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EXHIBIT (p)(i)
UNDISCOVERED MANAGERS FUNDS
Amended and Restated Code of Ethics
Adopted March 31, 1999
In order to ensure that personnel associated with Undiscovered Managers
Funds (the "Trust") comply with requirements of Section 17(j) of the Investment
Company Act of 1940, as amended (the "Act"), and of Rule 17j-1 thereunder, the
Trust has adopted the Code of Ethics (the "Code") set forth below. Personnel
associated with the Trust include, but are not limited to, persons employed by
Undiscovered Managers, LLC (the "Manager"); Bay Isle Financial Corporation, E.R.
Taylor Investments, Inc., J.L. Kaplan Associates, LLC, Kestrel Investment
Management Corporation, Fuller & Thaler Asset Management, Inc., Unibank
Securities, Inc., and Waite & Associates, L.L.C. (each a "Sub-adviser" and
together, the "Sub-advisers"); and First Data Distributors, Inc. ("First Data").
This Code of Ethics is based on the principles that (i) Access Persons
(as such term is hereinafter defined) owe a fiduciary duty to, among others, the
shareholders of the Trust to conduct their personal transactions in securities
in a manner which neither interferes with Trust portfolio transactions nor
otherwise takes unfair or inappropriate advantage of an Access Person's
relationship to the Trust; (ii) in complying with this fiduciary duty, Access
Persons owe shareholders a high duty of trust and fair dealing; and (iii) Access
Persons must, in all instances, place the interests of the shareholders of the
Trust ahead of the Access Person's own personal interests or the interests of
others to which the Access Person does not owe a fiduciary duty.
I. Definitions
(A) "Access Person" means (1) any Trustee or officer of the Trust;
(2) any director, officer or general partner of the Manager or
any Sub-adviser; (3) any director or officer of First Data who
makes, participates or obtains information regarding the
purchase or sale of securities for the Trust; or (4) any
Advisory Person (as such term is hereinafter defined).
(B) "Advisory Person" means (1) any employee of the Manager or any
Sub-adviser or of any company in a control relationship to the
Manager or any Sub-adviser, who, in connection with his or her
regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of a Security (as
such term is hereinafter defined) by the Trust, or whose
functions relate to the making of any recommendations with
respect to such purchases or sales; and (2) any natural person
in a control relationship to the Manager or any
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Sub-adviser who obtains information concerning recommendations
made to the Trust with regard to the purchase or sale of a
Security.
(C) A Security is "being considered for purchase or sale" when a
recommendation to purchase or sell a Security has been made
and communicated or, with respect to the person making the
recommendation, when such person seriously considers making
such a recommendation.
(D) A Security is "being purchased or sold" by the Trust from the
time when a purchase or sale program has been communicated to
the person who places the buy and sell orders for the Trust
until the time when such program has been fully completed or
terminated.
(E) "Beneficial ownership" shall be 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 from time to
time in effect, except that the determination of direct or
indirect beneficial ownership shall apply to all Securities
which an Access Person has or acquires. As a general matter,
"beneficial ownership" will be attributed to an Access Person
in all instances where the Access Person, directly or
indirectly, has or shares a pecuniary interest in the
Securities.
(F) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the Act. Section 2(a)(9) provides that
"control" means the power to exercise a controlling influence
over the management or policies of a company, unless such
power is solely the result of an official position with such
company.
(G) "Disinterested Trustee" means a Trustee of the Trust who is
not an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the Act.
(H) "Purchase or sale of a Security" includes, inter alia, the
writing of an option to purchase or sell a Security.
(I) "Security" shall have the meaning set forth in Section
2(a)(36) of the Act, except that it shall not include
securities issued by the Government of the United States,
short-term debt securities which are "government securities"
within the meaning of Section 2(a)(16) of the Act, shares of
registered open-end investment companies, bankers'
acceptances, bank certificates of deposit, commercial paper
and other money market instruments, savings or demand deposit
accounts with banks or thrifts, or such other securities as
may be excepted under the provisions of Rule 17j-1 under the
Act as in effect from time to time.
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(J) "Security held or to be acquired" by the Trust means any
Security which, within the most recent fifteen (15) days, (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.
A person who normally only assists in the preparation of public reports, or
receives public reports, but receives no information about current
recommendations or trading, is neither an Advisory Person nor an Access Person.
A single instance or infrequent, inadvertent instances of obtaining knowledge
does not make one either then or for all times an Advisory Person. Under the
definition of "Advisory Person" the phrase "makes . . . the purchase or sale"
means someone who places orders or otherwise arranges transactions. An Advisory
Person or Access Person of the Trust does not include an employee, director,
officer or general partner of the Manager, any Sub-adviser or First Data where
such company has adopted pursuant to Section VI hereof a code of ethics
satisfactory to the Board of Trustees of the Trust which contains provisions
reasonably necessary to prevent its Advisory Persons from engaging in any act,
practice or course of business prohibited by Rule 17j-1(a) under the Act and
such employee is required to report his transactions to such company.
