor.
1.5. PURCHASE OR SALE OF A SECURITY includes, among other things, the
writing of an option to purchase or sell a security.
1.6. REPORTABLE SECURITY means any security as defined in Advisers Act
Section 202(a)(18) and Company Act Section 2(a)(36) except (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;
(iii) shares issued by money market funds; (iv) shares issued by
open-end funds other than Reportable Funds; and (v) shares issued by
unit investment trusts that are invested exclusively in one or more
open-end funds, none of which are Reportable Funds.
1.7. SECURITY HELD BY A CLIENT means any Reportable Security which is
currently held by a client. This definition also includes any option
to purchase or sell, and any security convertible into or exchangeable
for, a Reportable Security.
2. PRE-APPROVAL REQUIREMENTS FOR ACCESS PERSONS
2.1. TRANSACTIONS IN SECURITIES HELD BY A CLIENT. Access Persons may not
engage in a transaction in any Security held by a Client, absent the
approval of the CCO. In considering an Access Person's request to
engage in a transaction involving a Security held by a Client, the CCO
shall consider, among other factors, whether the sale of the
Reportable Security may negatively impact the market value of the
Securities held by a Client and whether the transaction is otherwise
consistent with the Code.
2.2. 30 DAY HOLDING PERIOD. Absent the prior written consent of the CCO,
no Access Person may sell a Reportable Security within 30 days of
acquiring the Reportable Security.
2.3. PROHIBITION ON SELF PRE-CLEARANCE OR APPROVAL. No Access Person shall
pre-clear his own trades, review his own reports or approve his own
exemptions from this Code. When such actions are to be undertaken with
respect to the CCO, Kenneth H. Thomas will perform such actions as are
required of the CCO by this Code.
3. ADDITIONAL REQUIREMENTS
3.1. FAIR TREATMENT. Access Persons must avoid taking any action which
would favor one client or group of clients over another, in violation
of our fiduciary duties and applicable law. Access Persons must comply
with relevant provisions of our compliance manuals designed to detect,
prevent or mitigate such conflicts.
3.2. SERVICE AS OUTSIDE DIRECTOR, TRUSTEE OR EXECUTOR. Access Persons
shall not serve on the boards of directors of publicly traded
companies, or in any similar capacity, absent the prior approval of
such service by the CCO following the receipt of a written request for
such approval. In the event such a request is approved, "Chinese Wall"
procedures may be utilized to avoid potential conflicts of interest.
Other than by virtue of their position with the firm or with respect
to a family member, no Access Person may serve as a trustee, executor
or fiduciary. Similarly, Access Persons may not serve on a creditor's
committee. In appropriate circumstances the CCO may grant exemptions
from this provision.
4. REQUIRED REPORTS
4.1. INITIAL AND ANNUAL HOLDINGS REPORTS. Each Access Person must submit
to the CCO a report: (i) not later than ten (10) days after becoming
an Access Person, reflecting the Access Person's Reportable Securities
as of a date not more than 45 days prior to becoming an Access Person;
and (ii) annually, on a date selected by the CCO, as of a date not
more than 45 days prior to the date the report was submitted.
4.2. Holdings reports must contain the following information:
(a) the title and type of security and as applicable, the exchange
ticker symbol or CUSIP number, number of shares, and principal amount
of each Reportable Security in which the Access Person has any direct
or indirect Beneficial Ownership;
(b) the name of any broker, dealer or bank with which the Access
Person maintains an account in which any securities are held for
the Access Person's direct or indirect benefit. (Note that even
those accounts which hold only non-Reportable Securities, must be
included); and
(c) the date the Access Person submits the report.
4.3. QUARTERLY TRANSACTION REPORTS. Within 30 days after the end of each
calendar quarter, each Access Person must submit a report to the CCO
covering all transactions in Reportable Securities during the
preceding calendar quarter other than those excepted from the
reporting requirements.
4.4. Quarterly Transaction Reports must contain the following information:
(a) the date of the transaction, the title and as applicable, the
exchange ticker symbol or CUSIP number, interest rate and
maturity date, number of shares, and principal amount of each
Reportable Security involved;
(b) the nature of the transaction (I.E., purchase, sale or any other
type of acquisition or disposition);
(c) the price of the security at which the transaction was effected;
(d) the name of the broker, dealer or bank with or through which the
transaction was effected; and
(e) the date the Access Person submits the report.
4.5. EXCEPTIONS TO REPORTING REQUIREMENTS. The reporting requirements of
this section apply to all transactions in Reportable Securities other
than:
(a) transactions with respect to securities held in accounts over
which the Access Person has no direct or indirect influence or
control; and
(b) transactions effected pursuant to an automatic investment plan
(i.e., any program in which regular periodic purchases or
withdrawals are made automatically in or from investment accounts
in accordance with a predetermined schedule and allocation,
including, but not limited to, any dividend reinvestment plan
("DRIP").
