Commonwealth International Series Trust
CODE OF ETHICS
FOR
PRINICIPAL EXECUTIVE AND PRINCIPAL FINANCIAL OFFICERS
I. Covered Officers/Purpose of Code
The Boards of Trustees of the Commonwealth International Series Trust on
behalf of its Funds has established this Code of Ethics (the "Code") in
accordance with the Sarbanes-Oxley Act of 2002 and the rules promulgated
thereunder. Commonwealth International Series Trust, a Massachusetts business
trust (the "Trust") is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"). This Code of Ethics ("Code") for the Trust and its series funds
(collectively, the "Funds" and each a "Fund") applies to the Fund's Principal
Executive Officer and Principal Financial Officer (the "Covered Officers" each
of whom are set forth in Exhibit A) for the purpose of promoting:
o Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in
reports and documents that the Trust files with, or submits to, the
Securities and Exchange Commission ("SEC") and in other public
communications made by or on behalf of the Funds;
o Compliance with applicable laws and governmental rules and
regulations;
o Accountability for adherence to the Code, and
o The prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code.
Each Covered Officer must adhere to a high standard of business ethics and
must be sensitive to situations that may give rise to actual as well as apparent
conflicts of interest.
II. Covered Officers Should Ethically Handle Actual and Apparent Conflicts of
Interest
A "conflict of interest" occurs when the Covered Officers' private
interests interfere with the interests of, or their service to, the Trust. For
example, a conflict of interest would arise if a Covered Officer, or a member of
his family, receives improper personal benefits as a result of his position with
the Trust.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Trust and are already subject to conflict of interest
provisions in the Investment Company Act and the Investment Advisers Act of
1940, as amended (the "Investment Advisers Act"). For example, Covered Officers
may not individually engage in certain transactions (such as the purchase or
sale of securities or other property) with the Funds because of their status as
"affiliated persons". Compliance programs and procedures of the Trust and the
Trust's investment adviser, transfer agent, fund accounting service provider,
administrative service provider, and principal underwriter (each a "Service
Provider") 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.
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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 Trust and a Service Provider. As a result, this Code
recognizes that Covered Officers will, in the normal course of their duties
(whether formally for the Trust or for a Service Provider, or for both), be
involved in establishing policies and implementing decisions which will have
different effects on a Service Provider and the Trust. The participation of the
Covered Officers in such activities is inherent in the contractual relationship
between the Trust and a Service Provider and is consistent with the performance
by the Covered Officers of their duties as officers of the Trust. Thus, if
performed in conformity with the provisions of the Investment Company Act and
the Investment Advisers Act, such activities will be deemed to have been handled
ethically.
Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Investment Advisers Act. The following list provides examples of
conflicts of interest under the Code, but Covered Officers should keep in mind
that these examples are not all inclusive. The primary concern is that the
personal interest of the Covered Officer should not be placed improperly before
the interests of the Trust.
Each Covered Officer must:
o Not use his personal influence or personal relationships to
improperly influence investment decisions or financial reporting by
the Funds whereby the Covered Officer would benefit personally to
the detriment of the Funds;
o Not 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 Funds;
o Disclose any ownership interest in, or any consulting or employment
relationship with, any of the Trust's service providers or any
affiliated person thereof; and
o Not use material non-public knowledge of portfolio transactions made
or contemplated for a Fund to trade personally or cause others to
trade personally in contemplation of the market effect of such
transactions.
Certain material conflict of interest situations require written
pre-approval from the Trust's Audit Committee or its designated representative.
Examples of material conflict of interest situations requiring pre-approval
include:
o Service as a director on the board of any public company;
o The receipt of any non-nominal gifts;
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o 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; and
o A direct or indirect financial interest in commissions, transaction
charges or spreads paid by a Fund for effecting portfolio
transactions or for selling or redeeming shares other than an
interest arising from the Covered Officer's employment, such as
compensation or equity ownership.