II. Exempted Transactions
The prohibitions of Section III of this Code shall not apply to the
following transactions by Access Persons:
(1) Purchases or sales effected for any account over
which the Access Person has no direct or indirect
influence or control.
(2) Purchases or sales of Securities which are not
eligible for purchase or sale by the Trust, as
determined by reference to the Act and regulations
thereunder, the investment objectives and policies
and investment restrictions of the Trust,
undertakings made to regulatory authorities, and
other policies adopted from time to time by the
Trust.
(3) Purchases or sales which are nonvolitional on the
part of either the Access Person or the Trust,
including purchases or sales upon exercise of puts or
calls written by the Access Person and sales from a
margin account pursuant to a bona fide margin call.
(4) Purchases which are either: made solely with the
dividend proceeds received in a dividend reinvestment
plan; or part of an automatic payroll deduction plan,
whereby an employee purchases Securities issued by an
employer.
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(5) Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of
its Securities, to the extent such rights were
acquired from such issuer, and sales of such rights
so acquired.
(6) Transactions which appear to present no reasonable
likelihood of harm to the Trust, which are otherwise
in accordance with Rule 17j-1 under the Act, and
which the President of the Trust has authorized in
advance.
(7) Purchases or sales of up to 500 shares of a Security
which is being considered for purchase or sale by the
Trust (but not being purchased or sold) if the issuer
has a market capitalization of over $10 billion, or
if, in the case of any purchase or sale of an equity
Security by an Access Person or Advisory Person of a
Sub-adviser, the aggregate amount of such equity
Security (including any options to buy or sell such
equity Security, and all Securities convertible into
or exchangeable for such equity Security) held or
being considered for purchase for all accounts over
which such Sub-adviser has investment discretion does
not exceed 5% of the average daily trading volume
(over the most recent 30-day period) of such equity
Security.
(8) With respect to any Access Person or Advisory Person
of any Sub-adviser, transactions for the account of
any investment advisory account managed by such
Sub-adviser that is a limited partnership or other
pooled investment vehicle in which all Access Persons
and Advisory Persons of such Sub-Adviser collectively
own or hold, directly or indirectly, less than a 25%
interest in the profits of the partnership or other
vehicle.
(9) Transactions which the Disinterested Trustees, after
consideration of all the facts and circumstances,
determine to have not been fraudulent, deceptive or
manipulative as to the Trust.
III. Prohibited Purchases and Sales
(A) No Access Person shall, in connection with the purchase or
sale, directly or indirectly, by such person of a Security
held or to be acquired by the Trust:
(1) employ any device, scheme or artifice to defraud the
Trust;
(2) 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 under which they are made,
not misleading;
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(3) engage in any act, practice or course of business
which operates or would operate as a fraud or deceit
upon the Trust; or
(4) engage in any manipulative practice with respect to
the Trust.
(B) In this connection, subject to the exceptions stated in
Section II of this Code, it shall be impermissible for any
Access Person to purchase or sell, directly or indirectly, any
Security (or any option to purchase or sell such Security) in
which he or she had, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and
which he or she knows or should have known at the time of such
purchase or sale:
(1) is being considered for purchase or sale by the
Trust; or
(2) is being purchased or sold by the Trust;
provided, that, if an Access Person is an Access Person solely
as a result of his or her affiliation with a Sub-adviser, then
any purchase or sale (or considered purchase or sale) not
known to such Access Person of any Security by any series of
the Trust not sub-advised by such Sub-adviser shall not be a
purchase or sale (or considered purchase or sale) for purposes
of this Section III(B) of which such Access Person "should
have known."
(C) Any Access Person who questions whether a contemplated
transaction is prohibited by this Code should discuss the
transaction with the President of the Trust prior to
proceeding with the transaction.
IV. Reporting
(A) Every Access Person shall file with the Secretary of the Trust
and such other person or persons designated by the Secretary
of the Trust a report containing the information described in
Section IV(C) of this Code with respect to transactions in any
Security in which such Access Person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership in the Security (regardless of whether such
transaction is listed in Section II(2)-(9); provided, however,
that such Access Person shall not be required to make a report
with respect to transactions effected for any account over
which such person does not have any direct or indirect
influence or control if such person certifies such fact to the
Trust.
(B) A Disinterested Trustee of the Trust need only report a
transaction, if at the time of that transaction, such Trustee
knew or, in the ordinary course of fulfilling his official
duties as a Trustee, should have known that, during the 15-
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day period immediately preceding or following the date of the
transaction by the Trustee, such Security is or was purchased
or sold by the Trust or was being considered by the Trust or
the Manager for purchase or sale by the Trust. (The "should
have known" standard implies no duty of inquiry, does not
presume that there should have been any deduction or
extrapolation from discussions or memoranda dealing with
tactics to be employed in meeting the Trust's investment
objectives, or that any knowledge is to be imputed because of
prior knowledge of the Trust's portfolio holdings, market
considerations or the Trust's investment policies, objectives
and restrictions.)