4.6. DUPLICATE STATEMENTS AND CONFIRMS. In order to satisfy the reporting
requirements of this Section, each Access Person, with respect to each
brokerage account in which such Access Person has any direct or
indirect beneficial interest, must arrange to have his/her broker mail
all brokerage statements, confirmations, and other periodic reports
directly to the CCO at the same time they are mailed or furnished to
such Access Person. To the extent that a duplicate brokerage statement
lacks some of the information otherwise required to be reported, the
missing information must be submitted as a supplement to the statement
or confirmation.
5. CODE NOTIFICATION AND ACCESS PERSON CERTIFICATIONS
The CCO shall provide notice to all Access Persons of their status under this
Code, and shall deliver a copy of the Code to each Access Person annually.
Additionally, each Access Person will be provided a copy of any Code
amendments. After reading the Code or amendment, each Supervised Person shall
make the certification contained in Appendix B. Annual certifications are due
within ten (10) days after the end of each calendar year. Certifications with
respect to amendments to the Code must be returned to the CCO within a
reasonably prompt time. To the extent that any Code-related training sessions
or seminars are held, the CCO shall keep records of such sessions and the
Access Persons attending.
6. REVIEW OF REQUIRED CODE REPORTS
6.1. Reports required to be submitted pursuant to the Code will be
reviewed by the CCO or a designee on a periodic basis.
6.2. Any material violation or potential material violation of the Code
must be promptly reported to the CCO. The CCO will investigate any
such violation or potential violation and determine the nature and
severity of the violation. All violations will be handled on a
case-by-case basis in a manner deemed appropriate by the CCO. In each
case of a violation, the CCO must determine what actions, if any, are
required to cure the violation and prevent future violations.
6.3. The CCO will keep a written record of all investigations in
connection with any Code violations, including any action taken as a
result of the violation.
6.4. Sanctions for violations of the Code may include: verbal or written
warnings and censures, monetary sanctions, disgorgement, suspension or
dismissal. Where a particular Client has been harmed by the violative
action, disgorgement may be paid directly to the client; otherwise,
monetary sanctions shall be paid to an appropriate charity determined
by the CCO.
7. RECORDKEEPING AND REVIEW
The Advisor will maintain records (which shall be available for examination by
the SEC staff) in accordance with its POLICY REGARDING RECORDKEEPING, and
specifically shall maintain:
(i) a copy of this Code of Ethics and any other preceding code of ethics
that, at any time within the past 5 years, has been in effect in an
easily accessible place;
(ii) a record of any Code of Ethics violation and of any sanctions imposed
for a period of not less than 5 years following the end of the fiscal
year in which the violation occurred, the first 2 years in an easily
accessible place;
(iii) a copy of each report made by an Access Person under this Code of
Ethics for a period of not less than 5 years from the end of the
fiscal year in which it is made, the first 2 years in an easily
accessible place;
(iv) a record of all persons who are, or within the past 5 years have
been, required to submit reports under this Code of Ethics, or who are
or were responsible for reviewing these reports for a period of at
least 5 years after the end of the fiscal year in which the report was
submitted, the first 2 years in an easily accessible place; and
(v) a record of any decision, and the reasons supporting the decision, to
approve the acquisition by an Access Person of Securities acquired in
an Initial Public Offering or Limited Offering, for a period of at
least 5 years after the end of the fiscal year in which the approval
is granted, the first 2 years in an easily accessible place.
To the extent appropriate and permissible, the CCO may choose to keep such
records electronically.
The CCO shall review this Code and its operation annually and may determine to
make amendments to the Code as a result of that review. Non-material amendments
to this Code should be made no more frequently than annually. Material
amendments to the Code may be made at any time.
8. REPORTING VIOLATIONS
Any Access Person who believes that a violation of this Code has taken place
must promptly report that violation to the CCO or to the CCO's designee. To the
extent that such reports are provided to a designee, the designee shall provide
periodic updates to the CCO with respect to violations reported. Access Persons
may make these reports anonymously and no adverse action shall be taken against
an Access Person making such a report in good faith.
9. WAIVERS.
The CCO may grant waivers of any substantive restriction in appropriate
circumstances (E.G., personal hardship) and will maintain records necessary to
justify such waivers.
10. CONFIDENTIALITY
All reports of securities transactions and other information filed pursuant to
this Code of Ethics shall be treated as confidential to the extent permitted by
law.
11. GIFTS, REBATES, CONTRIBUTIONS OR OTHER PAYMENTS
The Advisor will take reasonable steps to ensure that neither it nor its
Supervised Persons offer or give, or solicit or accept, in the course of
business, any inducements which may lead to conflicts of interest between the
Advisor and its Clients. Supervised Persons generally may not solicit gifts or
gratuities nor give inducements, except in accordance with this Code of Ethics.
The term "inducements" means gifts, entertainment and similar benefits which
are offered to or given by Supervised Persons. Gifts of nominal value or those
that are customary in the industry such as meals or entertainment may be
appropriate. Any form of a loan by a Supervised Person to a Client or by a
Client to a Supervised Person is not allowed. A relaxation of, or exemption
from, these procedures may only be granted by the CCO.
