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Title: |
Joint Code of Ethics |
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Date: |
2006 |
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$56 |
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#2382462 |
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BARRETT ASSOCIATES, INC.
THE BARRETT FUNDS
JOINT CODE OF ETHICS
(As of December 15, 2005)
{PAGE}
INDEX
{TABLE}
{CAPTION}
{S} {C}
Page
A. PREAMBLE 1
B. DEFINITIONS 2
C. PROHIBITED TRANSACTIONS 4
D. PERSONAL TRANSACTIONS IN MANAGED FUNDS 6
E. COMPLIANCE PROCEDURES 7
F. EXEMPTED TRANSACTIONS 10
G. REPORTING OF VIOLATIONS 10
H. ANNUAL REPORTING 11
I. SANCTIONS 11
J. RETENTION OF RECORDS 11
Appendix A Insider Trading Policy
Appendix B Aggregation & Allocation
Policy
Appendix C Pre-clearance Forms
Exhibit A Initial Report
Exhibit B Annual Report
{/TABLE}
{PAGE}
BARRETT ASSOCIATES, INC.
and
THE BARRETT FUNDS
JOINT CODE OF ETHICS
A. PREAMBLE
High ethical standards are essential for the success of
Barrett Associates, Inc. ("BAI") and the Barrett Funds (the "Trust") and to
maintain the confidence of clients. Our long-term business interests are best
served by adherence to the principle that our clients' interests come first.
Further, BAI and the Trust have a fiduciary duty to their clients, which
requires individuals associated with our firm to act solely for the benefit of
our clients. Potential conflicts of interest may arise in connection with the
personal trading activities of individuals associated with investment adviser
firms. In recognition of BAI's and the Trust's fiduciary obligations to their
clients and BAI's and the Trust's desire to maintain high ethical standards, BAI
and the Trust have adopted this Code of Ethics containing provisions designed to
prevent improper personal trading, identify conflicts of interest and provide a
means to resolve any actual or potential conflict in favor of the client.
In addition, because of the nature of our business, employees
may be exposed to information which constitutes "inside information" or
material, non-public information. Federal securities laws prohibit the use of
such information for financial benefit. Accordingly, BAI and the Trust have also
adopted policies that prohibit the use of material non-public information. The
BAI/Trust Insider Trading Policy is attached to this Code of Ethics as Appendix
A.
One of our goals is to still allow BAI personnel to engage in
personal securities transactions, while protecting our clients and employees of
BAI from the conflicts that could result from a violation of the securities laws
or from real or apparent conflicts of interests. In this regard, we have set out
below procedures governing personal transactions for members of the firm. As
part of this process, BAI and the Trust will make every effort to keep
confidential all personal information provided by employees.
Adherence to the Code of Ethics and the related restrictions
on personal investing is considered a basic condition of employment by BAI and
the Trust. If you have any doubt as to the propriety of any activity, you should
consult with the Compliance Officer or his/her designee, who is charged with the
administration of this Code of Ethics, has general compliance responsibility for
BAI and the Trust, and may offer guidance on securities laws and acceptable
practices, as the same may change from time to time.
This Code of Ethics is being adopted by BAI and the Trust in
compliance with the requirements of Rule 17j-1 (the "Rule") adopted by the U.S.
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "Act") to effectuate the purposes and objectives of that Rule. The
Rule makes it unlawful for certain persons, in connection with purchase or sale
{PAGE}
by such person of a security "held or to be acquired"(1) by the Trust:
1. To employ a device, scheme or artifice to defraud the
Trust;
2. To make to the Trust any untrue statement of a material
fact or omit to state to the Trust a material fact necessary in order to make
the statements made, in light of the circumstances in which they are made, not
misleading;
3. To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon the Trust; or
4. To engage in a manipulative practice with respect to the
Trust.
The Rule also requires that the Trust, and its investment
adviser shall each adopt a written Code of Ethics, which shall be approved by a
majority of the Board of Trustees of the Trust (including a majority of
Independent Trustees) and that contains provisions reasonably necessary to
prevent persons from engaging in acts in violation of the above standard and to
use reasonable diligence and institute procedures reasonably necessary, to
prevent violations of the Code of Ethics.
Set forth below is the Code of Ethics adopted by the Board of
Directors of BAI and by the Board of Trustees of the Trust, in compliance with
the Rule. This Code of Ethics is based upon the principle that persons
associated with BAI, the Trust and certain affiliated persons of BAI and the
Trust, owe a fiduciary duty to, among others, the clients of BAI and the
shareholders of the Trust to conduct their affairs, including their personal
securities transactions, in such manner to avoid (i) serving their own personal
interests ahead of shareholders; (ii) taking inappropriate advantage of their
position with clients and/or the Trust; and (iii) any actual or potential
conflicts of interest or any abuse of their position of trust and
responsibility.