(C) Every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which
the report relates was effected, and shall contain the
following information:
(1) The date of the transaction, the title and number of
shares and the principal amount of each Security
involved;
(2) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition),
including information sufficient to establish any
exemption listed in Sections II(2)-(8) which is
relied upon;
(3) The price at which the transaction was effected; and
(4) The name of the broker, dealer or bank with or
through whom the transaction was effected.
(D) If an Access Person is not required to file such a report for
any quarter because no reportable transactions were effected
by such Access Person or because any transaction effected by
such Access Person was for an account over which he or she has
no direct or indirect influence or control, such Access Person
(other than a Disinterested Trustee of the Trust) shall
certify these facts to the Trust within ten (10) days of the
end of such calendar quarter.
(E) The making of such report shall not be construed as an
admission by the person making such report that he or she has
any direct or indirect beneficial ownership in the Security to
which the report relates, and the existence of any report
shall not be construed as an admission that any event reported
on constitutes a violation of Section III hereof.
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V. Review and Enforcement
(A) Review
(1) The President of the Trust shall cause the reported
personal Securities transactions to be compared with
completed and contemplated portfolio transactions of
the Trust to determine whether any transactions (each
a "Reviewable Transaction") listed in Section III may
have occurred.
(2) If the President of the Trust determines that a
Reviewable Transaction may have occurred, he or she
shall then determine whether a violation of this Code
may have occurred, taking into account all the
exemptions provided under Section II. Before making
any determination that a violation has been committed
by an individual, the President of the Trust shall
give such person an opportunity to supply additional
information regarding the transaction in question.
(B) Enforcement
(1) If the President of the Trust determines that a
violation of this Code may have occurred, he or she
shall promptly report the possible violation to the
Trustees of the Trust, who, with the exception of any
person whose transaction is under consideration,
shall take such actions as they consider appropriate,
including imposition of any sanctions that they
consider appropriate, which sanctions may include,
among others, a letter of censure, suspension of the
right to trade for his or her own account or
suspension or termination of the employment of the
violator.
(2) No person shall participate in a determination of
whether he or she has committed a violation of this
Code or in the imposition of any sanction against
himself or herself. If a Securities transaction of
the President of the Trust is under consideration, a
Trustee or other officer of the Trust designated for
the purpose by the vote of the Trustees of the Trust,
shall act in all respects in the manner prescribed
herein for the President of the Trust.
VI. Alternate Code of Ethics
(A) The Manager, each Sub-adviser and First Data shall be bound by
the requirements of this Code of Ethics of the Trust; except
that the Manager, any Sub-adviser, or First Data may:
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(1) Submit to the Board of Trustees of the Trust a copy
of a Code of Ethics adopted by such entity pursuant
to Rule 17j-1 under the Act and satisfactory to the
Trust; and
(2) Promptly report to the Trust in writing any material
amendments to such Code.
(B) In the event a Manager, any Sub-adviser or First Data submits
a Code of Ethics which it has adopted and is satisfactory to
the Trust, the Manager, any Sub-adviser or First Data, as the
case may be, shall:
(1) Promptly furnish to the Trust upon request at any
time and from time to time copies of any reports made
pursuant to such Code by any person who would, except
for the provisions of the final paragraph of Section
I hereof, be defined as an Advisory Person or Access
Person as to the Trust; and
(2) Immediately furnish to the Trust, without request,
all material information regarding any violation of
such Code by any person who would, except for the
provisions of the final paragraph of Section I
hereof, be defined as an Advisory Person or Access
Person as to the Trust.
VII. Records
(A) The Trust shall maintain records in the manner and to the
extent set forth below, which records may be maintained on
microfilm under the conditions described in Rule 31a-2(f)(1)
under the Act and shall be available for appropriate
examination by representatives of the Securities and Exchange
Commission.
(1) A copy of this Code and any other Code which is, or
at any time within the past five years has been, in
effect shall be preserved in an easily accessible
place.
(2) A record of any violation of this Code and of any
action taken as a result of such violation shall be
preserved in an easily accessible place for a period
of not less than five years following the end of the
fiscal year in which the violation occurs.
(3) A copy of each report made pursuant to this Code by
any Access Person shall be preserved by the Trust for
a period of not less than five years
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from the end of the fiscal year in which it is made,
the first two years in an easily accessible place.
(4) A list of all persons who are, or within the past
five years have been, required to make reports
pursuant to this Code shall be maintained in an
easily accessible place.
(B) Confidentiality
All reports of Securities transactions and any other
information filed with the Trust pursuant to this Code shall
be treated as confidential, except as regards appropriate
examinations by representatives of the Securities and Exchange
Commission.
VIII. Amendment; Interpretation of Provisions
The Trustees may from time to time amend this Code or adopt such
interpretations of this Code as they deem appropriate, and shall provide each
Sub-adviser with copies of any such amendments or interpretations.
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