Discretion must be used in accepting gifts, including invitations for dinners,
entertainment, golf outings, sporting events, theater, etc. No Access Person
may accept any gift or preferential treatment (except meals and entertainment
valued at less than $100) from any person or entity that: (i) does business
with the Advisor; (ii) is or may appear to be connected with any present or
future business dealings between the Advisor and such person or entity; or
(iii) may create or appear to create a conflict of interest. Similarly, no
Access Person should offer any gifts that could be viewed as influencing the
decision making or otherwise could be considered as creating a conflict of
interest on the part of the recipient.
12. OUTSIDE EMPLOYMENT OR OTHER ACTIVITIES
Supervised Persons are generally prohibited from being employed or compensated
by any other entity, serving on the board of directors of any publicly traded
companies, and similar conduct except with the prior authorization of the CCO.
Any employment or other outside activity by a Supervised Person may result in
possible conflicts of interests for the Supervised Person or for the Advisor
and therefore must be reviewed and approved by the CCO. Outside activities,
which must be reviewed and approved, include the following:
(1) being employed or compensated by any other entity;
(2) engaging in any other business including part-time, evening or
weekend employment; or
(3) serving as an officer, director, partner, etc., in any other entity.
Written approval for any of the above activities is to be obtained by a
Supervised Person BEFORE undertaking any such activity so that a determination
may be made that the activities do not interfere with any of the Supervised
Person's responsibilities and any conflicts of interests which may be created
by such activities may be addressed. Supervised Persons seeking approval shall
provide the following information to the CCO: (1) the name and address of the
outside business organization; (2) a description of the business of the
organization; (3) compensation, if any, to be received; (4) a description of
the activities to be performed; and (5) the amount of time per month that will
be spent on the outside activity. Because the Advisor encourages involvement in
charitable, nonpublic organization, civic and trade association activities,
these outside activities will generally be approved unless a clear conflict of
interest exists. Supervised Persons must update annually any requests for
approval of an outside activity.
Records of requests for approval along with the reasons such requests were
granted or denied are maintained by the CCO.
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ENFORCEMENT OF THIS CODE OF ETHICS
CCO'S DUTIES AND RESPONSIBILITIES
The CCO shall be primarily responsible for administering and enforcing the
provisions of this Code of Ethics. The CCO shall:
(i) maintain a current list of all Access Persons;
(ii) supervise, implement and enforce the terms of this Code of
Ethics;
(iii) (a) provide each Access Person with a current copy of this Code
of Ethics and any amendments thereto, (b) notify each person who
becomes an Access Person of the reporting requirements and other
obligations under this Code of Ethics at the time such person
becomes an Access Person, and (c) require each Access Person to
provide a signed Certificate of Compliance for the Code of Ethics
and Insider Trading Policy;
(iv) maintain a list of all Securities which Community Development
Fund Advisors, LLC recommends, holds, or is purchasing or
selling, or intends to recommend purchase or sell on behalf of
its Clients;
(v) determine whether any particular Personal Securities
Transactions should be exempted pursuant to the provisions this
Code of Ethics;
(vi) maintain files of statements and other information to be
reviewed for the purpose of monitoring compliance with this Code
of Ethics, which information shall be kept confidential, except
as required to enforce this Code of Ethics, or to participate in
any investigation concerning violations of applicable law;
(vii) review all Holdings Reports required to be provided by each
Access Person pursuant to this Code of Ethics: (a) for each new
Access Person, to determine if any conflict of interest or other
violation of this Code of Ethics results from such person
becoming an Access Person; and (b) for all Access Persons, to
determine whether a violation of this Code of Ethics has
occurred;
(viii) review on a quarterly basis all Securities reported on the
Quarterly Transaction Reports required to be provided by each
Access Person pursuant to this Code of Ethics for such calendar
quarter to determine whether a Code of Ethics violation may have
occurred;
(ix) review any other statements, records and reports required by
this Code of Ethics; and
(x) review on a periodic basis and update as necessary, this Code of
Ethics.
VIOLATIONS OF THIS CODE OF ETHICS
If the CCO determines that a violation of this Code of Ethics has occurred,
the CCO shall prepare a record of explanatory material regarding such violation
and shall immediately take remedial or corrective action. The CCO shall monitor
his own Securities holdings and transactions in accordance with the reporting
requirements set forth in this Policy.
If the CCO finds that a Supervised Person has violated this Code of Ethics,
the CCO will impose upon such Supervised Person sanctions that the CCO deems
appropriate in view of the facts and circumstances. Sanctions with respect to
any Supervised Person (other than a principal) may include written warning,
suspension or termination of employment, a letter of censure and/or restitution
of an amount equal to the difference between the price paid or received by the
offending Supervised Person. In addition, the Advisor reserves the right to
require the offending Supervised Person to reverse, cancel or freeze, at the
Supervised Person's expense, any transaction or position in a specific Security
if the Advisor believes the transaction or position violates this Code of Ethics
and/or the Advisor's general fiduciary duty to its Clients, or otherwise appears
improper.
All violations of this Code of Ethics must be immediately reported to the
CCO.