The Trust's Independent Trustees will be provided a list of any such
written pre-approvals requested in connection with the next regularly scheduled
Board meeting.
III. Disclosure and Compliance
o Each Covered Officer should familiarize himself with the disclosure
requirements generally applicable to the Trust;
o Each Covered Officer should not knowingly misrepresent, or cause
others to misrepresent, facts about the Funds to others, whether
within or outside the Trust, including to the Trust's Board of
Trustees ("Board") and auditors, and to governmental regulators and
self-regulatory organizations;
o Each Covered Officer should, to the extent appropriate within his
area of responsibility, consult with other officers of the Trust and
officers and employees of the Service Providers with the goal of
promoting full, fair, accurate, timely and understandable disclosure
in the reports and documents the Trust files with, or submits to,
the SEC and in other public communications made by or on behalf of
the Funds; and
o It is the responsibility of each Covered Officer to promote
compliance with the standards and restrictions imposed by applicable
laws, rules and regulations.
IV. Reporting and Accountability
Each Covered Officer must:
o Upon adoption of the Code (or thereafter as applicable, upon
becoming a Covered Officer), affirm in writing to the Board that he
has received, read and understands the Code;
o Annually thereafter affirm to the Board that he has complied with
the requirements of the Code;
o Not retaliate against any other Covered Officer, other officer of
the Trust, any employee of a Service Provider or any of their
affiliated persons for reports of potential violations that are made
in good faith; and
o Notify the Trust's Audit Committee or its designated representative
promptly if he knows of any violation of this Code. Failure to do so
is itself a violation of this Code.
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The Trust's Audit Committee, directly or through its designated
representative, 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, the Independent Trustees will
consider any waivers of any provision of this Code.
The Trust will follow the following procedures in investigating and
enforcing this Code:
o The Trust's Audit Committee will take all appropriate action to
investigate any reported potential violations;
o If, after such investigation, the Audit Committee believes that no
violation has occurred, the Audit Committee is not required to take
any further action; o Any matter that the Audit Committee believes
is a violation will be reported to the Independent Trustees;
o If the Independent Trustees concur that a violation has occurred,
they will inform the Covered Officer and consider appropriate
action, which may include review of, and appropriate modifications
to, applicable policies and procedures; notification to appropriate
personnel of a Service Provider or its board; or a recommendation to
dismiss the Covered Officer;
o The Independent Trustees will be responsible for granting waivers,
as appropriate; and
o 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 Trust 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 Trust, a Service Provider, or other service
providers govern or purport to govern the behavior or activities of Covered
Officers, they are superceded by this Code to the extent that they overlap or
conflict with the provisions of this Code. The Code of Ethics under Rule 17j-1
under the Investment Company Act is a separate requirement applying to the
Covered Officers and others, and is not part of this Code.
VI. Amendments
Except as to Exhibit A, this Code may not be amended except in written
form, which is specifically approved or ratified by a majority vote of the
Board, including a majority of Independent Trustees.
VII. Confidentiality
A Fund's Covered Officers must maintain the confidentiality of information
entrusted to them by the Fund, except when disclosure is authorized by the
applicable Fund's counsel or required by laws or regulations. Whenever possible,
Covered Officers should consult with Fund counsel if they believe they have a
legal obligation to disclose confidential information. Confidential information
includes all non-public information that might be of use to competitors, or
harmful to the Fund or its shareholders, if disclosed. The obligation to
preserve confidential information continues even after employment as a Covered
Officer ends.
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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 Board, officers of the Trust, Trust counsel
and counsel for a Service Provider.
VIII. Internal Use
The Code is intended solely for the internal use by the Trust and does not
constitute an admission, by or on behalf of any Trust, as to any fact,
circumstance, or legal conclusion.
Date: January 7, 2004
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EXHIBIT A
Persons Covered by this Code of Ethics
Robert W. Scharar, President of the Trust
Lawrence Beaver, Principal Financial Officer of the Trust
Date: January 7, 2004
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