B. DEFINITIONS
1. "Access Person" means any trustee, director, officer, or
any employee of BAI or the Trust (or of any company in a control relationship to
BAI or the Trust) who, in connection with his regular functions or duties,
normally makes, participates in, or obtains current information regarding the
purchase or sale of a security by a client or the Trust, or whose functions
relate to the making of any recommendations with respect to such purchases or
sales; and any natural person, or the families of such persons, in a control
relationship to the Adviser or the Trust who regularly obtains current
information concerning recommendations made to a client or the Trust with regard
to the purchase or sale of a security by a client or the Trust. "Access Person"
also includes:
(a) An Access Person's spouse (other than a legally separated
or divorced spouse of the Access Person) and minor children;
__________________________________
(1) A security "held or to be acquired" is defined as (a) if within the most
recent fifteen (15) days, it (i) is or has been held by the Trust, or (ii) is
being or has been considered by the Trust or its investment adviser for purchase
by the Trust, and (b) any option to purchase or sell, and any security
convertible into or exchangeable for such a security.
2
{PAGE}
(b) Any individuals who live in the Access Person's household
and over whose purchases, sales, or other trading activities the Access
Person exercises control or investment discretion;
(c) Any persons to whom the Access Person
o provides primary financial support or
o whose financial affairs the Access Person controls.
(d) Any trust or other arrangement which names the Access
Person as a beneficiary or remainderman; and
(e) Any partnership, corporation, or other entity of which the
Access Person is a director, officer or partner where the Access Person
has a 25% or greater beneficial interest, or in which the Access Person
owns a controlling interest or exercises effective control.
A comprehensive list of all Access Persons will be maintained by our
Compliance Officer.
2. "Beneficial ownership" shall be as defined in, and
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder which, generally speaking, encompasses
those situations where the beneficial owner has the right to enjoy some economic
benefit from the ownership of the security. A person is normally regarded as the
beneficial owner of securities held in the name of his or her spouse or minor
children living in his or her household.
3. "Client Account" means any account managed by a portfolio
manager of BAI which is not a Covered Account.
4. "Covered Account" means any account, other than a Client
Account (as defined below) in which an Access Person has any beneficial
ownership, with the following exceptions:
(f) Access Person as Trustee. A Covered Account does
not include any account for which an Access Person serves as
trustee of a trust for the benefit of (1) a person to whom the
Access Person does not provide primary financial support, or
(2) an independent third party.
(g) Covered Accounts of Other Access Persons. A
Covered Account of an Access Person that is managed by another
Access Person excluding Covered Accounts of employees of BAI,
is considered to be a Covered Account only of the Access
Person has a beneficial ownership in the Covered Account. The
account is considered to be a client account with respect to
the Access Person managing the Covered Account.
3
{PAGE}
5. "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act.
6. "Independent Trustee" means a non-employee Director of BAI
or a non-employee Trustee of the Trust who is not an "interested person" of BAI
or of the Trust within the meaning of Section 2(a)(19) of the Act.
7. "Purchase or sale of a security" includes, among other
activities, the writing of an option to purchase or sell a Security (as defined
below).
8. "Managed Fund" means the Barrett Growth Fund, the Legg
Mason Financial Services Fund or any series of the Trust.
9. "Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, pre-organization
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 in 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. Notwithstanding the above, "Security" shall not include:
(i) securities issued by the government of the United States or by federal
agencies and that are direct obligations of the U.S. (e.g., Treasury securities)
or any derivative thereof; (ii) U.S. government agency obligations; (iii)
bankers' acceptances; (iv) bank certificates of deposit; (v) commercial paper;
(vi) securities issued by exchange traded funds; and (vi) shares of registered
open-end investment companies other than shares issued by a Managed Fund.
10. "Short Sale" means the sale of a security that the seller
does not own. A Short Sale is "against the box" to the extent that the seller
contemporaneously owns or has the right to obtain at no added cost securities
identical to those sold short.
C. PROHIBITED TRANSACTIONS
Except with respect to paragraph (1) below, an Independent
Trustee is not subject to the prohibitions set forth below unless, in conducting
his or her transactions, the Independent Trustee knew or, in the course of
fulfilling his or her official duties as a trustee, should have known that,
during the 15-day period immediately preceding or after the date of the
transaction by the trustee, such security was purchased or sold by the Trust or
was being considered for purchase by the Trust or by its investment adviser.
1. General. No Access Person shall engage in any act, practice
or course of conduct, which would violate the provisions of Rule 17j-1
set forth above. It is the responsibility of each Access Person to
ensure that a particular securities transaction being considered for
his or her Covered Account is not subject to a restriction contained in
4
{PAGE}
this Code of Ethics or otherwise prohibited by any applicable laws.
Personal securities transactions for Access Persons may be effected
only in accordance with the provisions of this Section.
2. Blackout Periods. As part of the pre-clearance process (as
described in Section E, "Compliance Procedures"), the Compliance
Officer shall determine, by speaking with the Director of Research
and/or the President, whether a personal securities transaction being
considered in a Covered Account involves a security that is currently
on, likely to be added to or deleted from the list of securities that
are being considered by the BAI portfolio management team (the "BAI
Focus List").
(a) If the personal securities transaction being considered
involves a security that is likely to or may be added to or be deleted
from the BAI Focus List within five (5) trading days, then the Access
Person shall not be allowed to trade the security in a Covered Account.
(b) If the personal securities transaction being considered
involves a security that is definitely not going to be added to or be
deleted from the BAI Focus List within five (5) trading days, then the
Access Person shall be allowed to trade the security in a Covered
Account.
(c) When a security is first placed on the BAI Focus List,
there is an initial seven (7) trading day waiting period before any
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